| 29/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 18 |
Decided on 11 March 1957: |
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Disposition By Onerous, As Against Gratuitous, Title In Favour Of Children. Whether Resulting Income Was Still To Be Aggregated To The Disponing Parent's Income.
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The two cases concerned the same issue and case no 17 was withdrawn, so that the decision summarized below was given in case no 18.
The I.T.A. states that "where by virtue or in consequence of any disposition made during the life of the disponer, any income is payable to or for the benefit of a child...the income shall.....be treated for the purposes of this Act as the income of the disponer...and not as the income of the child". The Revenue contended that this provision applied to any disposition, irrespective of whether the disposition was onerous (i.e. made at a price) or gratuitous (i.e. freely). The taxpayer contended that only gratuitous dispositions fall under this provision, even though the word "disposition" was of wide impact.
Both the Board and the Court agreed that only gratuitous dispositions fell within these arrangements. U.K. law was basically identical with that of Malta, and there were clear indications both from text books and from case law that only gratuitous transfers were so dealt with. Debates in the Malta's House of Representatives also seemed to give the same indication.
The tribunals pointed out that the law covered income which, as a result of the disposition, had become payable for "the benefit" of the child. This immediately tied the applicability of the provision to cases where there was an element of bounty on behalf of the disponer, and income which resulted from an onerous transaction could not fall within this area. It was also pointed out that the specific provision formed part of a section of the law which attacked tax avoidance. In the other provisions made by this section, however, the idea of a benefit being granted to the recipient of the income was absent. All that was necessary, for the relative provisions to come into operation, was that certain transactions had been carried out, even if these were clearly by onerous disposition.
BSC Case No: 27/56
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