| 4/2/2012 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 25 |
Decided on 2 April 1959 |
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Questions Of Fact And Law. When Appeal Lies. Capital Allowances In Respect Of A Motor Vehicle
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The taxpayer was an employee who in practice had to make extensive use of his car in carrying out his duties, even though this was not an express condition of his terms of employment. The Revenue took the stance that the relative expenditure was not wholly and exclusively incurred in the production of the income and disallowed the deduction. The Board was satisfied that the appellant needed a car for the efficient carrying out of his duties. It was inconceivable that he should walk or use public transport when he had to visit continually a large number of places all over Malta, including his employer's premises. A deduction was therefore allowed both for running expenses and wear and tear.
On appeal by the Revenue, the Court held that whether expenses had been wholly and exclusively incurred in the production of the income was a point of fact and something for the Board to decide. Once there was no indication that the Board had not properly applied its mind to this matter, the appeal was rejected as regards the vehicle's running expenses. As regards capital allowances, the Court came to the conclusion that since allowances were only granted in respect of "plant and machinery", and since a car could not he held to fall under either term, no such allowances were due.
Note: the latter part of the decision was subsequently over-turned by the Court of Appeal, while there have been extensive legislative changes regarding motor vehicles and related expenses. Moreover, in the case of employment income, expenses must now be "necessarily" incurred in the production of the income.
BSC Case No: 24/58
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