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Case H35

Judges: JL Burke Ch
RE O'Neill M

CF Fairleigh QC

Court:
No. 1 Board of Review

Judgment date: 31 August 1976.

C. F. Fairleigh Q.C. (Member): The Commissioner adjusted the income as returned by the taxpayer for the year ended 30 June 1971 by disallowing a deduction claimed for a loss on the sale of shares. The taxpayer's agent duly objected thereto and the Commissioner decided to disallow the objection. The agent then duly requested that the Commissioner's decision be referred to a Board for review.

2. At the outset of the hearing of the reference the Commissioner's representative contended that the Board could not proceed to hear the case on the merits. Evidence was given on this preliminary point and I find the facts pertinent thereto to be as follows: -

  • (a) The aforesaid request (para. 1 hereof) to refer the said decision to a Board of Review was by letter bearing date 22 March 1973.
  • (b) On 9 July 1973 a conference took place between the Commissioner's officer and the taxpayer and his said agent concerning the claim for the said deduction.
  • (c) The said agent sent to the Commissioner a letter bearing date 11 July 1973 stating that the taxpayer ``wishes to withdraw his appeal to the Board of Review

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    on the matter of him having the claim for loss incurred on sale of shares in (a proprietary company) disallowed as a deduction.''
  • (d) The said agent sent to the Commissioner a letter bearing date 13 July 1973 stating that ``the taxpayer wishes to withdraw his appeal to the Board of Review.''
  • (e) The taxpayer dispensed with the services of the first-mentioned agent and engaged a second agent who sent to the Commissioner a letter bearing date 16 May 1974 in which reference is made to the letter of 11 July 1973 and stating ``following a discussion with your appeals section the taxpayer withdrew his appeal to a Board of Review in respect of the year ended 30 June 1971 on the matter of the taxpayer having the claim for loss incurred on sale of shares in (the proprietary company). However, there is still an appeal outstanding in respect of the losses on sale of shares other than (that company). Would you please advise what stage this appeal has reached and whether a time for hearing by the Board of Review has been arranged.''
  • (f) The second agent sent to the Commissioner a letter bearing date 10 September 1974 in which it is said that the taxpayer had not authorized the letter of 13 July 1974 and the taxpayer always had the impression that ``an Objection lies to the Board in respect to the loss on sale of shares incurred by him during the year ended 30 June 1971''. The letter states that the taxpayer was aware of the letter dated 11 July 1973. The letter of 10 September concludes with the following paragraph: ``However... I cannot find a provision in the Income Tax Assessment Act 1936, as amended, which gives effect to the withdrawal of the objection dated 11 July 1973. It would appear... that a taxpayer is not entitled to withdraw an Objection could only be withdrawn by the Board of Review itself. If this is the case then my client wishes the total Objection, both in respect of the loss on sale of shares in public companies and the loss on sale of shares in (the proprietary company) to be heard by the Board of Review. Accordingly, would you please advise the estimated date of hearing before the said Board.'' In an earlier part of that letter it is said that a recent conversation with the Commissioner's officer had led to the belief that the Department was not proceeding to refer the matter to a Board of Review.
  • (g) The Commissioner referred the aforesaid decision to Board of Review No. 1 and the file of documents was received by the Board on or about 3 March 1975.
  • (h) The statement of the Commissioner's reasons (reg. 35) in the said file relates to the loss on sale of shares in public companies and in the said proprietary company.
  • (i) The first agent of the taxpayer exceeded his authority to the extent stated by the taxpayer (but this fact becomes of no importance in the outcome).

