Addie v Solicitor of Inland Revenue
| Jurisdiction | Scotland |
| Judgment Date | 16 February 1875 |
| Docket Number | No. 81. |
| Date | 16 February 1875 |
| Court | Court of Session (Inner House - First Division) |
Lord President, Lord Deas, Lord Ardmillan, Lord Mure.
Income-Tax5 and 6 Vict. c. 35, sec. 100, rule 3, and sec. 159.
Held that in computing profits for assessment of income-tax a tenant of minerals is not entitled to make deductions from the gross receipts of sums necessary to replace capital expended in sinking pits, or lost by depreciation of buildings and machinery, in respect that the Act expressly provides that in estimating the balance of profits and gains chargeable under schedule D, or for the purpose of assessing the duty thereon, no sum shall be set against or deducted fromsuch profits or gains on account of any sum employed or intended to be employed as capital in such trade.
This was a case for the opinion of the Court presented under 37 Vict. cap. 16, sec. 9, by Messrs Robert Addie and Son, coal and iron masters, Langloan, who were dissatisfied with the determination of the commissioners under the Property and Income-Tax Acts for the Middle Ward of Lanarkshire.
Messrs Addie had appealed to the commissioners against the assessment made on them under schedule D of the Act 5 and 6 Vict. chapter 35, entituled, An Act for granting her Majesty duties on profits arising from Property, Professions, Trades, and Offices, and subsequent Income-Tax Acts referring thereto, in respect of the profits arising from their business for the year preceding, in so far as the said assessment includes two sums of 5525, 19s. 9d. and 4435, being a percentage which they claimed to deduct for pit sinking and for depreciation of buildings and machinery respectively, and for which they maintained they were not assessable.
The appellants stated that they were tenants in several mineral fields on leases of thirty-one years, which were in various periods of currency. 1. Pits were sunk nearly every year and were only wrought for a short time, and the appellants were not recouped for the cost of them, except out of the gross annual returns. 2. When pits were wrought out the price obtainable for the machinery and buildings was only breaking-up value, and they were not recouped for the difference between that and the original cost except out of the gross annual returns.
The surveyor maintained that the deductions claimed were not allowed by the Act.*
The commissioners dismissed the appeal.
Lord President.The appellants, Messrs Addie and Sons, have been assessed under schedule D of the Income-Tax Act...
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HM Revenue and Customs v William Grant & Sons Distillers Ltd Small (HM Inspector of Taxes v Mars UK Ltd
...is by no means clear, this has always been taken to prohibit deductions for the depreciation of capital assets: see Robert Addie and Sons v Solicitor of Inland Revenue (1875) 2 R 431. Any sum which has been deducted for depreciation in the computation of profits must therefore be added back......
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HM Revenue and Customs v William Grant and Sons Distillers Ltd; Small (Inspector of Taxes) v Mars UK Ltd
... ... CM Campbell QC and Jane Paterson (instructed by the Solicitor for Revenue & Customs) for the Crown ... Colin Tyre QC and James Mure (instructed by McGrigor ... The following cases were referred to in the judgment: Addie v IR CommrsTAXUNK (1875) 1 TC 1; (1875) 2 R 431 Duple Motor Bodies Ltd v Ostime ... in stock carried forward and deducted from profits in year in which stock sold - Inland Revenue argued that in each year gross depreciation should be added back for tax purposes - ... ...