The Great Southern Railways Co v The Revenue Commissioners
| Judge | Sullivan P,Hanna J and O’Byrne J. |
| Judgment Date | 13 March 1930 |
| Court | High Court |
Assessments for the three accounting periods to 31 December 1924, having been made in respect of the profits of the owning company, the appellant company, as its successor contended that that company was within the exemption in FA 1920 s 52(2)(i), as being a company which carried on a railway undertaking and which was precluded by an Act from charging a higher price than authorised by the Act.
The Special Commissioners decided that the owning company was not carrying on a railway undertaking during the accounting periods in question, being of opinion that the carrying on of the original undertaking had passed entirely into the hands of the (then) working company.
Held, in the High Court, dismissing the appeal, with costs, that the decision of the Special Commissioners was correct.
FA 1920 s 52(2)(i).
Commissioners of Inland Revenue v The Edinburgh and Bathgate Railway Co 12 TC 895, [1926] Sess Cas 862.
Commissioners of Inland Revenue v The Dublin and Kingstown Railway Co [1930] IR 317, 1 ITC 131.
Commissioners of Inland Revenue v The Edinburgh and Bathgate Railway Co 12 TC 895, [1926] Sess Cas 862.
Egyptian Hotels Ltd v Mitchell 6 TC 542, CA [1914] 3 KB 118, [1915] AC 1022.
Case stated under FA 1920 s 56(6), and ITA 1918 s 149, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the High Court of Justice
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 28 March 1927, at Dublin, for the purpose of hearing appeals, the Great Southern Railways Co (hereinafter called “the appellant company”) appealed against assessments to corporation profits tax upon the Dublin and Kingstown Railway Co (hereinafter called “the owning company”) as follows:
Net amount of profits accounting periods (after deduction of the whole or proportionate part of £500 allowance |
Assessments |
|
|---|---|---|
£ |
£ |
|
1 March, 1922 to 28 February 1923. |
29,383 |
1,469 3 0 |
1 March, 1923 to 29 February 1924. |
29,335 |
1,466 15 0 |
1 March, 1924, to 31 December 1924. |
24,415 |
1,220 15 0 |
made upon the owning company under the provisions of FA 1920 Pt V, in respect of profits which arose in the accounting periods abovementioned (hereinafter referred to as “the accounting periods”).
2. The High Court of Justice decided upon an appeal from a determination of the Special Commissioners relating to earlier accounting periods that the owning company was carrying on a trade or business, or undertaking of a similar character, including the holding of investments, within the meaning of s (2)(a) the holding of investments, within the meaning of FA 1920 s 52(2)(a), and was therefore liable for the payment of corporation profits tax in respect of the earlier accounting periods in question, vide the case of the Commissioners of Inland Revenue v The Dublin and Kingstown Railway Co [1930] IR 317, 1 ITC 131 in the High Court of Justice dated 17 May 1926. In that case the question whether the owning company was carrying on a railway undertaking was not raised or referred to.
It is now claimed by the appellant company that during the accounting periods the owning company was a company which carried on wholly in the UK, which means Great Britain and Ireland, Article 9(2) of Inland Revenue (Adaptation of Taxing Acts) Order, 1923, No 4 of 1923, a railway undertaking, and which by, or by virtue of, any Act was precluded either from charging any higher price, or from distributing any higher rate of dividend than that authorised by, or by virtue of, the Act, and that, accordingly under FA 1920 s 52(2)(i), FA 1920 Pt V does not apply to the profits of the owning company.
3. The following facts were admitted or proved:
The owning company was established and incorporated by an Act of Parliament passed in 1831, the first and second years of the reign of King William IV (C lxix) intituled
- An Act for making and maintaining a railroad from Westland Row in the City of Dublin to the Head of the Western Pier of the Royal Harbour of Kingstown in the County of Dublin, with branches to communicate therewith.
Section 1 of this Act provided that certain persons therein named and all other persons and bodies politic and corporate, who have subscribed or shall hereafter become subscribers to the said undertaking and their several respective successors, executors, administrators and assigns, shall be and they hereby are united into a company for making and maintaining the said railway and other works by this Act authorised, according to the provisions and restrictions hereinafter mentioned, and for that purpose shall be one body corporate, by the name and style of “The Dublin and Kingstown Railway Co”, and by that name shall have perpetual succession, and shall have a common seal, and by that name shall and may sue and be sued, and also shall have power and authority to purchase and hold lands and other hereditaments to them and their successors and assigns, for the use of the said undertaking, without incurring any of the penalties or forfeitures of the statutes of Mortmain, and also to sell and dispose of the said lands and hereditaments again in manner by this Act directed.
