| 22/8/2008 |
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| Board of Special Commissioners - Cases |
| Case No. 21/52 |
Decided: 19 May, 1953 |
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Profits arising from property - article 5(1)(f), now article 4(1)(e), Income Tax Act
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Appellant filed an objection on the grounds that a payment of Lm225 received from three new tenants were not taxable. These had been made in respect of fixtures that eventually were to revert to appellant. The three payments were non-recurring and of a capital nature. He also maintained that the payments were not a gain or profit as these were neither rent nor a premium.
The Board held that the payments may not have represented rents or premiums or royalties but they were certainly taxable under article 5(1)(f) which taxed "any other profits arising from property".
Owners do not have any right for compensation in respect of the benefits which tenants may have made to an estate. Therefore, the fact that the fixtures were to revert to appellant meant that appellant had benefited twice (through the rent and through the said payment). Appellant had not actually transferred any capital but merely exploited the situation to his maximum benefit on a change of tenancy,
The Board also held that the fact that the payment in question was non-recurring did not mean that it was not taxable.
Finally it was held that the payment could not be spread over the number of years for which the rent was being paid as: (1) it had not been proved that the payment was in the nature of rent; (2) appellant had not proved that the rent involved was being paid for any definite period of time on which the payments could be divided. The amount of Lm225 was taxable wholly in the year of receipt.
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