Aylmer (Inspector of Taxes) v Mahaffy
| Jurisdiction | Northern Ireland |
| Judgment Date | 01 January 1925 |
| Date | 01 January 1925 |
| Court | Court of Appeal (Northern Ireland) |
Guarantee of customer's loan - "Assessment - Deduction - Money wholly and exclusively laid out for the purposes of the trade" - Res judicata - Income Tax Act, 1918 (8 9 Geo. V., c. 40), Sched. D, 3 (a), Cases I. II. and s. 196.
The respondent, a commission agent, was promised large orders by one of his customers if he would guarantee up to £1,000, the customer's loan from his bankers. The respondent did guarantee the loan, the customer failed, and the respondent was obliged to pay the sum of £1,000 to the bank under his guarantee. The respondent claimed to deduct this sum of £1,000 in computing the profits for the year ending 31st March, 1921, as "money wholly and exclusively laid out or expended for the purposes of the trade." The Commissioners for the Special Purposes of the Income Tax Acts on an appeal from an assessment decided that the £1,000 was not a proper deduction. The respondent appealed to the Recorder of Belfast, who reversed this decision and allowed the respondent the deduction claimed. The question came again before the Special Commissioners by way of an appeal from an assessment for 1922-23. The Special Commissioners who heard the appeal held that the Recorder's decision on the 1921-22 appeal did not prevent the question from being raised in connection with the appeal against the assessment for 1922-23, and while ruling that the £1,000 was not an allowable...
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