| 22/8/2008 |
Bil-Malti
HOME
SERVICES
HELP
SEARCH
|
| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 36 |
Decided on 28 May 1962 |
   |
|
Expenses Incurred On A Court Case Instituted To Resist The Registration By A Rival Firm Of A Trade Name Connected With Goods Formerly Sold By Appellant Were Not Deductible As They Had Not Been Incurred In The Production Of The Income,Then Limited To Royalties
|
The taxpayer was a long established company which formerly traded in goods having an internationally known brand name. During war time, the company's trade on Malta was wound up, but it received royalties from branches/subsidiaries in Africa trading in the same goods.
A rival firm attempted to register the same brand name under the Industrial Property (Protection) Ordinance. In resisting this attempt, the taxpayer incurred legal costs which it wanted to set off against the royalty income. The Board of Special Commissioners granted the deduction, relying heavily on U.K. case law concerned with the deductibility of expenses incurred "for the purposes of the trade".
The Court of Appeal over-ruled the Board, pointing out that deductions under the Maltese Income Tax Act were limited to expenses incurred "in the production of the income". In the present instance, the taxpayer's only income were royalties from Africa and these were in no way connected with the court action concerning the registration of a rival trade-name in Malta. The said royalty income in no way depended for its production on the relative judicial expenses.
BSC Case No: 7/60
|
|
|
|
|