Torrens v Revenue Commissioners
| Jurisdiction | Ireland |
| Year | 1931 |
| Date | 1931 |
| Court | King's Bench Division (Ireland) |
NO. 903.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION- NORTHERN IRELAND).-
Income Tax - Promissory notes discounted by bank - Interest or discount - Income Tax Act, 1918 (8 & 9 Geo. V., c. 40), Section 36.
The Appellant financed purchases of properties by drawing promissory notes (of three months' currency) in favour of a firm of solicitors, who endorsed the notes and handed them to a bank which thereupon discounted them and credited the Appellant's account with their discounted value. When the note fell due, the bank debited the Appellant's account with the face value of the note. The bank gave the Appellant a certificate that, in the negotiation of bills and promissory notes, certain amounts were "charged to him", but declined to give him a certificate in relation to these amounts in the usual form applicable to interest charged on a bank overdraft.
The Appellant claimed repayment of Income Tax for the years 1929-30 and 1930-31, in respect of the discounts taken by the bank, i.e., the difference between the amounts debited and credited to his account, on the ground that they constituted "interest payable ".... on an advance from a bank" within the meaning of Section 36 of the Income Tax Act, 1918.
The claim was refused by the Commissioners of Inland Revenue and, on appeal, the Special Commissioners decided that the discounts charged by the bank did not constitute payment of interest within the meaning of Section 36.
Held, by Best L.J., that the Special Commissioners' decision was correct in law.
by Megaw J., that the claim for relief should be allowed.
The Court, being equally divided, did not make any order and, accordingly, the decision of the Special Commissioners stood
Stated under the Finance Act, 1925, Section 19 (3), and the Income Tax Act, 1918, Section 149, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the King's Bench Division of the High Court of Justice in Northern Ireland.
At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 25th October, 1932, David Torrens, hereinafter called "the Appellant", claimed repayment of Income Tax under the provisions of Section 36 of the Income Tax Act, 1918, by reason of the matters hereinafter set out, for the two years ending 5th April, 1930 and 1931, respectively.
1. Under the provisions of Section 19 of the Finance Act, 1925, the said claim was made to the Commissioners of Inland Revenue who refused the same. Notice of appeal to the Special Commissioners against this decision was duly given under the provisions of Sub-section (2) of the said Section.
2. The Appellant owns a considerable amount of real property. In order to finance further purchases of property, he has been in the habit of drawing various promissory notes in favour of Messrs. C. & J. Black, a firm of solicitors. On receipt of the said notes, Messrs. C. & J. Black endorse the same and hand them to the Provincial Bank of Ireland, Limited (hereinafter called "the "bank"). The bank thereupon discount the said notes and credit the Appellant's account with their discounted value. When a note falls due, i.e., three months after the date of drawing the same, the bank debits the Appellant's account with the face value of the note. Messrs. C. & J. Black guarantee part of the overdraft granted by the bank to the Appellant.
3. The difference between the amounts debited to the Appellant's bank account and the amounts credited, being the discounts taken by the bank, are claimed by the Appellant to be "interest "payable .... on an advance from a bank" within the meaning of Section 36 of the Income Tax Act, 1918. A certificate from the bank, dated 7th October, 1931, which is annexed to and forms part of this Case, shows the amounts charged to the Appellant for the two years in question and it is in respect of these sums that he claims repayment of Income Tax.
We were informed and accepted the evidence that the bank declined to give the Appellant a certificate relating to the discount charged in the usual form applicable to interest charged on a bank overdraft.
4. The Appellant contended that the sums of £345 6s.9d. and £208 9s. 10d. were interest payable on advances from a bank and that he was entitled to repayment of tax on the said sums under Section 36 of the Income Tax Act, 1918.
5. On behalf of the Respondents it was contended that the said sums of £345 6s. 9d. and £208 9s. 10d. were not interest paid by the Appellant on an advance from a bank for the years ending 5th April, 1930, and 5th April, 1931, respectively, and that he was not entitled, under Section 36 of the Income Tax Act, 1918, to repayment of tax on the said sums.
6. We, the Commissioners, held that the discounts charged by the bank in the above circumstances did not constitute payment of interest by the Appellant within the meaning of Section 36 of the Income Tax Act, 1918. We refused the claim.
7. The Appellant, immediately after the determination of the appeal, declared to us his dissatisfaction therewith as being erroneous in point of law and in due course required us to state a Case for the opinion of the High Court pursuant to the Finance...
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