Peel River Land and Mineral Co (Ltd) v Federal Commissioner of Taxation [1954] HCA 58

92 C.L.R.] OF AUSTRALIA. 467

[HIGH COURT OF AUSTRALIA.]

APPELLANT ;

PEEL RIVER LAND AND MINERAL COM- PANY (LIMITED) . si 5 3 5

AND

FEDERAL COMMISSIONER OF TAXATION RESPONDENT.

Income Tax: (Cth.)—Assessable income—Pastoral business—Land—Grazing—Sale— H., 0. ov A. Proceeds—Resumption—Compensation —" Profits "— Income — Profit-making 1954. undertaking or scheme—Sale of parcels of land over long period—Intention of = ~~

taxpayer—Town allotments—Income Tax Assessment Act 1936-1949, s. 26 (a)— SYDNEY, Income Tax and Social Services Contribution Assessment Act 1936-1952, Oct. 12, 15; 8. 26 (a). Nov. 8.

The appellant objected to the inclusion in its assessment for income tax 'Taylor J. for the year ended 30th June 1950, of the sum of £3,819 said to be profit which accrued to the appellant during that year upon the sale of approxi- mately 1,844 acres of grazing land to D. for the sum of £7,622, the profit being arrived at by deducting from that sum the amount of approximately £3,688, or two pounds per acre which was treated as the cost price of the land. During the year ended 30th June 1952, some 24,300 acres more of the appel- Jant's grazing land were compulsorily acquired by the State Government and the appellant received £143,821 as compensation therefor. On the basis that the cost of the land to the appellant was two pounds per acre the Federal Taxa- tion Commissioner included the sum of £95,214, as profits in the appellant's assessable income.

The two parcels of grazing land formed part of a tract of land, 313,298 acres in extent, which was acquired by the appellant in 1854 and upon which it conducted an extensive pastoral business. Over a long period the appellant consistently sold town allotments so that townships might develop and settlers be attracted to the district. By 1950, however, the appellant's holding had shrunk to 50,000 acres, the balance having been disposed of, by sale or otherwise, or lost to it, during the intervening period, and upon disposing of the two parcels there remained in the possession of the appellant only, approximately, 26,500 acres of its original holding.