A company registered in London for the purpose of carrying on an hotel business in Egypt resolved that the company’s business should be carried on in Egypt by a local board independent of the home board (except that the latter fixed their remuneration). Only such part of the profits as was required for distribution as dividends in London and payment of home expenses was remitted home. The company was assessed to income tax under case 1 of Sched. D of section 100 of the Income Tax Act 1842 in respect of the whole of their profits, which were derived exclusively from the Egyptian business. The Court of Appeal, reversing Horridge, J., held that the control exercised by the board of directors in London was merely the control of the manner in which the profits arising from the carrying on of the business should be dealt with and did not amount to carrying on business, which was as and from the 27th August 1908 wholly carried on by the local board, and therefore the company was assessable to income tax on such profits only as were actually remitted to London.
The House, upon consideration, was equally divided in opinion, with the result that according to the practice of the house the appeal stood dismissed.
Decision of the Court of Appeal (reported 1914, 3 KB 118) affirmed.
Judges:
Earl Loreburn, Lords Parker, Sumner, and Parmoor
Citations:
[1915] UKHL 496, 53 SLR 496
Links:
Jurisdiction:
England and Wales
Income Tax
Updated: 26 April 2022; Ref: scu.620693