9911796707
TMI Blog1948 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules applicable to all Schedules of the Income Tax Act, 1918, on the ground that this sum was "payment of interest of money, annuity, or other annual payment charged with tax under Schedule D" from which the respondent society was bound to deduct tax and was thus rightly assessed against the respondent society, who paid the amount to a Mr. Hart without deduction in pursuance of a transaction between Mr. Hart and the respondent society. The respondent society denied that the sum which it paid to Mr. Hart was a payment from which tax had to be deducted, and contended that it was money lent to him. The commissioners decided in favour of the respondent society, but stated a case for the opinion of the High Court. Macnaghten, J., rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request, provided that the aggregate of the amounts of such loans at any date shall not exceed the amount which would have been payable by the society... if the annuitant had died on that date. Such loans shall be free of interest and shall not be recoverable by the society otherwise than on the death of the annuitant and out of the sum then payable." By his letter of May 26, 1944, Mr. Hart called on the respondent society to make loans to him free of interest to the maximum extent and on the earliest date permitted by the bond unless and until this request was cancelled. In accordance with the option thus exercised, the respondent society paid to Mr. Hart £ 4 14s. 8d. in eight successive months until the end of the fiscal year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r method does not. There have been cases in the past where what has been called the substance of the transaction has been thought to enable the court to construe a document in such a way as to attract tax. That particular doctrine of substance, as distinct from form, was, I hope, finally exploded by the decision of the House of Lords in Inland Revenue Commissioners v. Westminster (Duke)*". Applying these principles, I reach the same conclusion as that arrived at by the Court of Appeal, and expressed by the Master of Rolls in a manner which I find quite conclusive. The obligation of the respondent society is to provide a sum at death; the right of Mr. Hart is to borrow such sums as he thinks fit month by month, subject to the limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciding that these payments were loans, and I move that the appeal be dismissed with costs. LORD PORTER.―I agree with the reasons and conclusion reached by the noble Lord upon the Woolsack, and have nothing to add. LORD UTHWATT.―It is conceded by the Commissioners of Inland Revenue that the whole transaction between the respondents and Mr. Hart is to be found in the bond of May 25, 1944, and the letter of May 26, 1944, and that the transaction so disclosed is to be taken at its face value. It follows that the task before your Lordships is to ascertain what, upon the true construction of the deed, are the legal rights of the parties, and in light of that construction to determine whether the sums paid to Mr. Hart in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und; 4 14s. 8d. every month and his executor would receive nothing. Financially it would pay him so to exercise his right. The transaction has the same commercial result as an agreement to pay a monthly annuity of £ 4 14s. 8d., coupled with a stipulation that Mr. Hart was to be entitled to leave in the hands of the society any instalment of the annuity which he did not wish to receive when it became due and was to be entitled to demand payment at a later date. There was no automatic set-off between sums borrowed and the gross sum. One other matter has to be added. Mr. Hart was entitled, in my opinion, as a matter of construction of the bond at any time to repay the moneys borrowed. If he wished to exercise that right he would, I appr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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