TMI Blog1933 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ance the whole of the area, amounting to'888 acres, is used for and in connection with the stud. Upon this farm he breeds thoroughbred stock, and uses his stallions both for the purpose of serving his own mares and mares of other people brought into his farm for the purpose. No mares are served outside the farm. He advertises his stallions, with the fees charged for the service of each, and, roughly speaking, twice as many visiting mares are served as his own. It is for the fees in respect of the services for these outside mares that the assessment has been made. The mares from outside owners themselves remain on the farm for about four months, and the appellant receives payments for their keep during the time: The appellant's claim is that he is only entitled to be taxed under Schedule B in respect of his occupation of the land, and that the profits derived from the use of the stallions are not profits of a trade, adventure or concern separate from and outside the purpose of such occupation. 3. It is as well to consider this contention in the first instance apart entirely from questions of authority. It is not disputed by the Crown that the occupation of the land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t served the mares of the adjoining farms and other people who required its services. Assessment was made in respect of the profits earned by these outside services, and it is plain from the findings of fact in that case that it was only the moneys so received that it was sought to tax. The Court of Session treated the case upon the hypothesis that the land was occupied as an ordinary farm, and that the use of the stallion outside it was outside the purpose of this occupation. The Lord President said (1918 S.C., at p. 84): If the farm lease terminated tomorrow, then he would if, as I presume, it was for his profit, certainly continue to carry on this business. And Lord Johnstone stated that the employment of a stallion for stud purposes for hire outside of his own farm is no part of the business of a farmer. He said (1918 S.C., at p. 85): A stallion kept for this purpose has no necessary relation to a farm or to the adventure of a farmer. It was in these circumstances that the matter came before your Lordships' House, where the real question argued was whether there was any reason to displace the finding of fact of the Commissioners that the employment of a stallion for stu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g at the matter apart from authority, I can see no reason in logic for distinguishing between the profit derived from the reproductive capacity of the female and the profit derived from the reproductive capacity of the male. 9. So far as authority is concerned, the question is what was the basis of the decision in your Lordships' House in the case of Malcolm v. Lockhart. It rested, I think, upon the fact that the occupation of the land in that case was not an occupation for the purposes in relation to which the fees were received, and that such fees were therefore received in respect of a trade, adventure or concern separate from and outside the purposes of the occupation. I concur in the views which have already been expressed upon that decision by the noble and learned Viscount on the Woolsack. The decision appears, therefore, to have been too broadly interpreted in McLaughlin v. Bailey, and I see nothing in it to prevent your Lordships from reaching the conclusion which appears to be required, that the fees in question in the present case arise from the occupation of the land and are not taxable under Schedule D. I concur in the motion proposed. 10. Lord Russbll of Kil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of these fees. The question in this appeal is whether this additional assessment is justified, that is, whether these fees are or are not covered by the general assessment made on the lands under Schedule B. 14. Thoroughbred stallions cannot be sent round, like shire stallions, to the farms where the mares to be served are kept. The thoroughbred mares must be brought-generally just before foaling-to the stud farms where the thoroughbred stallions live and remain there for about four months in all, partly before being served and partly afterwards. During this time the visiting mares need the same care as the appellant's own mares, and the use of the farm lands and of the same equipment in the way of boxes, paddocks, and so forth. The appellant's stud farm comprises 888 acres, of which the stud paddocks form 284 acres, the pasture land 59 acres, the arable land 357 acres, and woodland belts about 180 acres. The paddocks, which are forty in number, are run on by horses and bullocks alternately, the rotation being necessary to prevent them from becoming horse sick, and are limed every two years. The woodland belts shelter the paddacks. The arable land provides st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... House as being covered by concurrent findings of fact. No more need be said about it here, except that, whether rightly so decided or not, it throws no light on the question now debated, namely, whether the service fees are or are not covered by Schedule B. On that issue the Commissioners stated all the relevant facts and then decided the case on the footing that they were bound to decide adversely to the appellant by a decision of the Court of Appeal in Ireland, McLaughlin v. Bailey. The question is thus left to the decision of the Court on the specific facts found as a question of the construction of the Act. The decision of the Commissioners was upheld by Rowlatt, J., and by the majority of the Court of Appeal: Romer, L.J., however, dissented. 16. The tax under Schedule B is expressed to be charged in respect of the occupation of lands, tenements and hereditaments in the United Kingdom, for every twenty shillings of their assessable value. It is, like other taxes under the Income Tax Act, 1918, a tax on income or profits; but save in the special cases otherwise provided by the Act, it is a tax not varying with the actual profits or depending on there being profits at all, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other accessories; they were held to be carrying on a business for profit outside their status as owners of the land. The question here is accordingly whether the fees charged for the service of the stallions constitute a matter outside whatever is included in occupation. Schedule B exhausts ail profits that come within occupation of the land; such profits are dealt with once for all by the assessment, and cannot be taxed otherwise or again; Schedule D has no application to such profits. The Act does not define occupation, but does throw some light upon its meaning; thus it distinguishes occupation only or mainly for husbandry from occupation not so described, though both are within Schedule B. The Act excludes from Sche. due B not only dwelling-houses, other than farm houses, but warehouses or other buildings occupied for the purpose of carrying on a trade or profession-rule 1 (b)-indicating thereby that the income from occupation has reference to use of the lands as such. This would exclude from Schedule B and throw into Schedule D income from trades, professions and factory operations, although the buildings in which they are exercised do occupy some land. Rule 5 under Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products, as making cream, butter or cheese. The farmer is still dealing with the products of the soil, and Schedule B covers the income. Hence the elaborate, expensive and scientific equipment of the appellant's stud farm is not adverse to his claim that the profits (if any) are exhaustively covered by Schedule B. But in the present case these points need not be laboured, because it is admitted by the respondent that the land as a whole is properly assessed, as in fact it was, under Schedule B. 18. The question thus arises on what principle the respondent claims to assess the services of the stallions in relation to the mares sent by other owners, as separate profits or income not covered by Schedule B but taxable under Schedule D. It is clearly not relevant to say that what is in question is the receipt of fees and not the services for which they are paid, any more than a distinction can be drawn in the case of an ordinary farmer between the produce which he uses on the farm and the produce which by selling he turns into money. In fact, the services of the stallions are exactly the same in respect of visiting mares as in respect of the appellant's own mares and exactly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this conclusion is not open to your Lordships because of the decision of this House in Malcolm, v. Lockhart. That would be true if the case contained a direct decision of principle governing the question now before your Lordships. But I do not find in it any such ruling. The Commissioners had found as a fact that the fees were outside Schedule B, but only in regard to fees for serving mares at outside farms away from Malcolm's farm. No claim was being made to assess outside Schedule B in respect of fees for serving mares of other farmers on Malcolm's farm. This House held in effect that it was impossible to say there was no evidence for the Commissioners' finding of fact and though no specific mention is made of the distinction between serving mares at the stallion's home and serving, mares at outside farms, the decision must be taken to be based on the special facts which involved that the fees in question were not a profit arising in respect of the occupation of that particular farm. And it may be observed that there may, at least in theory, be cases in which the stallion kept, say, in a stable or a mews, and taken round to visit the mares, could not be regarded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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