| 29/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case no: 79 |
Decided on 16 February 1971 |
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Profits Arising From Property Being A Sum Received By A Landlord To Grant Permission To His Tenant To Effect Structural Alterations
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A landlord gave permission to his tenant to open a door in a shop which he had rented to him, to join it up with the shop next door which the tenant had also taken on lease. The landlord received a sum of money for granting his permission, which he claimed was capital in character.
Both the Board of Special Commissioners and the Court of Appeal held that the amount received by the landlord was correctly taxable under the provision which brought to charge to tax 'rents, royalties, premiums and any other profits arising from property'. The sum in question was clearly of an income character, as the taxpayer had not lost or given away a part of his capital for its receipt. The same U.K. case law quoted by both parties to the appeal was more in the Revenue's favour, as it had dealt with compensation received for the sterilization of a capital asset. No such thing was happening in this case: the landlord still had what he owned before. There was no alienation of a part of his capital. The more so since the lease agreement had clearly stipulated that at the end of the term of the lease, the owner could request that the premises be reinstated in their original form.
BSC Case No: 26/69
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