Federal Commissioner of Taxation v Lewis Berger and Sons (Australia) Limited

The Federal Commissioner of Taxation appealed to the High Court of Australia from a decision of the Board of Review concerning the income tax assessment of Lewis Berger and Sons (Australia) Limited for the 1919-1920 income year. The dispute centred on the ascertainment of profits derived from Australia, where the company's business included sales to customers outside the Commonwealth, specifically in New Zealand.

The legal issues before the High Court involved determining the extent to which profits attributable to sales made to customers outside Australia were derived directly or indirectly from sources within Australia. The court was also required to consider the nature of an appeal from the Board of Review to the High Court, specifically whether parties were limited to the material presented to the Board or could adduce further relevant evidence. Furthermore, the court had to address the grounds upon which such an appeal could be brought and whether the Commissioner was entitled to apply a rigid formula for apportioning profits in all cases.

Starke J. held that an appeal from the Board of Review to the High Court, being a proceeding in the original jurisdiction of the Court, permitted parties to adduce relevant evidence beyond that considered by the Board. However, an appellant was restricted to the grounds stated in their notice of appeal unless leave to amend was granted. The court found that the Commissioner's method of calculating profits attributable to New Zealand sales, which involved a rigid formula, was not a rule of law and could be unreasonable in specific circumstances. The Board of Review's decision to halve the disputed profit sum was based on business judgment applied to the facts, and the Commissioner's contention that there was no evidence to support this apportionment was rejected. The Commissioner's attempt to introduce new evidence regarding the basis of sales was refused as it was not within the scope of the appeal as framed.

Consequently, the appeal by the Commissioner of Taxation was dismissed with costs.