3. During the course of the submissions on the preliminary point the Board informed the parties that it would proceed to hear the reference as made to the Board. The Commissioner's representative in his final address requested that the Board give reasons in writing for holding that it would proceed as aforesaid. Not withstanding the restrictive nature of reasons as required by sec. 195(2) of the Act (cf.
Barripp v. C. of T. (N.S.W.) (1940) 58 W.N. (N.S.W.) 22 ; 6 A.T.D. 58 ), it appears to me that a charge that a tribunal is usurping jurisdiction, if it proceeds, is so grave in its nature that it is essential that the parties as well as the Court which may be called upon to hear the charge on an application for a writ of prohibition or certiorari (if that eventuates) should know not only whether the tribunal has formed a particular opinion but also whether the tribunal has understood the nature of the opinion which the tribunal has to form (cf.
R. v. Connell ; ex parte Hetton Bell Bird Collieries Ltd. (1944) 69 C.L.R. 407 particularly per Latham C.J. at p. 430 et seq.). It is questionable whether discussions in arguendo with the party's agent (or counsel) especially where made ex post facto in a final address satisfy that rule. In any event I regard the dictum of the Privy Council in
Smith v. The Queen (1878) 3 App. Cas. 614 at p. 625 as a sufficient direction that I should comply with the Commissioner's request and therefore that I should state in writing my reasons for concurring in the course which was taken by the Board. Doubtless it would have been of advantage to have the taxpayer's case argued by counsel but this does not alter the responsibilities of the Board. My reasons for the decision on the preliminary point are set

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out in the ensuing paragraphs 4 to 10 inclusive. On a cognate question of the proceedings before a Board of Review being concluded so that the Board is functus officio see
Texas Co. (Australasia) Pty. Ltd. v. F.C. of T. (1939-1940) 63 C.L.R. 382 at pp. 435, 439, 457, 458 and 475-476 ; also
F.C. of T. v. West Australian Trustee Executor and Agency Co. Ltd. (1929) 43 C.L.R. 20 at pp. 23-24 .

4. There are two major aspects of the question whether a taxpayer may effectively withdraw a request to refer to a Board for review the decision of the Commissioner on an objection. It is convenient to deal first with the position when the ``withdrawal'' is made after such decision has been referred as aforesaid. The other aspect is when the ``withdrawal'' is made before such decision has been referred as aforesaid. It may be noticed that the word ``formal'' or ``formally'' is not introduced into the discussion of the word ``withdrawal'' or ``withdrawn''. The use of the word ``formal'' or ``formally'' can only mean (a) in accordance with prescribed formalities as where rules (e.g. of Court) prescribe the same; or (b) ``expressly'' in all other instances. Thus in matters presently relevant the use of the word ``formal'' or ``formally'' may be intended by the user to indicate some solemnity (perhaps that careful consideration has been given to the course taken) but the use of the word does not achieve any result which would not be achieved if that word were omitted.

5. Where the taxpayer gives notice whether to the Commissioner or to a Board of Review after referral as aforesaid that he ``withdraws'' his reference, the term ``withdraw'' is not used correctly. It is a misnomer and properly understood that notice is an intimation that the taxpayer's current intention is not to adduce any evidence documentary (whether in the remitted file or otherwise) or oral in support of his claim. If the taxpayer has duly given notices, as in para. I hereof, which have resulted in the reference being received by the Board then it seems to me that the Board is empowered to hear the reference and a notice of withdrawal does not divest the Board of what for convenience may be called its jurisdiction. If it were otherwise, i.e. if the taxpayer could withdraw from the Board a matter which has been ``duly'' referred to it then the Board would not be empowered to proceed as it customarily does in such circumstances, viz. to set the reference down for ``disposal'', to make the statutory file of documents an exhibit, to hold that the taxpayer (on non-appearance) has failed to discharge the onus of proof and to confirm the assessment (where the Commissioner's representative asks that that be done). The Board is an executive body in an administrative hierarchy (cf.
Jolly v. F.C. of T. (1935) 53 C.L.R. 206 at p. 214 ); its functions when conducting a review are quasijudicial (
F.C. of T. v. Munro (1926) 38 C.L.R. 153 at p. 177 ;
Shell Co. of Australia Ltd. v. F.C. of T. (1930) 44 C.L.R. 530 at pp. 544-546 ); its decisions are administrative awards ( Munro's case at p. 178). Compare
R. v. Income Tax Special Commissioners ; ex parte Elmhirst (1936) 1 K.B. 487 where the taxpayer who had given a notice of appeal to the Special Commissioners subsequently gave notice that he withdrew the appeal: it was held that the appeal could not be withdrawn without the consent of the Special Commissioners because (on receipt by them of the notice of appeal) they had a duty to arrive at the true assessment. If a taxpayer does give notice of withdrawal of his reference the failure of his claim (if that is the outcome) is not the consequence of that notice but is because when the reference is brought on for hearing by the Board the taxpayer in such circumstances is (usually) not present personally or by representative on the appointed day at the appointed time and place and so no evidence is given to displace the burden of proof under sec. 190(b) of the Act. Thereupon the decision of the Commissioner on the objection is upheld pursuant to the Commissioner's motion that that be done. On the other hand if the taxpayer, despite his earlier ``withdrawal'', is present when the reference is called on for hearing and announces a change of intention and desires to adduce evidence in support of his claim, he is entitled to do so (at a suitable time and place) because his earlier conduct does not operate as an estoppel or otherwise bar him from his cause of action. So far as Court proceedings are concerned the matter is governed in some instances by rules of Court in respect of discontinuance (
Dymock's Book Arcade Ltd. v. F.C. of T. (1936) 3 A.T.D. 373 ). At the far end of the spectrum is
R. v. Munisamy (1975) 1 All E.R. 910 at p. 912 per James L.J. (in respect of an appeal against conviction and sentence): ``One cannot in the strict sense withdraw a notice of abandonment. What one can do is put before the Court sufficient facts to satisfy the Court that the abandonment is falsified and rendered a nullity.'' On the same subject see also
Reg. v. Medway (1976) 2 W.L.R. 528 .

