COMMERCIAL STRUCTURES LTD Vs. RABRIGGS

JUDGEMENT

(1.) This is an appeal from a judgment of Atkinson, J., whereby he dismissed an appeal by way of case stated by the General Commissioners for the Finsbury District. The General Commissioners had confirmed five additional assessments made under Schedule A on the taxpayers, Commercial Structures, Ltd., in purported pursuance of Section 125 of the Income Tax Act, 1918.

(2.) 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 :- (1) The compensation payable under this Act in respect of the taking possession of any land shall be the agreegate of the following sums, that is to say - (a) a sum equal to the rent which might reasonably be expected to be payable by a tenant in occupation of the land, during the period for which possession of the land is retained in the exercise of emergency powers, under a lease granted immediately before the beginning of that period, whereby the tenant undertook to pay all usual tenants rates and taxes and to bear the cost of the repairs and insurance and the other expenses, if any, necessary to maintain the land in a state to command that rent, and (b) a sum equal to the cost of making good any damage to the land which may have occurred during the period for which possession thereof is so retained (except in so far as the damage had been made good during that period by person acting on behalf of His Majesty), no account being taken of fair wear and tear or of damage caused by war operations.

(3.) 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 :- If the Surveyor discovers that any properties or profits chargeable to tax have been omitted from the first assessment, or that a person chargeable has not delivered any statement, or has not delivered a full and proper statement, or has not been assessed to tax, or has been undercharged in the first assessments... then and in every such case - (i) where the tax is chargeable under Schedule A, B or E........(b) if the first assessments have been signed and allowed, the Surveyor shall certify the particulars to the General Commissions, who shall singe and allow an additional first assessment in accordance therewith : Provided that any such additional first assessment shall be subject to appeal and other proceedings as in the case of a first assessment.