Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34

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H.C. or A, Income Tax (Cth.)—Assessable income—Deduction—Costs and expenses incurred in

. 1946. opposing application by trade competitor for extension of patent—Baxpenditure— So Capital or rerenue—" Outgoings" (not being " outgoings of capital") " incurred Sypyey, in gaining or producing the assessable income" or " necessarily incurred in Aug. 1, 2. carrying on a business" —Appeal—Question of law—Income Tax Assessment Act E, 1936-1940 (No. 27 of 1936—No, 65 of 1940), ss. 51 (1), 196.

Oct. 7. The E. company, a trade competitor of the appellant, petitioned for an — Tatham C.J., extension of the term of certain letters patent held by it. Such extension, if Starke, Dison, granted, would have caused heavy losses to the appellant in the conduct of Williams JJ. its business both in respect of its trading commitments and in respect of wh he: moneys already expended by it on the reorganization of its plant in anticipation

h.L Rh 3/ of the expiry of the letters patent. 'The appellant successfully opposed the E. company's petition and in so doing incurred legal costs and expenses amount- ing to £6,020,

Held, by Latham C.J., Starke and Williams JJ. (Dixon and McTiernan JJ. dissenting), that the legal costs and expenses so incurred were outgoings of a revenue and not of a capital nature, and, therefore, under s. 51 (1) of the Income Tax Assessment Act 1936-1940, were deductible from the taxpayer's — assessable income.