The Gazette 1985

GAZETTE

JULY/AUGUST

1985

Others [1984] 2 All E.R. 358 at 363; Tolley -v- Morris [1979] 1 All E.R. 71 and [1979] 2 All E.R. 561). He expressed disagree- ment with the proposition that there is an onus on an infant, as so defined in the Statute of Limitations, to explain delay in the commencement or prosecution of an action, neither did he accept that the Plaintiff necessarily has an alternative course of action for the purpose of recovering damages or compensation. If the Plaintiff were to sue her present Solicitor her action might well be tried by a Judge and Jury (see Finlav -v- Murtagh [1979] I.R. 249) and he would be far from confident that a Jury or, indeed, a Judge sitting alone will conclude that the Plaintiff's Solicitor has been in breach of duty amounting to breach of Contract or negligence in his conduct of the Proceedings. He would allow the Appeal and permit the Action to proceed. O'Domhnaill-v- Merrick - SupremeCourt (per Henchv J.. Griffin ./. concurring - McCarthy J. Diss. [1985] ILRM 40 - unreported. Franklin O'Sulllvan TAX CASES The following summaries have been supplied by the Office of the Revenue Commissioners. CORPORATION TAX Section 241 of the Income Tax Act, 1967 and section 36 of the Finance Act, 1971, as applied for corporation tax purposes by section 2 of the Corporation Tax Act, 1976 — whether company entitled to claim 100% wear and tear allowance on the provision of a deep pit poultry house and equipment for the purpose of its business— whether expenditure incurred in respect of items of plant and machinery. The company carried on the business of egg production and during the accoun- ting period ended 31 December, 1976 expended £45,935 on the provision of a deep pit poultry house and equipment. The cedarwood poultry house was raised approximately six feet above the ground and contained tiered stacks of cages in which the hens were kept. There was a deep concrete pit underneath the cages which could be cleaned by access through two doors provided for this purpose. The house, approximately 156 feet by 36 feet, was stated to be specially designed to ensure a controlled environment with thermostatically controlled heating and lighting. Fans were located to blow air around the inside of the house and extract harmful ammonia fumes. It was contended on behalf of the company that the hen house in its entirety was an apparatus or device designed specially for the purpose of egg produc- tion; that the house was as much necessary for the purpose of the egg production as was the equipment (such as

the cages) in the house and that one could not exist or be effective withopt the other. It was contended by the Inspector that the house, as distinct from the equipment therein, was merely the setting in which the trade of egg production was carried on; that it was not a device or an apparatus by which the trade was carried on and that it was a building or shelter as opposed to an item of plant. At the appeal hearing, the Appeal Commissioners determined the appeal in favour of Revenue. On re-hearing the Circuit Court Judge ruled that the structure was an item of plant and granted the 100 per cent wear and tear allowance. HELD in the High Court that on the basis of the findings of fact in the Circuit Court as recited in the Case Stated the Circuit Court Judge was entitled to find as he did, that the building in question was plant within the meaning and for the purposes of the Income Tax Acts. S. O'Srianain, (Inspector of Taxes) Appellant -v-Lakeview Limited Respon- dent - High Court, 8 October. 1984 - unreported. CORPORATION TAX Whether the company's business consisted of or included the carrying on of a profes- sion or the provision of professional services for the purposes of section 162, Corporation Tax Act, 1976, and, if the company was carrying on such profession or was providing professional services whether the principal part of the income of the company was derived from the carrying on of the profession or the provision of the professional services. The company was a "close company" and carried on business as an advertising agency. The company, based on the marketing objectives and the advertising budget of its customers, involved itself in the preparation of creative proposals for the customers and also researched the market. If its proposals were accepted by a customer, the company would "process the ideas" and might then utilise a range of talents, depending on what was required. The company appealed against assess- ments made in accordance with the provisions of section 162 of the Corpora- tion Tax Act, 1976 for the accounting periods ended 30 April, 1977 and 30 April, 1978. The Appeal Commissioners determined the appeals in favour of the Revenue. At the re-hearing in the Circuit Court the Judge decided that the company was not carrying on a profession nor was it providing profes- sional services. The High Court upheld the decision of the Circuit Court. The High Court Judge, having reviewed the evidence and having considered the legislation, expressed an inability to

conclude that the inference drawn by the Circuit Court Judge was incorrect. P. Mac Giolla Mhaith (Inspector of Taxes), Appellant -v- Brian Cronin & Associates Ltd., Respondent - High Court. 24 July. 1984 - unreported. INCOME TAX AND CORPORATION PROFITS TAX Whether advance deposits on houses received by the company were payments on account of trading stock the value of which stock would fall to be reduced accordingly for purposes of a claim for stock relief under section 31 of the Finance Act, 1975. Since its incorporation the company had been engaged in the manufacture and erection of pre-fabricated type houses and buildings. The manufacture and supply of each building was carried out under a standard form of contract supplied by the company. Under the terms of the contract a deposit of 15 per cent of the total house price was required from the customer on execution of the contract. At the time when the customer entered into the agreement and paid the deposit, the company, in almost all cases, would have had no house-building stock on hands and the stock from which the house was manufactured would not be acquired by the company until shortly before it commenced work on the house. The total price of the house was invoiced to the customer immediately upon delivery of the house to the customer's site and the customer was given credit in the statement of account for the amount of the deposit paid by him. It was contended on behalf of the company that the deposits were not payments on account of any trading stock for the purpose of reducing the value of the "trading stock" as defined in section 31(1) of the Finance Act, 1975. The Appeal Commissioners did not accept the company's claim. At the re- hearing the Circuit Court Judge decided that the deposits were not payments in respect of trading stock. HELD in the High Court that the deposits should be regarded as payments on account received by the company in respect of trading stock and that the value of that stock and the deposits held should be taken into account in arriving at the net figure on which the claim to stock relief should be based. P C. O'Laoghaire (Inspector of Taxes), Appellant -v- C.D. Limited, Respondent)- [1984] ILRM 196.

INCOME TAX Income Tax, Schedule D, Case 11 — Profession — Capital allowances — whether the taxpayer was entitled to

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