Casey v Royal Cinemas (Limerick) Ltd

• Jurisdiction: Ireland
• Judgment Date: 31 July 1965
• Date: 31 July 1965
• Docket Number: (1960. No. 32.)
• Court: High Court

(H.C.)

Casey

and

Royal Cinemas (Limerick) Ltd

Action brought by building contractor against taxpayer - Action defended -Costs of defending action - Whether referable to profits or capital - Income Tax Act, 1918, Sch. D. Cas. 1 and 2, r. 3.

The promoter of the respondent company engaged M. & Co. to build a cinema. The building was completed on the 17th November, 1947. The company was registered on the 3rd January, 1948, and took over all the assets and liabilities of the promoter in relation to the business. The amount finally payable under the building contract was not agreed between the parties and ultimately M. & Co. commenced an action against the promoter, claiming £1,275 14s. 2d. The action was defended and judgment was given for £650 and costs in favour of M. & Co.The costs of defending this action were borne by the company, who claimed that the amount of the costs was an allowable deduction for income tax purposes from its profits for the relevant trading years. Held by Teevan J. 1, that the disbursement for costs was not made in earning profits, nor was it a trading loss; it was therefore not an allowable deduction; 2, the money expended on the costs was solely referable to the capital structure of the company and was therefore not an allowable deduction. Southern v. Borax Consolidated Ltd.ELR, [1941] 1 K.B. 311 distinguished. Davis v....