LATILLA Vs. COMMISSIONERS OF INLAND REVENUE

JUDGEMENT

(1.) The judgment which I am about to read is the judgment of the Court.

(2.) The questions raised by this appeal are short and the answers to them do not, in our judgment, admit of doubt. They arise in the Finance Act, 1936, Section 18 : "For the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income-tax by means of transfers of assets by virtue or in consequence whereof, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled out of the United Kingdom, it is hereby enacted as follows :- (1) Where such an individual as by means of any such transfer, either alone or in conjunction with the meaning of this section, power to enjoy, whether or with or in the future, any income of a person resident or domiciled out of the United Kingdom which, if it were income of that individual received by him in the United Kingdom, would be chargeable to income-tax by deduction or otherwise, that income shall, whether it would or would not have been chargeable to income-tax by deduction or otherwise, that income shall, whether it would or would not have been chargeable to income-tax apart from the provisions of this section, be deemed to the income of that individual for all the purposes of the Income-tax Acts : Provided that this sub-section shall not apply if the individual shows in writing or otherwise to the satisfaction of the Special Commissioners that the transfer and any associated operations were effected mainly for some purpose other than the purpose of avoiding liability to taxation."

(3.) Finance Act, 1938, Section 28 (2) : " The proviso to sub-section 1 [of Section 18 of the Finance Act, 1936] shall cease to have effect and the following two sub-sections shall be inserted immediately after the said sub-section... (1B) : The last two foregoing sub-sections shall not apply if the individual shows in writing or otherwise to the satisfaction of the Special Commissioners either (a) that the purpose of avoiding liability to taxation was not the purpose... for which the transfer or associated operations or any of them were effected; or (b) that the transfer and any associated operations were bonafide commercial transactions and were not designed for the purpose of avoiding liability to taxation." following circumstances. On March 20,1933, by an agreement of that date, four ladies, the appellants wife, Mrs. Latilla, and her two daughters and a Mrs. Jane Johnson, being all at that time resident in the United Kingdom, sold to a company called latjohn Trust, Ltd., their shares in a mining partnership having the firm-name of John Mack & Co. The shares in question were two one-third shares, of which one was owned by Mrs. Johnson and the other by Mrs. Latilla and her two