Revenue Commissioners v Sisters of Charity
| Jurisdiction | Ireland |
| Judge | Mr. Justice Geoghegan |
| Judgment Date | 11 February 1998 |
| Neutral Citation | [1998] IEHC 24 |
| Docket Number | [1997 No. 69R] |
| Court | High Court |
| Date | 11 February 1998 |
[1998] IEHC 24
THE HIGH COURT
BETWEEN
AND
Citations:
INCOME TAX ACT 1967 S430
INCOME TAX ACT 1967 S333
INCOME TAX ACT 1967 S334
INCOME TAX ACT 1918 S37
FINANCE ACT 1921
CAMILLE & HENRY DREYFUS FOUNDATION INC V COMMISSIONERS OF INLAND REVENUE 1955 36 TC 126
COMMISSIONERS OF INLAND REVENUE V GULL 21 TC 374
ORMOND INVESTMENT CO LTD V BETTS 13 TC 400
INCOME TAX ACT 1918 S37(1)(b)
Synopsis
Revenue
Income tax; exemption; body of persons established for charitable purpose; whether necessary for body to be established within State; whether body established within State; ss. 333 & 334 Income Tax Act, 1967 Held: Body must be established within State to benefit from exemption; body established within State( High Court; Geoghegan J. 11/02/1998)- [1998] 2 IR 553
Revenue Commissioners v. Sisters of Charity of the Incarnate Word
Mr. Justice Geoghegan delivered the 11th day of February, 1998
This is a case stated by his Honour Judge O'Higgins as a Judge of the Circuit Court (as he then was) pursuant to Section 430 of the Income Tax Act, 1967as amended. The case had come before the Circuit Court in Ennis, Co. Clare in the form of an appeal from a decision of the Appeal Commissioners upholding a decision of the Appellants refusing the Respondents a claim to exemption from Income Tax under Sections 333 and 334 of the Income Tax Act, 1967as amended on the grounds that it had not been proven to their satisfaction that the Sisters of the Incarnate Word - Carrigoran House Branch was established in the State, as the Appellants claimed, was required by Section 333 and 334 of the 1967 Act, it not being contested by the Appellants that the Respondents were established for charitable purposes only. As the learned Circuit Court Judge correctly discerned in the case stated, there was only one net question for determination before him and that was whether the Respondents were "established" within the meaning of the said Sections of the 1967 Act.
The Case stated sets out the following facts as having been either proved or admitted before the Circuit Court. These were:-
a "(a) The Congregation of the Sisters of Charity of the Incarnate Word hereinafter referred to as (C.C.V.I.) is a Pontificate Institute of the consecrated life of the Roman Catholic Church and was founded in 1866 and is registered in Galveston in the State of Texas in the United States of America. Essentially the Congregation is an Order of Catholic nuns who are spread throughout the world. The by-laws of the Congregation were proved before me and are annexed here and form part of this case stated. The Congregation has its headquarters in Houston, Texas and conducts its apostolic ministry primarily through civil law corporate structures known formally as:
(i) the C.C.V.I. (an acronym for its title in Latin "Congregatio Caritatis Verbi Incarnati") which was incorporated in 1975 as a Texas non profit federal income tax exempt corporation; its exclusive purpose as stated by its Articles of Incorporation is to carry out the religious, charitable and educational purposes of the Congregation;
(ii) the S.C.H., namely, the Sisters of Charity of the Incarnate Word which was Incorporated in 1910 under the name Sisters of Charity of the Incarnate Word of the diocese of Galveston; in 1966 its name was changed to Sisters of Charity of the Incarnate Word, Houston, Texas. This corporation is also a Texas non profit federal income tax exempt corporation.
(b) There is within the State an establishment known as Carrigoran House situated at Newmarket-on-Fergus in the Country of Clare which is an Old People's Home catering for approximately 150 patients. The home is run by the Respondents and was set up in 1972. It has 52 beds and a staff of 85, four of whom are members of the Order. The building is comparised of a large split-level two story building with a large cining room and chapel together with plenty of recreation areas, sun porches and a gift shop, library and lounges with televisions. There are sixty acres of landscape grounds with walks together with chalets for visitors.
(c) The Organisation in Ireland is run by a Board of Governors. The organisational matters are set out in the by-laws referred to above. The operation at Carrigoran is merely a branch of the S.C.H. referred to above. Audited accounts signed by an Administrator are submitted annually to Texas.
(d) The establishment of the Nursing Home was financed by a thirty year loan at 10% interest made by C.C.V.I. and S.C.H. in Houston in the sum of £800,000 which was secured on a mortage of the property in Carrigoran. In the first ten years, neither interest nor principal were payable, such that although the balance now outstanding is £1,600,000 it is unlikely that the loan will be paid off by the Respondents.
(e) The Operation at Newmarket-on-Fergus is subject to the Articles and by-law of the S.C.H. Houston. Directors can be nominated by either of the two bodies, C.C.V.I and S.C.H. and although they are in fact sent a list of directors for approval they can veto the appointment of any individual director.
(f) The entire operation in Newmarket-on-Fergus is a branch of the organisations in America. All major financial and property matters such as the construction of buildings and the sale of lands are subject to limitations and sanctions from America.
(g) Any action in relation to the philosophy of the branch requires Board approval from America in accordance with the underlining Catholic ethos of the Congregation and Board approval from America is also required in relation to its underlining financial stability. In essence, the Respondents are under the control and management of Houston although they look after their day to day administrations such as staffing levels, hospital regulations, etc. themselves. An Auditor's report to the Board of Directors of Sisters of Charity of the Incarnate Word, Houston, Texas is prepared annually by Ernst and Young on behalf of the Respondents and is then signed by the Administrator and submitted to Houston. Audited reports for the years 30th June, 1990, 30th June, 1991 and 30th June, 1992 were admitted in evidence before me and are annexed hereto and form part of this case stated. Sale of property requires permission from Rome because the Respondents are a canonical Congragation."
The Appellants contend that:-
1. Sections 333 and 334 of the Income Tax Act, 1967as amended apply to bodies or persons established for charitable purposes but only if they are established within the State.
2. That the charity in this case is not established within the State.
It is contended on behalf of the Respondents:-
1. That had the legislature intended to limit the provisions of the Sections to bodies or persons or charities as established within the State, it would have said so and that it is not justified to give the exemption provision in the Sections and confined interpretation contended for by the Appellants.
2. That at any rate even if the Appellants' interpretation is correct the...
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