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TMI Blog1892 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... e, under the Taxing Acts always resolve themselves into a question whether or not the words of the Act have reached the alleged subject of taxation. Lord Wensleydale said, in In re Micklethwait(1), It is a well-established rule, that the subject is not to be taxed without clear words for that purpose; and also, that every Act of Parliament must be read according to the natural construction of its words. Now, it is certainly true that the occupation of a house rent free is not income. Of course the possession of a house which may be used for purposes of profit, is property and taxable as such. But the bald, dry proposition that the mere fact of occupying a house, which house as property is already taxed, is not income in any sense, could, I think, hardly be disputed. For my own part, I doubt very much whether a house could ever properly be described as part of a man's income, though, doubtless, the rent for it when received would be income in the hands of the person receiving it. Another observation that occurs to me is, that in dealing with real property the whole framework of the statute seems to point to a peculiar kind of assessment while treating the things themselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cases where the thing is capable of being turned into money from its own nature. I have designedly avoided considering the question whether in any sense the occupation of this house is a benefit or a burden to the recipient of the advantage or disadvantage, whatever it may be, though I doubt very much whether such considerations on the one side or the other are relevant to the question which your Lordships have to determine. I am aware that it has the high authority of the late Lord President, and his Lordship undoubtedly treated the question as, if it were established to be a clear pecuniary benefit it would be taxable, whereas, if it were a heavy burden it would not. Nor did his Lordship shrink from suggesting that this occupation of a house rent free would be taxable or not, according as it was unsuitable for the occupant's domestic arrangements or the reverse. It followed, therefore, that in every case where such a question arose it would be necessary to examine the particular circumstances of each man's family. If he had a large family that could not be accommodated in the house, and he must hire a house elsewhere, one result would follow. If he was a bachelor, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable here, I do not consider it necessary for the purposes of this case to determine. Accordingly, it appears to me that the case was decided in the Court below, as it has been argued at your Lordships' bar, upon the true legal issue - namely, whether the appellant's residence is income, within the meaning of the statutes, which must be valued and assessed for income-tax. Schedule A, which assesses property according to its annual value, includes all lands, tenements, hereditaments, and heritages capable of actual occupation. Schedule B imposes an additional assessment in respect of occupancy, upon some of the lands and others comprehended in Schedule A, the occupation of which in itself constitutes a trade or business. The appellant is not a proprietor, neither is he an occupier within the meaning of Schedule B. The bank are the only occupiers, being, as Lord Herschell said in Russell v. Town and County Bank(1), in the same position as if that portion of their bank premises were used in any other way in the strictest sense for the purposes of the bank and the business of the bank. The appellant does, no doubt, reside in the building, but he does so as the servan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as specified in the third rule of that schedule. The Bank of Scotland being a corporation, the appellant's office is undoubtedly within the schedule. Neither is it doubtful that the appellant is liable to pay duty in respect of all salaries, fees, wages, perquisites, or profits whatsoever accruing to him by reason of such office, as provided by the first rule. It is clear that the benefit, if any, which a bank agent may derive from his residence in the business premises of the bank is neither salary, fee, nor wages. Is it, then, a perquisite or a profit of his office? I do not think it comes within the category of profits, because that word, in its ordinary acceptation, appears to me to denote something acquired which the acquirer becomes possessed of and can dispose of to his advantage - in other words, money - or that which can be turned to pecuniary account. If the context had permitted, it might have been possible to argue that a benefit of that kind was a perquisite. But the fourth rule of Schedule E defines perquisites, for all purposes of the Act, to be such profits of offices and employments as arise from fees and other emoluments, in the course of executing such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules of Schedule D were applied to the appellant's so-called benefit of residence. In that case the appellant would be chargeable upon the full balance of the profits, gains, and emoluments accruing to him from his employment as bank agent. Having regard to the general scheme and context of the Act, I am unable to come to the conclusion that these words profits, gains, and emoluments of a private employment as bank agent under Schedule D were meant by the legislature to include more than the salaries, fees, wages, perquisites, or profits whatsoever, accruing to a similar employment by a public company. In my opinion, the word emolument occurring in the rules of Schedule D means some more tangible benefit than a servant's residence in his master's house, or a meal or a suit of livery supplied by the master. I, therefore, concur in the judgment which has been moved by the Lord Chancellor. LORD MACNAGHTEN : My Lords, I agree. The appellant, who is the agent at Montrose for the Bank of Scotland, being assessed for income tax, claims an abatement. The question is whether his total income from all sources is or is not less than 400. That depends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion suggests itself, Has not the Crown got all that it is entitled to in respect of this house when it has received the duty on its full annual value? Is not the notion of finding some subject for taxation in lands, tenements, hereditaments, or heritages, over and above the full annual value chargeable under Schedules A and B, a fanciful notion and foreign altogether to the scope and intent of the Income Tax Code? The learned counsel for the Crown say no. Their case is that the benefit derived by the appellant from his occupation of the bank house is chargeable under Schedule E, or, at any rate, under Schedule D. I do not doubt that the occupation of the bank house rent free, though not unattended with some inconveniences, is, on the whole, a considerable advantage to the appellant. It is a gain to him in the popular sense of the word. Whether such a benefit or gain comes under the head of profits and gains chargeable for income tax purposes is the question submitted to your Lordships. I use the expression profits and gains because that is the term which the legislature uses as applicable to both the schedules of charge under which it is said the appellant is chargeable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f annual profits received (5 6 Vict. c. 35, s. 190, Schedule G, XII.). No doubt if the appellant had to find lodgings for himself he might have to pay for them. His income goes further because he is relieved from that expense. But a person is chargeable for income tax under Schedule D, as well as under Schedule E, not on what saves his pocket, but on what goes into his pocket. And the benefit which the appellant derives from having a rent-free house provided for him by the bank, brings in nothing which can be reckoned up as a receipt or properly described as income. For these reasons I am of opinion that the appeal must be allowed. LORD MORRIS : My Lords, I concur in the judgment which has been moved. LORD FIELD : My Lords, I also concur in the judgment that the appeal should be allowed and the decision of the commissioners restored. For the reasons which have been so fully indicated to your Lordships it appears to me that the residence of the appellant upon the bank premises, which although rent free could not in any way be converted by him into money or money's worth, cannot be held to be either a gain, profit, perquisite, or emolument, within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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