Tax Management India.Com

Home Page

Home List
← Previous Next →

1946 (3) TMI 18

Pontypridd and Khondda Water Act, 1910 - Dated:- 29-3-1946 - VISCOUNT SIMON, LORD THANKERTON, LORD WRIGHT, LORD PORTER, LORD SIMONDS JUDGES Tucker, K.C. and Donovan, K.C. for the Appellant. Sir Patrick Hastings, K.C. and Reginald P. Hills for the Respondent. JUDGMENT Viscount Simon - I have had the advantage of considering the opinion which my noble and learned friend Lord Thankerton is about to deliver, in which he has fully set out the facts in this case, and has examined and analysed the auth .....

X X X X X X X

Full Contents

X X X X X X X

fits arising ; see, for example, Lord Buckmaster s explanation in Forth Conservancy Board v. Inland Revenue Commissioners [1931] 16 Tax Cas. 103, and. compare what Lord Macmillan said in Municipal Mutual Insurance Co. v. Hills [1932] 16 Tax Cas. 430. 4. Lord Thankerton has conclusively demonstrated that Lord President Inglis decision in the first Glasgow Water case (Glasgow Water Commissioners v. Inland Revenue Commissioners [1875] 1 Tax Cas. 28) falls within this second proposition; so interpre .....

X X X X X X X

Full Contents

X X X X X X X

8, in the estimated sum of £ 10,000 for the year 1939-1940 in respect of the profits of its trade, which was that of an undertaking for the supply of water. The only question argued before this House was whether certain sums paid, under precept, to the appellant board by the Pontypridd Urban District Council and the Rhondda Urban District Council under Section 91 of the Pontypridd and Khondda Water Act, 1910, fall to be included as receipts in the computation of the appellant board s trade .....

X X X X X X X

Full Contents

X X X X X X X

l by the Crown to the Court of Appeal was allowed, and it was held that the sums in question were trading receipts and should enter into computation. Hence this appeal by the appellant board. 8. Counsel for the appellant board referred to reasons Nos. 6 and 7 of the appellant s case as embodying his main contentions. These are : (6) where a local authority carries on a commercial undertaking at a loss, and is permitted to make good that loss by a compulsory rate levied on the ratepayers, the amo .....

X X X X X X X

Full Contents

X X X X X X X

two urban district councils, these two councils being referred to in the Act as the constituent authorities. 10. Under Sections 58 and 59 of the Act of 1910, as amended by Section 25 (6) of the Pontypridd and Rhondda Water Act of 1913, the limits of supply within which the board are authorised to supply water direct to consumers are (1) the Pontypridd urban district, and (2) part only of the Rhondda urban district, but in addition the Board was authorised to sell water in bulk to the water under .....

X X X X X X X

Full Contents

X X X X X X X

ortion of which provides as follows: 91.-(1) Before the first day of April in each year or so soon thereafter as may be practicable the board shall make or cause to be made an estimate of the probable revenue and expenditure other than capital expenditure which will be received and incurred respectively during the year beginning on that day and if such estimate shows that their will be a deficiency in the net revenue of the board for the year the board are hereby authorised and required in every .....

X X X X X X X

Full Contents

X X X X X X X

e accordingly and the constituent authorities respectively are hereby authorised and required to make and levy any rate that may be necessary for the purposes of this section. 12. Sub-section (5) of Section 91 provides that in default of payment by a constituent authority of the amount so apportioned to it, the board may sue the defaulting authority, or itself cause a rate to be levied in the district of such authority, in order to secure payment. Pursuant to Section 91, the board made an estima .....

X X X X X X X

Full Contents

X X X X X X X

1 Tax Cas. 28, with which he maintained the present case was in pari pasu. In the second place, he contended that the sums in question were not trade receipts (a) on general grounds, and (b) that they were in exactly the same category as a local rate raised by a public body for the assistance of an undertaking carried on by that body, which is entitled to have such assistance. 14. The first of these contentions appears to me to involve the question whether the appellant board is entitled to the .....

X X X X X X X

Full Contents

X X X X X X X

er Chamber, Keating, J., said: Mr. Manisty does not contend that harbour and port dues, and other revenues of that description, are not taxable; and the Attorney General admits that a district rate is not. The question then is, does the rate in question partake more of the nature of the one or of the other? I am of opinion that it does not partake of the character of a district rate imposed by the inhabitants of a place upon themselves ; and that, on the other hand, it is very difficult to disti .....

