Commissioner of Taxation (Cth) v Murphy [1961] HCA 66

High Court of Australia Kitto, Taylor and Windeyer JJ. Commissioner of Taxation (Cth) v Murphy [1961] HCA 66

ORDER Question in the Case Stated answered Yes. Costs of the Case Stated reserved for the judge disposing of the appeal.

Cur. adv. vult.

The Court delivered the following written judgment:—

Nov. 9 Kitto, Taylor and Windeyer JJ.

This case stated relates to the year of income ended 30th June 1955. Before that year, and until 30th June 1954, the respondent was carrying on the business of a grazier on land which he owned at Tarago in New South Wales. The assets of the business included, in addition to the land, plant and improvements, 2,680 sheep, 84 cattle and five horses. On 25th June 1954 the respondent sold the land, plant and improvements to a company, and on the same day he and the company entered into a written agreement whereby he leased the live stock to the company for a term of five years from 1st July 1954, at a rental of fixed amount for the first twelve months and thereafter at an annual rental to be determined on the basis of twenty per cent of the book value of the live stock on 1st July 1955 and each succeeding year. The agreement obliged the company at its expense to look after, manage and depasture the live stock from year to year during the continuance of the agreement, without being responsible to make good any animals lost by death, unless by reason of negligence of the company or its servants. It was agreed that the company should not dispose of any of the livestock, except as agent for and with the consent of the respondent, and that the proceeds of any disposal should be accounted for forthwith to the respondent. The company was to be entitled during the currency of the agreement to the natural increase, wool and other produce of the live stock.