(1.) The taxpayers were the owners of the upper part of a warehouse in Clerkenwell which was in the course of erection at the outbreak of war. In September, 1939, the building was not finished, but it was taken possession of by the Minister of Works under the Defence Regulations, and, accordingly, what is called a compensation rent became payable under the provisions of the Compensation (Defence) Act, 1939. The actual amount of the payment was arrived at by agreement, and fixed at Pound 4,940 per annum. The relevant section is Section 2 of that Act, which reads as follows : -
(2.) Then there are other provisions which are not material to this appeal. Having fixed the sum payable under Section 2(1)(a), which is called a compensation rent, at Pound 4,940 gross, the Inspector made the statutory deduction of one -sixth from that sum, leaving Pound 4,113 as the figure for tax purposes on which Schedule A tax would be payable. The taxpayers went on paying on that basis until April 5, 1945, and then the Inspector, I will use neutral words, ascertained or became aware of the fact that he had proceeded on an erroneous basis in assenting to the figure of Pound 4,940 as being the correct gross figure for tax purposes before the one -sixth deduction was made. He had, apparently, regarded this compensation rent as if it was a rack rent payable under a lease and had dealt with it accordingly, and he had overlooked the provisions of para. (b) of that sub -section providing for the payment of a lump sum in certain circumstances. Accordingly, he caused additional assessments to be made in which he added to the figure of Pound 4,940 a figure of 10 per cent., representing repairs, producing a gross figure of Pound 5,434, and from that figure he made the statutory deduction, arriving at a net assessment of Pound 4,525. The five additional assessments in questioning this appeal were made on that basis. In so proceeding the Inspector purported to act in pursuance of Section 125(1) of the Income Tax Act, 1918, which, so far as material, reads as follows : -
(3.) The words in that section which are immediately applicable to the present case, are : 'If the Surveyor discovers that a person chargeable has been undercharged in the first assessment.'