BREATHNACH v McCANN

• Jurisdiction: Ireland
• Judge: Mr. Justice McWilliam
• Judgment Date: 03 October 1983
• Neutral Citation: 1984 WJSC-HC 66
• Docket Number: No. 758 A. R/1981,[1981 No. 758 R.]
• Court: High Court
• Date: 03 October 1983

1984 WJSC-HC 66

No. 758 A. R/1981

BREATHNACH v. McCANN

S. I. BREATHNACH (Inspector of Taxes)

-v-

THOMAS McCANN

Words & Phrases: Plant

Subject Headings:

PROFESSIONS: barrister

REVENUE: income tax

1 Judgment of Mr. Justice McWilliamdated the 3rd day of October 1983.

2 This appeal raises the question whether law reports and other legal textbooks purchased by the Taxpayer and used by him for the purposes of his profession as a barrister are "plant" within the meaning of section 241 of the Income Tax Act, 1967, (as substituted by the Corporation Tax Act, 1976) and section 26 of the Finance Act, 1971, so as to qualify for wear and tear allowances or initial allowances under the various provisions of the 1976 Act as amended. Figures have been agreed by the parties and I have not been asked to consider any other question as to the Taxpayer's qualification for allowances although it appears that some argument was addressed to the special commissioners as to the meaning of "wear and tear" in the context of books. No such argument has been advanced before me and I shall only consider the question I have referred to above.

3 Subsection (1) of section 241 of the 1976 Act (as amended by the Corporation Tax Act, 1976), provides that, where a person carrying on a trade in any chargeable period has incurred capital expenditure on the provision ofmachinery or plant for the purposes of the trade, an allowance shall be made to him for that chargeable period on account of the wear and tear of any of the machinery or plant which belongs to him and is in use for the purpose of the trade at the end of that chargeable period or its basis period. Subsection (10) of the same section provides that the preceding provisions of the section shall, with any necessary modifications, apply in relation to professions.

4 Similar provisions have been in operation for a long time and the first tax case to which I have been referred is that of Daphne -v-Shaw (1926/27) 11 Tax Cases 256. In that case it was held by Rowlatt, J., that the books of a lawyer, whether a barrister or a solicitor, could not be considered to be plant within the meaning of the statutes. This decision was accepted for about fifty years until its validity was questioned on behalf of a barrister in the case of Munby -v- Furlong (1977) 3 W.L.R. 270; (1977) Ch. 359. In this case, the Court of Appeal in England unanimously refused to follow the earlier decision of Rowlatt J., and held that the word "plant" covered books purchased by a barrister for the purposes of his profession.

5 One argument advanced on behalf of the Inspector of Taxes in the present case was that the case of Daphne -v- Shaw should carry more weight with this court than the case of Munby -v- Furlong on the ground that it hadbeen accepted here for so many years and that the case of Munby -v-Furlong is not binding on the courts in Ireland. Neither decision is binding on the Courts of this country and, in my view, the correct approach is to consider the reasoning on which the two decisions were based and try to decide which decision should be followed here. In so far as this argument was also based on a presumption that the Oireachtas, when enacting the statute of 1967, was aware of the decision in Daphne -v- Shaw and was endorsing it, I would refer to the observations of Henchy, J., in the case of Inspector of Taxes -v-Kiernan (1981) I.R. 117, in which he stated, at page 123, that any such principle is subject to considerable qualification. I would add that this statement should be given particular emphasis where the decision in question is one which is not binding on our Courts, and I am of opinion that the principle has no application to this case.

6 There is no definition of "plant" in any of the Income Tax Acts and the first definition to which I have been referred is that given by Lindley, L.J., in the case of Yarmouth -v- France (1887) 19 Q.B.D. 647. He said, at page 658, "There is no definition of "plant" in the Act: but, in its ordinary sense, it includes whatever apparatus is used by a business man for carrying on his business, - not his stock-in-trade which he makes or buys for sale; but all goods and chattels, fixed or moveable, live ordead,"which he keeps for permanent employment in his...