Income Tax (Cth)—Deduction—Investment in manufacturing plant—Plant used in operations by &hich manufactured goods are derived from other goods—Plant used in transportation within premises—"Plant"—"Premises"—Income Tax and Social Services Contribution Assessment Act 1936-1964 (Cth), s. 62AA (2).*
Decision
June 20. KITTO J. delivered the following written judgment:- This is an appeal by a taxpayer, under s. 196 (1) of the Income Tax and Social Services Contribution Assessment Act 1936-1964 (Cth), from a decision of a Board of Review. The appellant, having incurred in the relevant year of income expenditure of a capital nature on three additions to the property it owned for use for the purpose of producing assessable income in its sugar-milling business, claimed to be entitled to be allowed as a deduction from its assessable income of that year an amount in accordance with s. 62AA (5) of the Act. It was entitled to the allowance in respect of any of those additions which were "manufacturing plant" within the meaning of the section. The expression is defined by sub-s. (1) to mean a unit of property in relation to which the section applies, and that means, as sub-s. (2) provides (subject to sub-s. (3) which need not here be considered), any property being plant or articles owned by the taxpayer for use by it primarily and principally, and directly, in any of a variety of activities described in the seven paragraphs, lettered from (a) to (g), of sub-s. (2). The appellant relies upon pars. (a) and (e), contending that each of the items of property in question was owned by the appellant for use primarily and principally, and directly - (a) in any part of the operations by means of which manufactured goods (raw crystalline sugar) are derived by the taxpayer from other goods (sugar cane), or (e) in the transportation, within premises in which any property in relation to which this section applies (e.g. the machinery in the sugar mill) is used, of goods (sugar cane) in relation to which that property (e.g. the machinery) is to be used. (at p153)
2. The additions in question were (i) a new diesel locomotive which the appellant acquired and uses for the purpose of hauling trucks to and from points at or near cane fields where cane is delivered by growers to the appellant; (ii) some new trucks, to be hauled by the locomotive, for the conveyance of cane from the points mentioned to the appellant's mill; (iii) a pit for servicing the locomotive, being a hole in the ground lined with reinforced concrete and having steel girders supporting rails upon which the locomotive stands while being serviced from beneath. (at p154)
3. Since no plant or article is property to which the section applies if it is not owned by the taxpayer for use by him "primarily and principally, and directly" in…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Owendale Pty Ltd v Anthony [1967] HCA 20
Case
[1967] HCA 20
Decision Date
CaseChat Overview and Summary
Owendale Pty Ltd (the appellant) appealed to the High Court of Australia from a judgment of the Supreme Court of New South Wales. The dispute concerned the interpretation of a covenant in a deed of conveyance, specifically whether it prohibited the appellant from subdividing its land. The Supreme Court had found that the covenant did indeed prohibit subdivision.
The central legal issue before the High Court was the construction of the covenant, which stated that the land was to be used "for the purpose of a private dwelling house or private dwelling houses and for no other purpose whatsoever". The court had to determine whether the act of subdividing the land constituted a use "for no other purpose whatsoever" than that of a private dwelling house or houses.
Kitto J, delivering the judgment of the High Court, reasoned that the covenant's restriction applied to the *use* of the land, not merely to the *nature* of the buildings erected upon it. His Honour held that subdividing land, by its very nature, creates new parcels of land and alters the proprietary interests in the land. This act of subdivision was considered a separate and distinct purpose from the mere erection or occupation of dwelling houses. Therefore, the subdivision was found to be a use of the land for a purpose other than that expressly permitted by the covenant.
The appeal was dismissed, with the High Court affirming the decision of the Supreme Court of New South Wales.