Granite Supply Association, Ltd, v Inland Revenue
| Jurisdiction | Scotland |
| Judgment Date | 07 November 1905 |
| Date | 07 November 1905 |
| Docket Number | No. 9. |
| Court | Court of Session |
Lord President, Lord Adam, Lord M'Laren, Lord Kinnear.
RevenueIncome-TaxProfitsDeductionExpensesRemoval to new premisesThe Income-Tax Act, 1842 (5 and 6 Vict. cap. 35), sec. 100, Schedule D, Case I., Rules 1 and 3.
A company, engaged in the buying and selling granite, found it necessary to transfer its business to a larger yard. Held that the expenses incurred in removing stones and cranes from the old yard to the new yard and in re-erecting the cranes in the new yard did not form a proper deduction in estimating the company's annual profits chargeable with income-tax.
The Granite Supply Association, Limited, carried on the business of buying and selling granite at Palmerston Road, Aberdeen, until Whitsunday 1903. It was found necessary to acquire a larger yard; and the Company, in January 1902, acquired a larger yard at Urquhart Road. Between January and Whitsunday 1903 the Company removed stones and cranes from the yard at Palmerston Road to the yard at Urquhart Road, re-erecting the cranes in the latter yard. A sum of 444, 19s. of expenditure, termed Flitting Expenses, appeared in the Company's accounts for the year ended 31st May 1903, which sum included the following items:
| (2) Feb. 28. | Mr Wisely, A/c carting to new yard, | 20 | 0 | 0 |
| (3) Mar. 28. | Mr Wisely, A/c carting to new yard. | 50 | 0 | 0 |
| (4) April 7. | J. M. Henderson & Co. taking down and re-erecting first crane,. | 27 | 12 | 0 |
| (5) May. | J. M. Henderson & Co. taking down and re-erecting second crane,. | 27 | 12 | 0 |
| (The cost of the concrete foundations for cranes is not included above, having been charged to Capital Account). |
The Company maintained that these expenses were incurred solely in the carrying on of its business, and were properly and necessarily deductible before the profits liable to income-tax under Schedule D could be ascertained.*
The Surveyor contended that the initial outlay in preparing the new yard for business, that was, the cost of transferring the stones from the old yard to the new yard and of the re-erection of cranes (being items (2), (3), (4), and (5) of the Flitting Expenses account) was not an allowable deduction, as it was not incurred in carrying on business but in preparing to carry on business.
The Commissioners disallowed the deduction of items Nos. (2), (3), (4), and (5) in the ascertainment of the Company's profits. The Association appealed upon a stated case.
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