X X X X X X X

Full Contents

X X X X X X X

ithin the limits of compulsory supply the commissioners were entitled to levy two rates, (a) a domestic water rate, levied on the occupiers of all dwelling-houses within the area, according to their rents, and (b) a public water rate not exceeding a penny in the pound on the full annual value of all premises whatever within the same limits. Both these rates were payable irrespective of whether the ratepayers chose to use the water or not. 16. After meeting the current expenses of the undertaking .....

X X X X X X X

Full Contents

X X X X X X X

count, to be applied as the Act directs in reducing the domestic water rate ; and the question is, whether income arising from this assessment, which is appropriated to such purposes, is assessable for income tax under Schedule D as profits of this undertaking. I am humbly of opinion that it is not. It seems to me that this is an Act of Parliament by which the citizens of Glasgow have undertaken, through this water corporation as their representatives, to assess themselves for a very important p .....

X X X X X X X

Full Contents

X X X X X X X

and, because in those cases the statute which gave the right to levy the assessment did not impose it upon the citizens of the particular burgh or locality which obtained the Act. It was not an authority to the citizens of a particular locality to assess themselves. The learned Judge then made the reservation which led to the Second Glasgow case [1886] 2 Tax Cas. 131: I have only further to say, that if any attempt had been made here to discriminate between that portion of the revenue which aris .....

X X X X X X X

Full Contents

X X X X X X X

elivering the judgment of the Court, said : We were all of opinion that within the limits of compulsory supply the concern or undertaking as denned by the local Act, was of this nature, that the citizens of Glasgow undertook to assess themselves for accomplishing the important public purpose of supplying the city (being the limits of compulsory supply) with a good supply of pure water; that in doing so they had and could have no view of making profit, for that would have been equivalent to payin .....

X X X X X X X

Full Contents

X X X X X X X

d by any domestic consumer for his particular supply and he did not enter into any trading transaction with the commissioners; (5) the rates thus levied were applied to the expenses incurred on behalf of the inhabitants, and any surplus rightly belonged to the ratepayers and was carried forward and applied in reduction of the domestic rate in the next year, thus answering Lord Buckmaster s definition of the principle. On the other hand, the present case is very different. The appellant board- (1 .....

X X X X X X X

Full Contents

X X X X X X X

enter into a trading transaction with the board. In all these respects the present case is in strong contrast to the First Glasgow case [1875] 1 Tax Cas. 28. 18. It is true that in the case of the Forth Conservancy Board v. Inland Revenue Commissioners [1931] 16 Tax Cas. 103- Lord Buckrnaster, while finding it unnecessary for the purposes of that case to examine the soundness of the decision in the First Glasgow case, said it appeared difficult to reconcile it with the later decision in this Ho .....

X X X X X X X

Full Contents

X X X X X X X

ellants counsel s claim to come within the principle of the First Glasgow case not only fails, in my opinion, but in stating the various points of contrast between the provisions of the Glasgow Water Act and the provisions of the appellant board s Water Act, the various matters I have indicated in respect of the latter Act go far to show that the amount of the precepts are not in the position claimed under head (b) of his second contention, namely, that they were in exactly the same category as .....

X X X X X X X

Full Contents

X X X X X X X

n employment. It was not a trade receipt. Lord Atkin said : When received, they were received by the appropriate body not as part of their profits or gains or as a sum which went to make up the profits or gains of their trade. I am unable to regard the sums here in question as falling into the same category as the unemployment grants; on the contrary, they were received as a sum which went to make up the profits or gains of their trade. The other case cited was Lincolnshire Sugar Co. v. Smart [1 .....

X X X X X X X

Full Contents

X X X X X X X

ounsel s second contention, I will only add that the two cases last cited show that if, as in my opinion, was the case here, the assistance is given for the purpose of being used in the business carried on by the appellant board, so as to enable them to meet their trading obligations, the amounts so given are trading receipts, and this contention also fails. 21. I have so far expressed my own opinion, but I would like to express my general agreement with the reasons given in the judgments in the .....

X X X X X X X

Full Contents

X X X X X X X

 

 

← Previous Next →