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Issues:
1. Tax liability on a sum received for the cancellation of a commission agreement. Analysis: The case involved a respondent company that introduced another company to a third party and received commission on the supplies made. Subsequently, the commission agreement was canceled for a payment of lb1,500, which was questioned for income tax liability. The central issue was whether this cancellation sum was liable to income tax. The respondent argued that the canceled contract was not part of their ordinary business activities, thus different tax considerations should apply. However, the court opined that any intra vires contract of a revenue nature is considered to be in the ordinary course of business. The distinction was made between contracts of a trading nature and those involving capital assets, emphasizing that the cancellation of a contract for profit realization does not inherently make it a capital asset. Moreover, the court considered previous judgments and highlighted that dicta suggesting capital treatment for canceled contracts with more than one year to run were not directly applicable to the present case. Referring to established case law, the court concluded that the cancellation sum in question did not possess characteristics of a capital nature, as no capital expenditure was involved in securing or carrying out the contract. In light of the above analysis and the differences in facts from previous cases, the court allowed the appeal, ruling in favor of the respondent company and holding that the cancellation sum was not subject to income tax liability.
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