Madras Electric Supply Corp Ltd v Boarland House of Lords: HL 11 Mar 1955

Income Tax, Schedule D – Balancing charge – Succession by Crown – Whether cessation provisions apply – Income Tax Act, 1918 (8 and 9 Geo. V, c. 40), Schedule D, Cases I and II, Rule 11 ; Finance Act, 1926 (16 and 17 Geo. V, c. 22), Section 32.
The Respondent Company carried on an electricity undertaking in Madras under several licences which all provided that on 29th August, 1947, the local authority or local government should have the option to purchase the undertaking. This option was exercised by the Madras Government who took possession of the undertaking on that date and thereafter carried it on.
A balancing charge was made on the Company for the year 1947-48 on the footing that on 29th August, 1947, the Madras Government succeeded to the trade within the meaning of Rule 11 (2) of Cases I and II of Schedule D; that accordingly the basis period for the assessment on the Company for that year was the period beginning 5th April, 1947, and ending 29th August, 1947; and that the sale of the Company’s undertaking occurred in that basis period. On appeal to the Special Commissioners, the Company contended that the person succeeding to its trade was the Crown; that Rule 11 (2) of Cases I and II of Schedule D had no application where the successor to the trade was the Crown or was not chargeable to Income Tax; and that the Company’s basis period for the year of assessment 1947-48 was therefore the preceding year, the year to 3Is/ December, 1946, and not the period in which the sale occurred. The Commissioners allowed the appeal, holding that the trade was carried on after 29th August, 1947, by the Crown and that the Crown was not a ‘person ‘for the purposes of Rule 11 (2).
Held, that ‘person ‘in Rule 11 (2) includes the Crown.
The House was asked whether the Crown was a ‘person’ for a particular purpose. While holding that the Crown was such a person, their Lordships reiterated the classic doctrine, Lord MacDermott and Lord Reid locating this as a rule of statutory construction rather than an aspect of the royal prerogative.


Lord MacDermott and Lord Reid


[1955] UKHL TC – 35 – 612, (1955) 34 ATC 53, [1955] 2 WLR 632, [1955] 1 All ER 753, 8 R and IT 189, 35 TC 612, [1955] TR 57, [1955] AC 667




Income Tax Act 1918


England and Wales

Cited by:

CitedLord Advocate v Dumbarton District Council HL 1989
The House was asked whether the Ministry of Defence was entitled to cone off a section of the A814 road without the permission of the roads authority under the Roads (Scotland) Act 1984 or the local planning authority under the Town and Country . .
CitedBlack, Regina (on The Application of) v Secretary of State for Justice SC 19-Dec-2017
The Court was asked whether the Crown is bound by the prohibition of smoking in most enclosed public places and workplaces, contained in Chapter 1 of Part 1 of the Health Act 2006.
Held: However reluctantly, the claimant’s appeal was . .
Lists of cited by and citing cases may be incomplete.

Income Tax, Constitutional

Updated: 27 November 2022; Ref: scu.601882