THE INCOME TAX CASES.

Gisborne Times, Volume XXIX, Issue 3110, 5 January 1911, Page 3

THE INCOME TAX CASES.

JUDGMENT AGAINST THE CO3l- -

[Per press association.! WELLINGTON, Jan. 4

Mr Justice. Cooper gave judgment today in the important income tax eases, Wliiterock and 3tar.ainanga Estate Companies v. the Commissioner of Taxes, claiming a refill)dot taxes allegedly overpaid. His Honor said this was an action brought to recover from the Commissioner £2650 paid under protest. George D. Greenwood, of Canterbury, in 1905, agreed to purchase AYhiteroek, Canterbury, from 31rs Nicholls for £75.000, and stock, etc., for £25,000. Half the purchase money of £IOO,OOO was paid off before it whs determined to resell. Mr Greenwood' formed a private company of 35,000 shares, and took up all but two shares. Its object Avas to acquire Whitelock and carry oil the sheepfarming business. Its real object, said Mr. Justice Cooper. Avas to enable Greenwood to avoid a higher rate for graduated land than if Teviotdale, Avhicli he owned, and 3Yliiterock Avere both vested in him. The company then bought the adjoining property of 558 acres at £5 an acre, and sold the. whole of its property at £52,000. The Commissioner of Taxes assesed the income tax on that profit. The company paid it under protest, and the Court Avas asked to decide Avhother the company was liable to be so assessed. His Honor said the point of loav Avas an extremely narrow one. It ivas, was the principal business of the company that of dealing in land ? In his opinion, it was tun. The sale of the estate Avas in the ordinary course of business. r l lie purpose of formation of a company was solely to avoid graduated tax. Greenwood was a sheep farmer, and a wealthy linn. There was no indication that he was the class of man hit at by the statute. Persons whom the Legislature Intended to affect with liability wore the speculators. 'Judgment was given for plaintiffs for the amount claimed, with costs.