1942 (2) TMI 28 - Other - Income Tax

Summary

Issues Involved:
1. Whether the appellant held an office.
2. Whether the appellant held a public office.
3. Whether the appellant held a public office within the United Kingdom.

Issue-wise Detailed Analysis:

1. Whether the appellant held an office:
The court examined whether the appellant, a director of a limited company, held an office. The definition of an office was considered, referencing Rowlatt, J.'s statement in Great Western Railway Co. v. Bater, which described an office as "a subsisting, permanent, substantive position, which had an existence independent of the person who filled it and which went on and was filled in succession by successive holders." The court found no dispute that the director of a company holds such an office, affirming that the appellant indeed held an office.

2. Whether the appellant held a public office:
The appellant contended that while he held an office, it was not a public office within the meaning of the Income-tax Act, 1918. The court noted that it is not obvious that the position of director of a trading company is necessarily a public office. However, Rule 6(h) of the Income-tax Act, 1918, includes "offices or employments of profit under any company," without distinguishing between public and private companies. The court highlighted that duties imposed on officers of companies by the Companies Act, 1929, apply to both private and public companies. Therefore, the office of director of the company was deemed a public office.

3. Whether the appellant held a public office within the United Kingdom:
The court considered whether the appellant's office was within the United Kingdom. The reasoning of Lord Greene, M.R., in the Court of Appeal was endorsed, emphasizing that the office of director of an English company, whose head seat and directing power is in the United Kingdom, is necessarily located where the company is. The appellant, though residing in the United States, held office in the United Kingdom by virtue of his English office. The court concluded that the director of an English company resident in the United Kingdom holds an office in the United Kingdom, regardless of his physical location or participation in company affairs abroad. Therefore, the office held by the appellant was within the United Kingdom.

Separate Judgments:

LORD WRIGHT:
Lord Wright concurred with the majority, emphasizing that the appellant's emoluments from his directorship are taxable under Schedule E if they are profits of a public office or employment within the United Kingdom. He noted that the directorship of a company registered and controlled in the United Kingdom satisfies the requirements of Schedule E. The term "office" was interpreted as "a position or place to which certain duties are attached, especially one of a more or less public character." He concluded that the appellant held an office within the United Kingdom, as the office of director is inherently located where the company is resident and controlled.

LORD PORTER:
Lord Porter agreed with the dismissal of the appeal, reiterating that the appellant held an office in the United Kingdom. He noted that the appellant's office as a director of a company resident and managed in the United Kingdom, entitled him to attend board meetings and receive company reports, establishing his office within the United Kingdom. He also addressed the argument that the office was not public, concluding that a directorship in a company, even a private one, is a public office due to the statutory duties and public control imposed by the Companies Act, 1929.

Conclusion:
The appeal was dismissed, with the court affirming that the appellant held a public office within the United Kingdom, making his emoluments taxable under Schedule E of the Income-tax Act, 1918.