The case established the principle that the profit from a single transaction of a purchase and sale of property was taxable only if it amounts to a trade and if not does not fall within Case VI. The making of a profit on an isolated transaction of purchase and resale does not become income merely because the asset was acquired with the intention of selling at an increased value.
Viscount Dunedin said: ‘The limitations of the words ‘profits and gains’ were pointed out by Blackburn J. long ago in the case of Attorney-General v. Black, when he said that profits and gains in Case VI. must mean profits and gains ejusdem generis with the profits and gains specified in the preceding five Cases. And then there came the memorable and often quoted words of Lord Macnaghten in the London County Council case, when he begged to remind people ‘that income tax is a tax on income.’ The only question, therefore, here was – Was there in any sense income?’ and ‘The fact that a man does not mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or concern in the nature of trade in respect of his investments, but per se it leads to no conclusion whatever.’
Lord Buckmaster discounted the suggestion that a profit made on the sale of an asset acquired in the expectation that it would rise in value (and presumably result in a realized gain) is income. To him all that was involved in such a case was the realization of a capital asset.
Viscount Dunedin, Lord Buckmaster
[1930] 1 KB 279, [1930] 15 Tax Cas 333, 15 Tax Cas 333, [1930] AC 415
England and Wales
Citing:
Cited – Inland Revenue Commissioners v Livingston 1927
Lord Clyde said: ‘I think the test, which must be used to determine whether a venture such as we are now considering is or is not, ‘in the nature of trade’, is whether the operations involved in it are of the same kind, and carried on in the same . .
Cited by:
Mentioned – Wisdom v Chamberlain (Inspector of Taxes) CA 8-Nov-1968
The taxpayer, a comic actor, bought silver bullion hoping it would act as a hedge against a possible deflation of the pound. The revenue sought to tax his profits on sale under Schedule D. He argued that the money, being from one transaction, did . .
Lists of cited by and citing cases may be incomplete.
Income Tax, Capital Gains Tax
Updated: 01 January 2022; Ref: scu.235905
