Profit element on contractor supplies was negatived where freight and handling were only reimbursed expenses, not taxable gain.

Supply of cement, structural steel and bricks to contractors was examined to determine whether any profit element arose for tax purposes. The Tribunal found that no profit was charged on cement and structural steel, and that freight, insurance and handling charges merely reflected expenses actually incurred and formed part of the price paid. For bricks, the charged rate also left no profit after overheads and the uncertain transport component were taken into account. The supplies therefore did not yield taxable profit, and the issue was answered against the existence of any profit element.

---

---

Issues: Whether the supply of cement, structural steel and bricks to contractors yielded any profit so as to justify the tax liability in dispute.

Analysis: The Tribunal's supplementary statement showed that no profit was charged on the supply of cement and structural steel, and that the freight, insurance and handling charges recovered were expenses actually incurred and therefore formed part of the price paid by the company. As regards bricks, the evidence showed that the charged rate did not leave any profit after accounting for overheads and the indeterminate transport element.

Conclusion: The supplies did not yield any profit and the questions were answered in a manner that negatived the company's taxable profit element.

---