Re P McElligott Sons Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice McWilliam |
| Judgment Date | 01 January 1985 |
| Neutral Citation | 1984 WJSC-HC 2493 |
| Court | High Court |
| Docket Number | 1983 No. 563 S.S. |
| Date | 01 January 1985 |
1984 WJSC-HC 2493
THE HIGH COURT
Subject Headings:
HIGH COURT: jurisdiction
REVENUE: income tax
Judgment of Mr. Justice McWilliamdelivered on the 3rd day of July, 1984.
R.P. McElligott & Sons, Limited, (hereinafter called the Company) being dissatisfied with the refusal by the Circuit Court Judge for the South-Western Circuit of relief under section 31 of the Finance Act, 1975, by way of deduction from its trading profits for the purposes of income tax of the increase in stock values during the relevant accounting period, requested the Circuit Court Judge to state this case for the decision of the High Court.
The question of law submitted is whether the Circuit Court Judge was right in refusing relief under section 31 of the 1975 Act.
Subsection (1) of that section, in so far as is relevant to this proceeding provides that, in the section, "trade" means a trade which consists wholly or mainly of any of the following classes ofoperation:-
(a) the manufacture of goods,
(c) farming, or
(d) the sale of machinery or plant or goods to a person engaged in a trade consisting wholly or mainly of trading operations of a class specified in paragraphs (a), (b) or (c) for usefor the purpose of that trade.
Subsection (2) of the same section provides for certain tax reliefs for tax purposes by way of deductions in the computation of trading profits. No arguments were advanced by reference to the remaining subsections (3) to (6) as enacted by the 1975 Act or to sections ( 7) or (8) inserted by section 26 of the Finance Act, 1976, and I have not considered these provisions which appear to be very largely concerned with administration and the calculation of the amount of relief where relief is allowed.
The arguments were mainly concerned with the interpretation and application of subsection (9) added to the same section by section 43 and the First Schedule of the Finance Act, 1977. This subsection is as follows:- "(9) Where in any accounting period which ends on or after the 6th day of April, 1973, a company carries on a trade which consists partly of trading operations of any of the classes mentioned in the definition of "trade" in subsection (1) (hereinafter referred to as "qualifying tradeoperations") and partly other trading operations, the company shall be regarded as carrying on a trade which consists wholly or mainly of qualifying trading operations if, but only if, the total amount receivable by the company from sales made in the course of the qualifying trading operations in the accounting periodis not less that 75 per cent of the total amount receivable by the company from all sales made in the course of its trade in the accountingperiod."
As found by the Circuit Court Judge, the Company carries on the businesses of Millers, Provisions, Farm Fertilisers, Feed, Grain, Corn, Hardware Goods, Furniture, Furnishings, Fancy Goods, Toys and China, Wholesale Grocery, Publicans. It was contended on behalf of the Company that these activities comprised six groups, that is to say:-
1. Millers, Fertilisers, Grinding Corn and Animal Feed Sales;
2. Hardware;
3. Furniture;
4. Fancy Goods, Toys, China;
5. Wholesale Grocery;
6. Public House.
I am not sure whether the Circuit Court Judge intended to differentiate between provisions and wholesale grocery or not but it seems to be reasonable for the Company to include them together.
Each of the foregoing activities is located in separate places with separate entrances. Separate accounts are prepared for each activity and inter-departmental sales are invoiced from onedepartment to another. The milling and fertiliser business is carried on in a separate building and the furniture business is also carried on in a separate building.
Of these various activities, the first, that of millers, etc., and the second, that of hardware, would, if taken on their own, each qualify for relief as having more than 75 per cent. of such trade in respect of trading operations within the classes mentioned in the definition of "trade" in subsection (1) of section 31. If all the activities of the Company are taken together, the Company would not qualify for any relief.
The Company's business was described as that of "general merchants" in previous assessments and no objection was taken to this description by the Company which submitted a combined set of accounts under this heading in each year. The Company made no claim for relief under section 31 until after the passing of the Act of 1977.
There is no finding in the case stated as to the nature of the hardware business other than that it would have qualified for relief by reason of having 90 per cent of qualifying trading operations if taken on itsown.
The Circuit Court Judge stated that he did not agree that the Company was entitled to segregate the sales figures for eachdepartment of the business and that it appeared to him with regard to the wording of subsection (9) of section 31 that, in law, he was entitled to regard the Company as...
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