Federal Commissioner of Taxation v Thorogood

40 CLR 454
1929 - 0916B - HCA

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(Judgment by: Higgins J)

Federal Commissioner of Taxation
v Thorogood

Court:

Judges: Isaacs ACJ

Higgins JStarke J

Subject References:
Taxation and revenue
Income tax
Sales during year of assessment
Payments by installments over several years
Income "derived"

Legislative References:
Income Tax Assessment Act 1922 (Cth) No 37 - ss 4; ss 13; ss 16(a); ss 19; ss 25; ss 51

Hearing date: PERTH 9 September 1927; 12 September 1927; 16 September 1927;
Judgment date: 16 September 1927

Perth

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Judgment by:
Higgins J

HIGGINS J. I regret that I do not see any way to give any opinion on this (so-called) "appeal" from the Board of Review. The Justices of this Court have not yet made rules, under s. 53 (2), for regulating the practice and procedure as to appeals; but in the meantime the Commissioner has the statutory right to appeal under s. 51 (6), provided that the essential conditions of justice be satisfied as to the appeal. The difficulty is that in the papers submitted to us there are neither facts stated nor evidence. We are favoured with arguments of the parties, in vacuo, and we are apparently expected to infer from the character of the arguments pro and con what facts are assumed to be admitted. The Act does not enable us to deal with a hypothetical case; and yet a hypothetical case would be far less objectionable than the present. It would, of course, be absurd to treat this objection as "technical": it goes to the very root of judicial duty. For instance, we have not been allowed to see even the books or accounts kept by the taxpayer; although the Board of Review saw the books and relied on them for its decision. Any decision given by this Court has to be treated as a guide for the Commissioner and his deputies and officers, and for taxpayers; but in order that it may be an effective guide the precise facts to which the decision relates must be established clearly; and we are not told the facts or given the opportunity to find the facts for ourselves. The necessity for the facts is all the more imperious because of the view taken by the majority of the Court in Burke's Case ^[F8] and in Perrott's Case ^[F9] . Burke's Case was under a Queensland Income Tax Act, and it is not necessarily an authority under this Commonwealth Act; but it was there held that, because the taxpayer had, for the purpose of his business, treated the net profit shown in the account of his land-jobbing business as earned and derived in the year of the sales, although the instalments were payable in a series of years, the Commissioner was quite justified in treating it in the same fashion. The taxpayer had dealt with the profits as a divisible profit of the year of sale, and that was enough. Personally, I came to the same conclusion on the interpretation of the Queensland Act; but I did not feel myself justified in basing my opinion on the mere form of the accounts furnished by the taxpayer. In deference to the view of my colleagues, however, I must now give more effect to the taxpayer's mode of book-keeping than I should have thought proper; and yet I do not know in this case what the mode of book-keeping is. I should be glad to apply my mind to the facts as proved or admitted, or even as assumed, and to consider in particular the effect of ss. 19, 25 (g), 4; but I have not the materials. If hereafter the decision in this case be referred to as an authority, no one can point with confidence to the facts to which the decision was applied; and, holding the view which I have stated, I must decline the responsibility of giving an opinion.

Perhaps I should add that it is very doubtful whether the Board has not exceeded its power in making such an abstract declaration as it has made under the objection taken to the assessment (s. 51 (2)).