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6. A Board of Review is not empowered to review any matter until it has received the reference. It is my opinion that until the Board is seized of the reference the taxpayer is able to discontinue his claim and so one can properly say that he is able by notice to withdraw his request for reference to a Board for review. Furthermore, as a general proposition (i.e. in the absence of estoppel, compromise, legal satisfaction, etc. - cf. Jolly v. F.C. of T. (supra)), a taxpayer is not prejudiced by vacillation in his intentions. Thus having proceeded to the point as in para. I hereof he might then notify the Commissioner that he wants time to reconsider whether the reference is to be sent to a Board or that he wants to withdraw his notice of reference to a Board. Presumably in such cases the Commissioner would let things stand as they are (i.e. the reference would not be sent on to a Board) and I see nothing in the Act or Regulations which would prevent a taxpayer from changing his mind again and notifying the Commissioner that he does want the aforesaid decision referred to a Board of Review. The last notification would possibly be out of time (sec. 187) and so its effect is to direct the attention of the Commissioner to any earlier timely notice upon which the Commissioner (and in due course a Board of Review) may properly proceed.

7. It was contended that if a ``withdrawal'' is not effective then there will be difficulties in administration. If the withdrawal is made as mentioned in para. 6 hereof (i.e. before a Board is vested with jurisdiction to review) and the taxpayer at a later point of time changes his mind and asks that the aforesaid decision be referred to a Board then that vacillation and the attendant administrative difficulties are matters which the Commissioner may weigh in determining whether to accede to the ultimate intention of the taxpayer to proceed (whether or not a notice has been given pursuant to the latter part of the first paragraph of sec. 189 of the Act) or whether to decline to accede. If the latter course is followed then the taxpayer may have recourse to proceedings by way of prerogative writ and any laches on his part will be relevant to the exercise of the Court's discretion to grant or refuse relief. If the withdrawal is made as mentioned in para. 5 hereof, i.e. after a Board is vested with jurisdiction, then I do not see that the administrative difficulties can be regarded as of any relevance. (For an instance of the prerogative writ proceedings see
Reckitt & Colman (N.Z.) Ltd. v. Taxation Board of Review (N.Z.) (1966) 14 A.T.D. 249 .)

8. The notice contained in the letter of 10 September 1974 (para. 2(f) hereof) was out of time. However, the facts as set out in para. I hereof show that the taxpayer had duly complied with all formalities. As he could not be estopped (in the circumstances set out) from relying on his original timely notice requiring the transmission of the aforesaid decision to a Board, the Commissioner, in my respectful opinion, acted correctly in remitting the reference to a Board for review. Thus the Board received a reference consequent upon the facts as set out in para. I hereof and the Board was thereby vested with jurisdiction to review. The Board was bound to proceed with the hearing because both parties had complied with all formal requirements, each had received due notice of the date, time and place of hearing, neither party sought an adjournment, the Board was ready and willing to proceed and the taxpayer was present and desired to give evidence on the merits in respect of the matter referred to in para. I hereof.

