Clowes v Federal Commissioner of Taxation [1954] HCA 10

felt. Fark ase.

Afb Fe ALTA u/2

AAA, 133 C22, F2E, 91 CLR. OF AUSTRALIA. 7 p<

ie Sis 22 7 209

Of 33.422 345.

{HIGH COURT OF AUSTRALIA.] CLOWES AND ANOTHER. eae 5 APPELLANTS ; AND

FEDERAL COMMISSIONER OF TAXATION ReEsPONDENT.

Income Tax (Cth.)—Assessable income—Purchases under agreement of beneficial H.C. or A. interest in produce of "lots" in pine plantation—Vendor to plant, maintain 1953-1954. and harvest timber—Proportion of proceeds of sale of produce from whole plan. ~~ tation divisible among lot-holders according to respective lot-holdings—Distri- 1953, bution to lot-holder to be in full settlement of claims under agreement—Sum MELBOURNE, paid to lot-holder in excess of sum paid by him—Whether difference a " profit Sept. 16;

arising . . . from the carrying on or carrying out of any profit-making under- taking or scheme" by or on behalf of taxpayer—Scheme—Necessity for system gy

—Income Tax Assessment Act 1936-1945 (No. 27 of 1936-—No. 4 of 1945), 4 yrit 7. 5. 26 (a). anne Dixon C.J., Section 26 of the Income Tax Assessment Act 1936-1945 provides that the eta itto and sable income of a taxpayer shall include "' profit arising from the sale 'Taylor JJ. by the taxpayer of any property . . . or from the carrying on or carrying

out of any profit-making undertaking or scheme ".

Held by Dixon C.J. and Kitto J. (Webb and 7 opinion) that, on the proper construction of the si

ylor JJ. expressing no

ction, the undertaking or scheme must be carried on or carried out by the taxpayer or on his behalf,

A., a draper, entered into two agreements in similar form dated respectively 19th February 1926 and 17th July 1929 with a company, Pine Plantations Pty. Ltd. Each agreement, after reciting that A. was desirous of becoming possessed of a beneficial interest in the produce of a certain acreage of timber land, called a lot, provided for the payment by A. to the company of certain and for the transfer by the company, as soon as all the lots in the plantation had been sold and the pur-