Dreyfus Foundation Inc. v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | Lord Morton of Henryton,Lord Porter,Lord Normand,Lord Keith of Avonholm,Lord Somervell of Harrow |
| Judgment Date | 28 July 1955 |
| Judgment citation (vLex) | [1955] UKHL J0728-1 |
| Date | 28 July 1955 |
| Court | House of Lords |
[1955] UKHL J0728-1
House of Lords
Lord Morton of Henryton
Lord Porter
Lord Normand
Lord Keith of Avonholm
Lord Somervell of Harrow
Upon Report from the Appellate Committee, to whom was referred the Cause Camille and Henry Dreyfus Foundation Inc. against Commissioners of Inland Revenue, that the Committee had heard Counsel, as well on Tuesday the 5th, as on Wednesday the 6th, days of this instant July, upon the Petition and Appeal of The Camille and Henry Dreyfus Foundation Inc. of 180 Madison Avenue, New York, United States of America, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 3d of June 1954, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of the Commissioners of Inland Revenue, lodged in answer to the said Appeal; and Counsel appearing for the Respondents, but not being called upon; and due consideration being had this day of what was offered for the said Appellants:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, on the 3d day of June 1954, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
The Appellant Foundation was incorporated under the Membership Corporation Law of the State of New York in the United States of America. In the years 1946-47 to 1950-51 inclusive the Foundation received substantial royalties from British Celanese Limited. It is not in doubt that the Foundation is liable to pay income tax on these royalties under Schedule D unless it can establish that it is entitled to exemption under the provisions of section 37 of the Income Tax Act, 1918.
"37.—(1) Exemption shall be granted—
(a) from tax under Schedule A in respect of the rents and profits of any lands, tenements, hereditaments, or heritages belonging to any hospital, public school or almshouse, or vested in trustees for charitable purposes, so far as the same are applied to charitable purposes only:
Provided that any assessment upon the respective properties shall not be vacated or altered, but shall be in force and levied, notwithstanding the allowance of any such exemption;
(b) from tax under Schedule C in respect of any interest, annuities, dividends or shares of annuities, and from tax under Schedule D, in respect of any yearly interest or other annual payment forming part of the income of any body of persons or trust established for charitable purposes only, or which, according to the rules or regulations established by Act of Parliament, charter, decree, deed or trust, or will, are applicable to charitable purposes only, and so far as the same are applied to charitable purposes only;
(c) from tax under Schedule C in respect of any interest, annuities, dividends or shares of annuities, in the names of trustees applicable solely towards the repairs of any cathedral, college, church or chapel, or any building used solely for the purpose of divine worship, and so far as the same are applied to those purposes."
The Foundation claims that it is a "body of persons … established for charitable purposes only" and therefore comes exactly within the words of subsection (1) (b) of section 37. It is not in dispute that the Foundation is "established" in the United States of America, and the first question which arises for decision is whether (as the Foundation contends) the words just quoted cover a body of persons or trust "established for charitable purposes only" in any part of the world, or are limited (as the Crown contends) to a body of persons or trust established for the like purposes in the United Kingdom. If the former view is correct, a further question will arise, viz. whether the objects of the Foundation, as expressed in its Certificate of Incorporation, are exclusively charitable purposes. It has rightly been conceded on behalf of the Foundation that this question has to be decided according to the law of England.
The first question was considered by Lawrence, J. (as he then was) in the case ofCommissioners of Inland Revenue v. Gull 21 T.C. p. 374. That learned Judge felt himself constrained, by reason of the terms of certain later enactments, to hold that the exemption afforded by section 37 (1) (b) "applies only to the income of bodies or trusts established in the United Kingdom", although he decided in favour of the taxpayer on the ground that the trust there in question was in fact established in the United Kingdom. The later enactments which so constrained the learned Judge are referred to by Jenkins, L.J., in his judgment in the present case, in terms which I gratefully adopt—
"The consideration which Mr. Justice Lawrence regarded as constraining him to construe Section 37 as he did was the legislative interpretation placed on Section 37 by Section 21 of the Finance Act, 1923, which...
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