TMI Blog1932 (7) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... he year to the 31st March, 1929. The appellants' trading account for the year to the 31st March, 1928, which fell to be treated as the income year for the purpose of the assessment, showed a debit item of 10,000 in respect of directors' fees, which they claimed as a proper deduction. But the respondent disallowed this item to the extent of 8,000 on the ground that, to that extent, it was not exclusively incurred in the production of the assessable income and he assessed the appellants accordingly; the appellants challenge the assessment in this respect. The provisions of the Land and Income Tax Act, 1923, as to deductions, so far as material, are as follows:- 80.-(2) In calculating the assessable income of any person d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should state and sign a case setting forth the evidence taken before his Court and the questions of law arising for the determination of the Supreme Court. As the present case only raised a question of law, it was removed, with the consent of parties from the Supreme Court into the Court of Appeal under the provisions of s. 33. It will thus be seen that in the present appeal the power of review of their Lordships is limited to questions of law, and that the appellants have to discharge the burdens laid upon them by Ss. 14 and 25. The material facts may be summarised as follows:-The company was incorporated in 1923 as a private company, and since then has carried on business in Wellington as manufacturers and vendors of a patent medic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,170 11 8 31st March 1927. 21st July 1927. quot; 5,000 quot; 4,924 13 7 31st March 1928. 8th June 1928. quot; 5,000 quot; 5,145 6 6 These fees were fixed each year by resolution of the company in general meeting. The company having adopted Table A of the New Zealand Companies Act, 1908, the remuneration of the directors is provided by Art. 78, which is as follows: The directors shall be paid out of the funds of the company, by way of remuneration for their services, such sum or sums as the company may from time to time fix at a general meeting, and such remuneration shall be div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strate. The appellants maintained in the first place, that the production by them of a resolution fixing the remuneration of the directors for their services in terms of Art. 78, and vouchers for payment of the amounts so fixed, when taken along with the admitted fact that service had been rendered, was sufficient to exclude any further enquiry by the Commissioner and to entitle them to a deduction in terms of Section 80(2) of the Act. But this contention was not seriously pressed, and in their Lordships' opinion, it is untenable. The appellants maintained, in the second place, that the Commissioner was not entitled to challenge the amount paid by the company to its servants for their services on the ground of excess or over-gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was excessive and the question must be whether there was further evidence which reasonably entitled the Magistrate to decline to hold it proved that the assessment was excessive. Their Lordships are of opinion that the state of the evidence was not such as to compel the Magistrate to the conclusion that the 10,000 had been exclusively incurred in the production of the assessable income. There was complete identity of the persons interested as shareholders in fixing the amount of the fees to be paid to the directors and of the persons to whom the fees were to be paid, and, except in regard to its bearing on the liability of the company to tax, it made no difference to the destination of the money whether the amount of the fees repres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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