| 6/1/2009 |
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| Board of Special Commissioners - Cases |
| Case No. 29/61 |
Decided: 21 February, 1962 |
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Deduction allowed in respect of a payment which was made in terms of an agreement that was neither voluntary nor gratuitous - article 10, now 14, Income Tax Act
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Appellant inherited one of two adjoining buildings both of which had been furnished for leasing. The building, a block of flats, was leased while the adjoining one inherited by his mother was vacant. His mother felt that she had not been treated fairly. An agreement was reached whereby an annuity was to be paid to the mother irrespective of whether the house falling under the deceased aunt's estate was let or not.
Taxpayer claimed that the payments made to his mother should have been considered as deductible expenses. The Commissioner rejected the claim on the grounds that it was not necessary for appellant, a sole heir, to enter into an obligation towards his mother. The agreement was considered to be purely a gratuitous one and, therefore, the annuity was not deductible.
The Board ruled that, contrary to the Commissioner's assumption, it was necessary for the son to appease his mother. As a co-owner of the adjoining buildings the mother had the legal right to impede the sub-letting of part of the property and her son would have lost all his earnings. The agreement reached was not a voluntary or gratuitous one and, therefore, the payment was deductible.
An appeal was entered before the Court from this decision (see case no. 49).
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