O'Laochdha (Insp. of Taxes) v Johnson and Johnson (Ireland) Ltd

• Jurisdiction: Ireland
• Judgment Date: 06 November 1991
• Docket Number: [1991 No. 382R]
• Date: 06 November 1991
• Court: High Court

High Court

[1991 No. 382R]

Ó Laochdha (Insp. of Taxes) v. Johnson and Johnson (Ireland) Ltd.

D. Ó Laochdha ó laochdha (Inspector of Taxes)

Appellant

and

Johnson and Johnson (Ireland) Ltd.

Respondent

Cases mentioned in this report:—

Charles McCann Ltd. v. Ó Culacháin ó culacháin [1986] I.R. 196.

Cronin v. Strand Dairy Ltd. (Unreported, High Court, Murphy J., 18th December, 1985).

Irish Agricultural Machinery Ltd. v. Ó Culacháin ó culacháin [1990] 1 I.R. 535.

Revenue - Corporation tax - Manufacturing relief - Production of cleaning cloths and nappy liners from bale of fabric - No change in quality of material - Whether a manufacturing process - Finance Act, 1980 (No. 14), Part VI, s. 42.

Case Stated.

The case stated was signed by the Appeal Commissioner, Mr. Patrick Russell, on 15th March, 1991, pursuant to s. 428 of the Income Tax Act, 1967, as applied to corporation tax by s. 146 of the Corporation Tax Act, 1976.

Following an appeal hearing on the 12th and 26th September, 1988, from an assessment to corporation tax made by the appellant inspector of taxes for the accounting periods ending the 31st December, 1985, and the 31st December, 1986, the Appeal Commissioner held that the respondent was eligible for relief.

The question of law for the opinion of the High Court was whether the Appeal Commissioner was entitled on the evidence to hold that the process was a"manufacturing process" under Part VI of the Finance Act, 1980, thus entitling the respondent to relief under s. 42 of the Act of 1980.

The facts and statutory provisions are summarised in the headnote and are set out in the judgment of Carroll J., post.

The case stated was heard by the High Court (Carroll J.) on the 1st November, 1991.

Part VI of the Finance Act, 1980 (as amended), provides for relief from corporation tax payable by a company on the sale of goods manufactured within the State. Section 42 of the Act of 1980 provides for relief from corporation lax from profits derived from the sale by export of goods manufactured within the State.

The respondent's business consisted, inter alia, of the manufacture of nappy liners and "J. Cloths" (a type of domestic cleaning cloth). The production of these was achieved by placing huge bales of fabric into a sophisticated and expensive machine which rapidly cut, folded, and (in the case of J. Cloths) packaged the processed fabric. Employees of the respondent company required special training to operate the machine. Though the process did not alter the quality of the material, it changed...