Kealy v O'Mara, Limerick, Ltd

• Jurisdiction: Ireland
• Judgment Date: 01 January 1943
• Date: 01 January 1943
• Court: High Court

(H.C.),

Kealy

and

O'Mara, Limerick

Ltd

- Trade profits - Deduction -Costs of promoting new company - Holding company formed to benefit shareholders in existing companies - Costs of promotion borne by existing companies - Whether an allowable deduction from profits - Whether "wholly and exclusively laid out . . . for the purposes of the trade" - Whether income or capital expenditure - Income Tax Act, 1918 (8 9 Geo. 5, c. 40), Sch. D., Rules applicable to Cases I and II, r. 3 (a).

The respondent company arranged with two other companies in the same trade for the promotion of a now holding company, all the shareholders in the three existing companies exchanging their shares therein for shares in the new company, which became in effect sole owner of all the shares in the three existing companies. The main objects of the arrangement were to equalise profits and losses between the shareholders in the several companies arising out of dealings with quotas under the Pigs and Bacon Acts, 1935 and 1937, and to reduce certain trading expenses. A sum of £945 4s. 1d., part of the expenses of forming the new company, was, by agreement, borne by the respondent company, who claimed to be allowed this sum as a deduction from their profits for the purposes of income tax for the financial year in question. The respondent's claim was disallowed by the Special Commissioners but, on appeal, was allowed by the circuit Court Judge, who stated a Case for determination by the High Court. The Case Stated contained no findings of fact on the questions in issue other than the general finding that this payment was a proper deduction; the Circuit Court Judge had retired from office...