Patrick Monahan (Drogheda) Ltd v O'Connell D C (Inspector of Taxes)

• Jurisdiction: Ireland
• Judge: MR JUSTICE FRANCIS MURPHY
• Judgment Date: 15 May 1987
• Neutral Citation: 1987 WJSC-HC 1037
• Court: High Court
• Date: 15 May 1987

1987 WJSC-HC 1037

THE HIGH COURT

No. 2317R/1986

PATRICK MONAHAN (DROGHEDA) LTD v. O'CONNELL D C (INSPECTOR OF TAXES)

PATRICK MONAHAN (DROGHEDA) LIMITED

APPELLANT

and

INSPECTOR OF TAXES (D.C. O'CONNELL)

RESPONDENT

Citations:

INCOME TAX ACT 1967 S255

CORPORATION TAX ACT 1976 S146

INCOME TAX ACT 1967 S254

INCOME TAX ACT 1967 S255(1)(b)

PANAMA NEW ZEALAND & AUSTRALIAN ROYAL MAIL CO, IN RE 5 CH APP 318

BAYTRUST HOLDINGS LTD V INLAND REVENUE COMMRS 1971 1 WLR 1333

FINANCE ACT 1965 S31

INCOME TAX ACT 1967 S429

Synopsis:

REVENUE

Corporation tax

Trade - Profits or gains - Assessment - Deduction - Industrial building allowance - Allowance permitted where capital expenditure has been incurred by taxpayer on the construction of an "industrial building or structure" occupied for the purposes of a trade carried on by the taxpayer - Statutory definition of quoted term - Term to mean a building or structure in use for the purposes of (inter alia) a "dock undertaking" - The appellant company claimed the allowance in respect of capital expenditure incurred by the company in the construction of transit sheds at Steampacket Quay, Drogheda - The conduct of the company's business included the use of a dock - The company had built transit sheds a short distance from the dockside - The sheds were used for the storage of bonded goods, which had been unloaded by the company from ships at the dockside, until the goods had been cleared by customs officers and collected by the consignees - The clearance of bonded goods was normally completed within three days and the company made no charge for the storage of bonded goods in the transit sheds - Held that the word "undertaking" in s.255(1)(b) of the Act 1967 denoted the entire business or enterprise undertaken by the company - Held that the business of the company was a dock undertaking within the meaning of that sub-section - Held that the company's dock undertaking did not cease when goods had been landed at the dockside, and before they had been transported to the transit sheds - Held that the retention of unloaded and bonded goods in the transit sheds for a short period without charge in order to facilitate compliance with customs regulations did not constitute the separate business of a warehouseman but was ancillary to the company's dock undertaking - Held that the company was entitled to the allowance authorised by s.254 of the Act of 1967 - Case stated by Circuit Court - Income Tax Act, 1967, ss.254, 255 - Corporation Tax Act, 1976, ss.11, 146 - (1986/2317 R - Murphy J. - 15/5/87)

|Patrick Monahan (Drogheda) Ltd. v. O'Connell|

WORDS AND PHRASES

"Undertaking"

Corporation tax - Trade - Profits or gains - Assessment - Deduction - Industrial building allowance - Allowance authorised in relation to capital expenditure incurred in the construction of transit sheds in use for the purpose of a dock undertaking - Held that the word denoted the entire business or enterprise undertaken by the taxpayer - ~See~ Revenue, corporation tax - (1986/2317 R - Murphy J. - 15/5/87)

|Patrick Monahan (Drogheda) Ltd. v. O'Connell|

1 DELIVERED BY THE HONOURABLE MR JUSTICE FRANCIS MURPHY ON 15TH MAY 1987

2 This matter comes before me by way of Case Stated by the learned President of the Circuit Court pursuant to section 429 of the Income Tax Act 1967and section 146 of the Corporation Tax Act 1976.

3 In paragraph 2 of the Case Stated the learned president sets out the question which was originally posed for determination by him and which he in turn has submitted for consideration by this Court. That question is whether capital expenditure in certain amounts incurred during defined periods in respect of the erection of transit sheds at Steampacket Quay, Drogheda, was capital expenditure incurred in the provision of buildings or structures which were in use for the purposes of a dock undertaking within the meaning of section 255 of the Income Tax Act 1967.

4 In paragraph 3 of the Case Stated the learned President sets out the facts which were proved or admitted at the hearing before him. In subparagraph (a) of paragraph 3 there is set out the business of the taxpayer under a variety of titles or descriptions which include shipping agents, stevedores, customs clearance agents, forwarding agents and coal importers.

5 Subparagraph (c) sets out the material fact that between the years 1978 and 1982 the Appellant taxpayer erected three transit sheds at Steampacket Quay, Drogheda, but it is in subparagraphs (d) to (g) inclusive that the actual activities of the taxpayer are set out in detail. I propose to refer to all the facts contained in subparagraphs (d), (e), (f) and (g). These facts are as follows:

6 a "(d) The Appellant is responsible for the physical discharge of cargo when a ship docks at the Port of Drogheda. The Appellant is the owner of a crane, and cargo from a ship is unloaded either over the side of a ship with a crane by dockers employed by the Appellant, who place the cargo on a crane hook by means of which it is lifted from the hold of a ship and put on the Quay. The Appellant pays the dockers and the pilotage. When the goods are unloaded onto the Quay, a forklift truck is used by the Appellant to place them in one of the transit sheds which are situate on the far side of the Quay. In the case of certain more modern ship the sides of which can be lowered, the cargo is unloaded directly from the ship by means of forklift trucks which are driven onto the ship and remove cargo to the said transit shed. It is in this latter way that much of the newsprint imported by the Appellant on behalf of customers is unloaded and...