AI Drafter 
TaxTMI 
TaxTMI 
1938 (3) TMI 16
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....de upon it by the additional commissioners of income tax for the city of London under Case I, in respect of these profits. The following statement shows, in summary form, the material receipts and expenses of the London branch for the year ending March 31, 1928, upon which the assessment was based, as adjusted for income tax purposes by the additional commissioners:- Dr. Cr. Working expenses 41,070 Exchange and commission (mainly, profits on exporter's bills purchased) 90,600 Interest paid on deposits and balances in London 19,312 Rebates on bills receivable which were immature on March 31, 1928 7,814 Loans to Banks and discount houses 37,209 Commission and exchange 36,482 Interest on overdrawn accounts 25,558 Interest and expenses paid in New Zealand in respect of money borrowed in New Zealand, and used at the London branch 112,868 Interest on dishonoured bills 2,122 Discounts on Treasury bills 68,037 Interest on War Loan 3 per cent. 6,043 (Note-This item includes 41,262 in respect ....
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....he four credit items (GBP 78,556), to GBP 37,467. On appeal to the King's Bench Division, Lawrence. J., affirmed the determination of the special commissioners, and his judgment was affirmed, on appeal, by the Court of Appeal against whose judgment the present appeal is taken. The statutory provisions on which the respondents base their claim for the exclusion of the items are as follows: 1. As regards the War Loan interest, the Income Tax Act, 1918, Section 46, which provides: "(1) Where the Treasury have before the commencement of this Act issued or may thereafter issue any securities which they have power to issue for the purpose of raising any money or any loan, with a condition that the interest thereon shall not be liable to tax or super tax, so long as it is shown, in manner directed by the Treasury, that the securities are in the beneficial ownership of persons who are not ordinarily resident in the United Kingdom, the interest on securities issued with such a condition shall be exempt accordingly". 2. As regards the India Government Stock, Schedule C, General Rules, r. 2, which provides: "No tax shall be chargeable in respect of.......(d) the interest or....
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.... trading receipts of a trade exercised in the United Kingdom from the computation of the profits of the trade for the purpose of assessment under Schedule D, Case I. This appears to have been the only argument submitted by the Crown as to the War Loan, but, despite their abandonment of it as regards the War Loan, they still maintained it as regards the remaining items before your Lordships. My Lords, I have no difficulty in rejecting this contention. I agree with the Court below that, whether as interest or as a component part of the profits of the trade, the exemptions must equally apply. The only question remaining as to the India Government Stock is whether Schedule C, General Rules, r. 2(d), refers only to tax under Schedule C or is of general application. In my opinion, it is clearly not limited to Schedule C in its operation. The opening words of the rule do not limit it to no tax "under this schedule," as is done in both r. 1 and r. 3 and it can hardly have been the intention to limit the exemption of the stock, dividends or no interest of an accredited minister of any foreign state under r. 2(c). Equally, there seems to be no reason in so limiting r. 2(d). But, furthe....
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....ndents are right in their construction, is conferred for the first time by the Consolidation Act. The presumption against such a construction was rightly recognised by the Court of Appeal, but they held that the language of the sub-section is sufficiently clear to overcome the presumption. They felt fortified in this view by the provisions of the Finance Act, 1924, Section 27, to which I will refer later. The Crown's main contention is that Rule 7 is not a charging rule, but merely provides machinery for collection of tax, and that it would be out of place to find an exemption from tax in the rule. They claim, with some force, that the terminology of Rule 7(2) substantially reproduces the heading of the small group of rules of Schedule C above referred to, nothing incidentally that dividends are alone referred to, and that it is only in the small group that dividends are alone referred to, coupled with a definition clause. The Court of Appeal held that Rule 7(1) was a charging provision, and that the opening words of Rule 7(2)-"All the provisions of Schedule C relating to the tax to be assessed and charged"-were general, and clearly included the general rules, mutatis mut....
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.... use of the word "decision" on the ground that that could only refer to a power of decision expressly conferred on the Commissioners of Inland revenue. I find myself unable to agree with this latter view. In my opinion, it may well refer to a refusal to concede the claim of the aggrieved person, which, prior to the Act, would have involved a petition of right-a procedure which the provision was apparently designed to obviate. On the first point expressed by the judges I do not feel so clear as to utilise this ex post facto legislation in the construction of the Act of 1918, but again, I am not prepared to reverse, on appeal, the clear decision of the Court of Appeal. If the policy of the Crown is otherwise, it is for them to rectify the ambiguities by amending legislation. I am therefore of opinion that the appeal of the Crown fails on all the main questions. There remains the alternative question as to reduction of the amount of the four credit items so to be excluded from the computation by a proportionate part of the debit item of GBP 112,868, which has been agreed at GBP 41,262. It is perhaps enough to say that the Crown are unable to point to any statutory provisions in sup....