BARNES (INSPECTOR OF TAXES) Vs. HUTCHINSON

JUDGEMENT

(1.) In spite of the able arguments which have been addressed to me on behalf of the Crown, I think that, on the authorities as they stand, the decision of the Commissioners was right. (His Lordship stated the facts and continued :) The Commissioners based their decision upon the authority of Gilbertson V/s. Fergusson, which was decided in 1881. The facts in that case were these : The Imperial Ottoman Bank had an English agency in London, conducting a banking business in London and making profits in England, it was held that the English committee which acted as paying agent to English shareholders in the Imperial Ottoman Bank was entitled to the benefit of the tax paid upon the English profits in the proportion that those profits bore to the total profits of the Imperial Ottoman Bank.

(2.) The Commissioners have held that the principle in that case is applicable to the present case. The contention for the English agency, the Imperial Ottoman Bank, was that, as the profits of that agency were sufficient to pay the dividends payable in England, those dividends ought to be paid without any further tax being paid upon them. But the Court held that that was not so, and that those dividends were bound to suffer taxation in the proportion which the English profits bore to the total profits of the Imperial Ottoman Bank.

(3.) Counsel for the appellant, the Crown, have contended that the case of Gilbertson v. Fergusson is at any rate not decisive of the present case and really throws no light upon it; in the first place, because the point actually decided as to the proportion, was conceded by the Crown; secondly, that in that case the question under consideration related to ordinary shareholders, who suffer the taxation, as counsel for the Crown contended, directly and alone, as opposed to a preference shareholder, whose preference dividend, if it be paid to him in full, suffers no part of the taxation; and thirdly, because the judgments in that case, in dealing with the question of double taxation, say that the principle against double taxation applies where it is the same person who suffers the tax, and that there it was the Imperial Ottoman Bank which suffered the tax and which was assessed, whereas in the case before me, it is not the respondent who had suffered the tax but the English companies. Lastly, it is contended for the Crown that in any event in this case the connection between the respondent and the company who has paid the tax is too remote, an that whereas in the case of English companies the tax is assessed upon the company, in the case of the Imperial Ottoman Bank, referred to in Gilbertson V/s. Fergusson, it was assessed upon the agency, and in the present case it is assessed, there being no agency, upon the particular shareholder namely, the respondent.