J C Williamson's Tivoli Vaudeville Pty Ltd v Commissioner of Taxation
(1929) 42 CLR 452(1929) 36 ALR 14
(1929) 3 ALJ 276
(Judgment by: Starke J.)
J C Williamson's Tivoli Vaudeville Pty Ltd
v Commissioner of Taxation
Judges:
Knox CJ
Isaacs J
Rich J
Starke J
Judgment date: 7 November 1929
Judgment by:
Starke J.
This is a reference by a Board of Review to this court of certain questions of law arising upon the proviso to s 25 (i) of the "Income Tax Act 1922-25." That sub-section enacts that a deduction shall not be made in respect of any wastage or depreciation of lease or in respect of any loss occasioned by the expiration of any lease; but a proviso is added that --
Where it is proved to the satisfaction of the Commissioner that any taxpayer (being ... the assignee or transferee of any lease) has paid ... an amount for the assignment or transfer of a lease of premises used for the production of income the Commissioner may allow as a deduction for the purpose of arriving at the income the amount obtained by dividing the sum so paid by the number of years of the unexpired period of the lease at the date the amount was so paid ...
Upon its true interpretation, this section does not, I think, require that the payment should be in money: it is sufficient if money's worth be given. This view accords with the reasoning of St, C.J, upon a somewhat similar section in Simpson v Commissioner of Taxation, 26 State Reports (NSW) 437, which I adopt..
Turning to the facts, and omitting immaterial steps, we find that one Musgrove sold to the taxpayer certain sub-leases of Tivoli Theatres in consideration of (inter alia) £170,000, to be paid and satisfied by the allotment to the vendor of 170,000 fully paid-up shares in the Company of £1 each. The consideration for the sale was (inter alia) £170,000, and not fully paid shares: it was paid or satisfied in shares. If the transaction were one of business, and honest -- not colourable, unreal or illusory -- then the sum of £170,000 has been paid and satisfied by the issue of fully paid-up shares. Consequently the shares are or must be accepted as of that value unless the Commissioner can establish an unreal, illusory or colourable transaction -- see Pell's Case, 5 Ch 11; Re Baglan Hall, 5 Ch 346; Re Wragg Ltd, (1897) 1 Ch 796; Hong Kong Company v Glen, (1914) 1 Ch 527; The Crown v Bullfinch and Co Ltd ., 15 CLR 443 , 18 ALR 567 .
In my opinion the questions reserved should be answered as follow: -- 1. The amount of money of which the parties treated the shares as an equivalent, namely, £170,000, is the amount paid unless the transaction between the parties be fraudulent or unreal or colourable or illusory. 2. The transferability of the shares need not be demonstrated. The value of the shares is dealt with under Question 3. 3. Unless the transaction between the parties be fraudulent or unreal or colourable or illusory (which is a question for the Board to consider), the amount of money of which the parties treated the shares as an equivalent is the amount paid by the taxpayer.