Commissioners of Inland, Revenue v Dublin and Kingstown Railway Company

• Jurisdiction: Ireland
• Judgment Date: 01 January 1930
• Date: 01 January 1930
• Court: High Court (Irish Free State)

Corporation profits tax - The Dublin and Kingston Railway Co was incorporated in 1831 to make and maintain a railway between Dublin and Kingston - railway lines leased to another company at an annual rent - all the property of owning company (except offices) passed to lessee company - whether collection of rents and dividends and distribution of profits thereout to shareholders constituted a trade or business - whether company has a corporate existence.

The company was incorporated by special Act of Parliament in 1831 to “make and maintain” a railway between Dublin and Kingstown, and in 1846 power was taken by another Act to extend the original line as far as Bray. By an agreement in March 1846, the respondent company undertook to lease to another company (when incorporated) their working line, and by an Act of that year the new company was incorporated and given power to take over the proposed extension of the respondent company’s railway to Bray and to accept a lease of the Kingstown line.

By later agreements and ratifying Acts of Parliament the original lease was modified as to its term of years and the rent varied, while in 1903 power to surrender to the owning company was taken by the working company but was not exercised.

The effect of the various modifying Acts was that all the powers and privileges in relation to the actual working of the leased line and all the property of the owning company (except their offices) passed to the working company during the continuance of the lease. The respondent company always retained powers to deal with its capital stock, borrowing and investment matters, and had considerable investment income in addition to the rent for its line.

On appeal against corporation profits tax assessments on the company the special commissioners differed as to whether the company was carrying on a trade or business or undertaking of a similar character, and discharged the assessments.

Held, on the matter being argued on a case stated in the High Court, judgment was given in favour of the revenue, with costs.

Legislation

FA 1920 s 52(2)(a), ITA 1967 s 53.

Cases referred to in judgment

South Behar Railway Co v Inland Revenue Commissioners 12 TC 657, [1925] AC 276.

City of Dublin Steam Packet Co 1 ITC, [1926] IR 436.

Case stated

Case stated under FA 1920 s 56(6) and ITA 1918 s 149, by the Commissioners for the special purposes of the Income Tax Acts, for the opinion of the King’s Bench Division of the High Court of Justice

At a meeting of the Commissioners for the special purposes of the Income Tax Acts, held on 19 December 1922, at Dublin, for the purpose of hearing appeals, the Dublin and Kingstown Railway Co (hereinafter called “the owning company”), appealed against assessments to corporation profits tax as follows:

Accounting period	Net amount of profits (after deduction of the whole or proportionate part of £500 allowance)	Assessments	Deduction under FA 1920 s 31	Amounts payable
Income tax
£	£	£	£
1 January 1920 to 29 February 1920	4,923	246 3 0	73 17 0	172 6 0
1 March 1920 to 28 February 1921	29,565	1,478 5 0	443 9 0	1,034 16 0
1 March 1921 to 28 March 1922	29,602	1,480 2 0	444 0 0	1,036 2 0

made upon the owning company under the provisions of FA 1920 Pt V, in respect of profits which arose in accounting periods ended after 31 December 1919.

I. The following facts were admitted or proved:

• (1) The owning company was established and incorporated by an Act of Parliament passed in the first and second years of the reign of King William the 4th (C LXIX) intituled “an Act for making and maintaining a railroad from Westland Row in the city of Dublin to the head of the western pier of the Royal Harbour of Kingstown in the city of Dublin, with branches to communicate therewith”.
• Section I of this Act provided that certain persons therein named “and all other persons and bodies politic and corporate, who have subscribed or shall hereafter become subscribers to the said undertaking, and their several and respective successors, executors, administrators, and assigns, shall be and they hereby are united into a company for making and maintaining the said railway and other works by this Act authorised according to the provisions and restrictions hereinafter mentioned, and for that purpose shall be one body corporate, by the name and style of “The Dublin and Kingstown Railway Co”, and by that name shall have perpetual succession, and shall have a common seal, and by that name shall and may sue and be sued, and also shall have power and authority to purchase and hold lands and other hereditaments to them and their successors and assigns, for the use of the said undertaking without incurring any of the penalties or forfeitures of the statutes of Mortmain and also to sell and dispose of the said land and hereditaments again in manner by this Act directed.
• (2) A variation and extension of the said railroad were authorised by a further Act of Parliament passed in the 4th year of the reign of King William the 4th (C XXVII) intituled “an Act for enabling the Dublin and Kingstown Railway Co to make an extension of their present line of railway, and for altering and amending the Act for making the said railway”.
• (3) By deed of agreement dated 23 March 1846, the owning company undertook to lease for a term of 35 years the Dublin and Kingstown railway (hereinafter referred to as “the railway”) and all works connected therewith and all their property and effects...