Herring v Federal Commissioner of Taxation [1946] HCA 18

RK] OF AUSTRALIA. 543

[HIGH COURT OF AUSTRALIA.]

Me re St: APPELLANT';

AND

FEDERAL COMMISSIONER OF TAXA-

EION ResPoNnvENT.

e Tax (Cth.)}—Assessment—Deductions—Outgoings—Whether of capital nature HC. o A. _ —Construction of road for purpose of winning timber — Income Tax Assessment 1946. Act 1936-1938 (No. 27 of 1936—No. 46 of 1938), ss. 51, 69, 70. eed

z a BRISBANE, Section 51 of the Income Tax Assessment Act 1936-1938 provides for the June 13, 14,

deduction from assessable income of all losses and outgoings incurred in gaining """""99, or producing assessable income 'except to the extent to which they are losses === or outgoings of capital bore

Held that expenditure by a company (whose assessable income was derived from royalties paid for timber cut on its lands) for the construction of roads solely for the removal of timber from its lands was a capital expenditure and therefore not deductible within the meaning of s. 51.

AppeaL under Income Tax Assessment Act.

_ Maurice Stanley Herring, as receiver of Brisbane Timbers Ltd., appealed against three assessments of the company to income tax the years ended 30th June 1937, 1938 and 1939. The greater of the company's income for these years consisted of royalties in respect of timber obtained from land belonging to the com- any. During these Years the company incurred certain _expendi-

w the deductions and the company lodged "ela to the sments, which were also disallowed.

H.C. or A.

1946. Ww HERRING v. FEDERAL Commas- SIONER OF TAXATION.

Tune 20.

HIGH COURT

The appeal was heard by Rich J., in whose judgment the re facts are sufficiently set forth.

Bennett and Cross, for the appellant.

Fahey, for the respondent. : Cur. adv. vult. —

Ricu J. delivered the following written judgment :— These are three appeals from assessments for income tax upon timber company in the hands of a receiver. The company's account- ing period ends on 13th September and the assessments are for the three financial years beginning on Ist July 1936 and ending on 30 June 1939 and are made in respect of the years of income extendii