Section 120 to 137 of this Act contained provisions for the levying by the owning company of rates and tolls.
4. A small variation and extension of the said railroad in and around the Harbour of Kingstown were authorised by a further Act of Parliament passed in 1834, the fourth year of the reign of King William the Fourth (C xxvii) intituled
An Act for enabling the Dublin and Kingstown Railway Co to make an extension of their present line of railway and for altering and amending the Act for making the said railway.
Sections 29, 30 and 31 of this Act contained provisions for the levying by the owning company of rates and tolls.
5. By deed of agreement dated 23 March 1846, the owning company undertook to lease for a term of 35 years the Dublin and Kingstown Railway, and all works connected therewith and all their property and effect, including a railway with a single line only on the atmospheric principle, from Kingstown to Dalkey, constructed by the owning company upon a site which had been leased from the Kingstown Harbour Commissioners, to the Waterford, Wexford, Wicklow and Dublin Railway Co, when incorporated (hereinafter referred to as “the working company”) for a fixed yearly rent of £34,000 and an additional yearly rent contingent upon the gross income of the Dublin and Kingstown Railway.
6. A further agreement dated 24 June 1846, provided that if the working company should construct or join in constructing a line of railway from Bray through Dundrum to Dublin, arbitrators should, if required, ascertain whether and to what extent the owning company had been injured by diversion of traffic and that compensation should be settled accordingly.
7. By an Act of 1846 intituled “an Act for extending the line of the Dublin Kingstown Railway to the Bridge of Bray in the County of Dublin (hereinafter referred to as “the Extension to Bray Act”) (9 and 10 Vic c ccxiii) the owning company was empowered (a) to make an extension line from and out of the main line of the Dublin and Kingstown Railway at Kingstown to the Bridge of Bray, (b) to sell and transfer to the working company the said extension line, (c) to grant and from time to time renew to the working company a lease of the Dublin and Kingstown Railway, with all stations, etc, and the agreement dated 23 March 1846 and 24 June 1846, were declared as binding on the said companies as though the same were entered into under their respective corporate seals, after the passing of the said Act.
Section 27 to 32 of this Act contained provisions for the levying by the owning company of rates and tolls, and s 39 provided that nothing in this Act shall exempt the railway authorised to be made from any future revision and alteration under the authority of Parliament, of the maximum rates of fares and charges authorised by this Act.
8. By the Waterford, Wexford, Wicklow and Dublin Railway Act 1846 (9 and 10 Vic c ccviii) the working company was incorporated, was authorised to take over all powers in relation to the formation of the extension line from Kingstown to Bray, and was empowered to accept a lease of the Dublin and Kingstown Railway and all works connected therewith and all property and effect of the owning company, and the agreement dated 23 March 1846 and 24 June 1846, in reference to the said lease were rendered binding on the two companies.
9. By an Act of 1847 intituled “an Act to authorise certain alterations of the line of the Waterford, Wexford and Wicklow Railway and to amend the Act relating thereto” (10 & 11 Vic c lxi) the working company was, inter alia, authorised to alter part of its line of railway, and to make that portion of its line which lay between Kingstown and Wexford before the whole of its capital was subscribed.
10. By transfer deed dated 2 October 1847, the owning company transferred to the working company the powers contained in “the Extension to Bray Act” for the extension of the Dublin and Kingstown railway to the bridge of Bray.
11. By Articles of Agreement dated 2 October 1847, between the working company and the owning company, it was provided inter alia, that the working company should construct the Bray extension railway.
12. The provisions of the last-mentioned agreement were embodied in the Waterford, Wexford, Wicklow and Dublin Railway Amendment Act, 1848 (11 & 12 Vic c xxix), and made binding upon the owning and the working companies.
13. By the Dublin and Wicklow Act, 1851, (14 & 15 Vic c cviii) the name of the working company was changed to the Dublin and Wicklow Railway Co.
14. Disagreements having arisen between the owning company and the working company as to their respective rights, powers and liabilities under the foregoing deeds and Acts of Parliament, a deed of agreement dated 17 March 1854, was...
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