WESTCOTT (INSPECTOR OF TAXES) Vs. BRYAN.

JUDGEMENT

(1.) RATIO Decidendi: "Assessee shall be liable to pay tax on expenses as part of income of company if some part of expense is apportionment."

(2.) THE law is contained in sections 160 and 161 of the Income Tax Act, 1952. Those sections deal with expenses allowance for directors, and also benefits in kind which the company provides for them. If a director is paid money as expenses allowance, it is to be regarded as director part of his income. If he is allowed benefits in kind. such as a flat which is paid for by the company, the expenses incurred by the company are like wise to be regarded as his income. but he is allowed to deduct so much of it as is expended wholly necessarily and exclusively in performing his duties (paragraph 7 of Schedule 9).

(3.) THE Commissioners held in Mr. Bryans favour on section 161(6). They found as a fact that there was a genuine business use of the house, and that Mr. Bryans personal occupation of it was rusticated in that he was not free to discriminate as to his guests. They allowed one quarter of the total expenses for business purposes. The allowed one quarter of the total expenses for business purposes. The Crown appealed to the judge (Pennycuick J.), who dismissed the appeal. The Crown now appeals to this court. In this court Mr. Rees, who appeared for Mr. Bryan, supported the finding of apportionment, but alternatively claimed a like deduction under paragraph 7 of Schedule 9.