Trading write-off for subsidiary support was not deductible because it was not wholly and exclusively for the taxpayer's trade.

A write-off in a holding company's trading account was held not deductible because it was made to support a subsidiary's business and relieve its deficit, rather than being wholly and exclusively referable to the taxpayer's own trade. The court treated the holding company and subsidiary as separate taxable persons and applied the rule denying allowance for expenditure not laid out solely for the purposes of the taxpayer's trade. The deduction therefore failed and the amount could not be brought into computing trading profits.

---

---

Issues: Whether the amount written off in the trading account with a subsidiary was deductible as expenditure wholly and exclusively laid out for the taxpayer's trade.

Analysis: The holding company and its subsidiary were separate taxable persons, though they had both shareholding and trading relationships. The sum written off was found on the evidence to have been allowed to enable the subsidiary to continue its business and to relieve its deficit, rather than being confined to the taxpayer's own trading purposes. On that finding, the deduction failed under the rule prohibiting allowance for sums not wholly and exclusively laid out for the purposes of the taxpayer's trade.

Conclusion: The amount was not deductible and the appeal failed.

Final Conclusion: A write-off made to support a subsidiary's business, where it is not shown to be wholly and exclusively referable to the taxpayer's own trade, is not an allowable deduction in computing trading profits.

Ratio Decidendi: Expenditure or write-offs made partly to support a subsidiary's business, and not wholly and exclusively for the taxpayer's own trade, are not deductible in computing taxable profits.

---