Electric and Musical Industries Ltd v. Inland Revenue Commissioners
[1950] 2 All ER 261(Judgment by: Lord Morton of Henryton)
Electric and Musical Industries Ltd
v Inland Revenue Commissioners
Judges:
Lord Simonds
Lord Normand
Lord Morton of HenrytonLord Macdermott
Lord Reid
Judgment date: 23 June 1950
United Kindom
Judgment by:
Lord Morton of Henryton
My Lords, I agree with the decision of the Court of Appeal, affirming Singleton J and I shall not detain your Lordships for long. The question in issue is whether the sum of £17,265 paid over by the Phonographic Company to the Gramophone Company in the accounting period 1 July 1943, to 30 June 1944, is or is not "income received from investment ... " under para 6 of Part I of sched VII to the Finance (No 2) Act, 1939. I venture to quote the words which I used in Inland Revenue Comrs v Tootal Broadhurst Lee Co Ltd [1947] 2 All ER 409 ):
"... the word 'investment' in this context is not a word of art, and ... the question whether or not a particular piece of income is 'income received from an investment' must be decided on the facts of each case. I think that the question must be approached from the standpoint of an intelligent man of business ... "
In the present case I think that such a man, on being fully informed of the relevant facts, would say: "This is not what I call income from an investment." He would, I think, be impressed at the outset by the fact that the Gramophone Company put no money into the Phonographic Company, held no shares in the Phonographic Company, and, consequently, could receive no dividends, in the ordinary sense of the word, from that company, and further study of the memorandum and articles of the Phonographic Company and of the events leading up to the formation of that company would, I think, lead him still further away from the view that the sum in question was income received from an investment. I need not elaborate the matter further, as I have had the privilege of reading in print the opinion which is about to be delivered by my noble and learned friend Lord Reid. I agree with his reasoning, and with his conclusion that this appeal should be dismissed. I am also in agreement with the observations of my noble and learned friend on the Woolsack as to the decisions of this House in Gas Lighting Improvement Co Ltd v Inland Revenue Comrs [1923] AC 723 and Inland Revenue Comrs v Tootal Broadhurst Lee Co Ltd [1947] 2 All ER 409 .