| 17/5/2012 |
HOME
FSS
Downloads
|
| Board of Special Commissioners - Cases |
| Case No. 3/67 |
Decided: 13 May, 1967 |
   |
|
Annuity paid for the acquisition of a right to a source of income (even if paid in instalments) is capital in nature, therefore not deductible - article 10 and 11, now 14 and 26, Income Tax Act
|
Appellant's father had transferred his stevedore licence to his son against the payment of a weekly annuity. Appellant contended that such payment constituted an expense incurred in the production of income and was, therefore, deductible.
The Court of Appeal had held that in determining whether an expense is deductible or not, it must satisfy two tests: it must fall within the ambit of the article which grants a deduction and must not be prohibited under the provisions of the article which specifically denied the deduction of items of a capital nature. The annuity represented the price paid for the transfer of the licence that constituted the very source of appellant's income. The Board, citing Konstam, held that "Money paid for acquiring a business or business rights is not less capital expenditure if it is paid in a series of annual payments."
|
|
|
|
|