Income Tax (Cth)—Appeal—Objection by taxpayer to assessment—Reference to Board of Review—Appeal to High Court from decision of Board—Heard by single Justice—Whether further right of appeal to Full Court of High Court—Competency—Decision—"Final and conclusive"—Refusal by Justice to state case to Full Court—Whether right of appeal from refusal—Income Tax Assessment Act 1936-1966 (Cth), s. 196*.

Decisions

December 10.
BARWICK C.J. The appellant lodged an appeal against the dismissal of his appeal to this Court from a decision of a Board of Review in taxation and the allowance of cross-appeals of the respondent. (at p671)

2. The appeal was brought pursuant to s. 196 (1) of the Income Tax Assessment Act 1936-1966 (Cth). Included in his grounds of appeal is a ground that the Justice erred in refusing the application of the appellant to state for the opinion of the Full Court questions of law arising in the appeal from the Board of Review. (at p671)

3. The respondent lodged an objection to the competency of the appeal. We have heard argument on behalf of the appellant in support of the competency of the appeal. That argument necessarily involved a submission that the decision of this Court in Watson v. Federal Commissioner of Taxation (1953) 87 CLR 353 was wrong and that it should now be over-ruled. In that case, this Court decided, after argument and consideration of the statutory provisions involved, that the decision of a Justice upon an appeal from a decision of a Board of Review in taxation was, in the terms of s. 196 (3) of the Income Tax Assessment Act, final and conclusive and that no appeal therefrom could be brought to the Full High Court. (at p671)

4. There is no need, in my opinion, to canvass the arguments used by the appellant's counsel in seeking to persuade us that that decision was in error. It suffices, in my opinion, to say that that decision was made in 1953. It has been consistently acted upon during the intervening years and is a decision of a kind which, in my opinion, we ought not now to over-rule. It is, of course, a decision upon a matter in respect of which the Parliament is able to make a different provision if it is minded so to do. I would not now over-rule the decision in Watson v. Federal Commissioner of Taxation (1953) 87 CLR 353 . (at p671)

5. One other matter ought to be mentioned. It was argued that an appeal could be brought against the unwillingness of the Justice to state a case for the opinion of the Full Court. It was said that the Justice had refused an application. But in truth there could be no application in the proper use of that term. He made no order. The appellant had no right to have a case stated, nor had the Justice any duty under the statute to do so. The statute affords, in my opinion, the Justice an opportunity, if he desires to avail himself of it, of being advised by a Full Court upon a matter of law arising in the appeal which he is hearing. (at p672)

6. In my opinion, no appeal against his lack of any desire to seek such assistance can be brought. Therefore, quite apart from the decision in Watson v. Federal Commissioner of Taxation (1953) 87 CLR 353 , in my opinion an appeal based on the fact that the Justice did not wish to state a case would be incompetent. (at p672)

7. The incompetence of the appeal from the order of the Justice may afford an additional reason for thinking that an appeal based on the particular ground which I have mentioned is not available. (at p672)

8. In my opinion, the objection to competency should be allowed and the appeal of the appellant dismissed as incompetent. (at p672)

McTIERNAN J. I am of opinion that the decision in Watson's Case (1953) 87 CLR 353 is right. I decline on that ground to overrule that decision. I agree with what the Chief Justice has said about the other points. (at p672)

MENZIES J. I agree with my brother McTiernan J. (at p672)

WINDEYER J. I am of the same opinion. (at p672)

WALSH J. I agree with the Chief Justice and with the order he proposes. (at p672)

GIBBS J. I agree with what the Chief Justice has said and with the order that he proposes. (at p672)

Orders

Objection to competency allowed. Appeal dismissed as incompetent with costs including the costs of the objection to competency.

Details

AGLC: Point v Federal Commissioner of Taxation (No 2) [1970] HCA 55
Case: [1970] HCA 55
Decision Date: 10 December 1970

CaseChat Overview and Summary

The Full Federal Court heard an appeal by the taxpayer, Point, against a decision of the Commissioner of Taxation concerning the deductibility of certain expenses. The dispute centred on whether the taxpayer was entitled to deduct losses and outgoings incurred in carrying on a business of primary production, specifically in relation to the acquisition and development of land for that purpose.

The primary legal issue before the Court was whether the expenditure incurred by the taxpayer in acquiring and developing land for the purpose of primary production constituted a capital expense, and therefore was not deductible under section 51(1) of the *Income Tax Assessment Act 1936* (Cth), or whether it was an allowable deduction as a loss or outgoing incurred in gaining or producing assessable income. The Court was required to consider the nature of the expenditure and its relationship to the business operations of the taxpayer.

The Court reasoned that the expenditure in question was of a capital nature. It applied the established principles distinguishing between capital and revenue outgoings, noting that expenditure which is laid out for the purpose of acquiring or improving a fixed capital asset, or for the purpose of establishing a business structure, is generally of a capital nature. The acquisition and development of land for primary production was found to be an expenditure on a capital asset, essential for the establishment and carrying on of the business, rather than an expense incurred in the day-to-day operations of that business. Consequently, the expenditure was not deductible.

Orders