9. No doubt if the Commissioner had left the taxpayer to proceed by way of an application for a writ of mandamus against the Commissioner then the taxpayer could have been involved at that point of time in disproportionate and heavy legal expenses and the practical result of the course taken was to avoid that expense. Nonetheless the other side of the coin is that by taking the jurisdictional point before the Board the Commissioner was exhorting the Board to decline to hear the case on the merits and if the Board had acceded to that submission then the taxpayer could have been involved in similar legal expenses in seeking a prerogative writ (or its modern equivalent) against the Board. I am not drawing attention to that position in any critical sense nor am I suggesting that it was material to the question for determination. I regard the Commissioner's course as fully appropriate in the circumstances and the preliminary decision which the Board was required to make is an ordinary incident of every tribunal of limited jurisdiction. It seems to me that the instances where the Commissioner would virtually invite prerogative writ proceedings against himself rather than leave the dissatisfied party (whether the Commissioner or the taxpayer) to take such proceedings against the Board would

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be highly exceptional. There is an unqualified requirement in sec. 189 of the Act to refer a decision to a Board (or forward an objection to a Court) and the implication appears to be that where the Commissioner does so with knowledge of a jurisdictional defect or supposed defect, he is nonetheless entitled to rely thereon and submit that the Board does not have jurisdiction to proceed with a hearing on the merits. If either party is dissatisfied with the outcome of that submission the remedy is by an application for a prerogative writ. No doubt neither party can approbate and reprobate but that is pertinent to what occurs after the Board has made a determination on the jurisdictional point.

10. It so happens that during the progress of the hearing of the present reference the taxpayer after giving evidence on all issues chose to restrict his case to a claim for a deduction arising from the loss incurred upon the sale of shares in the proprietary company. This led to the Commissioner's representative in his final address adverting to the jurisdictional point in a separate submission directed to the withdrawal of a severable issue, i.e. the loss incurred upon the sale of shares in the proprietary company. All that I see necessary to add to what I have said above is that the Act requires the Commissioner to refer to the Board his decision on an objection (the ``Court'' procedure is not presently relevant) and he is thus bound to remit the decision as an entirety (taking the simple case of an objection being disallowed in toto) and not make a selection of some part of it on the basis which he has suggested in the present case.

11. It may be mentioned also that the Commissioner issued to the taxpayer on 21 March 1974 an amended assessment in respect of the year in issue - some 14 months after disallowing the objection. The amended assessment increases the taxable income. The taxpayer objected thereto and as at the date of hearing of the present case the Commissioner had not given a decision on that objection. The amended assessment was included in the statutory file of documents which became Exhibit A on the hearing of the reference (i.e. that which is dealt with in para. 1 hereof) but neither the lastmentioned objection nor any other document relevant to the lastmentioned objection was properly before the Board. Thus the Board was not concerned with the amended assessment.

12. It is now necessary to turn to the merits of the case concerning the loss on the sale of shares in the proprietary company and the first material fact is that during the whole of the year in issue, and for some years prior thereto, the taxpayer had been employed by a firm of stock and share brokers.

13. The notice of objection in respect of the shares in the proprietary company (the sole issue on which the taxpayer ultimately chose to proceed) is to the following effect: -

``The intention of this company was to buy and sell share options also listed shares and ultimately float the proprietary vehicle into a public company. Accordingly, it was intended to sell the shareholding initially valued at $5,000 at a profit once the company was listed on the Sydney Stock Exchange. However, the financial climate prevented listing from becoming a reality and the loss incurred is claimed under sec. 52 of (the Act as amended) as one derived whilst carrying on a business or trading with the intention of making a profit as prescribed in sec. 26(a) of (the Act as amended).''

14. The taxpayer's evidence concerning his payments to the proprietary company are inconsistent with the documents which are before the Board. For example the taxpayer is adamant that he has never lent money to this company and that all payments by him to it were solely for allotments of shares. On the other hand the documents imply that for some period of time the taxpayer had lent money to this company. I regard him as a truthful witness and any suggestion of rationalization or reconstruction on such a point seems to me to be fanciful. The documents are not supported by the testimony of any witness. The Commissioner is entitled to such advantages as flow from the conflict and may rely upon sec. 190 of the Act. At least it is clear that as a subscriber to the Memorandum of Association on or about 3 February 1970 the taxpayer became entitled to one B class share (par value $1) and probably he was one of the two directors at the outset. He said that he later paid $5,000 for 1,000 ordinary shares ($1 par value) at a premium of $4 a share. The Board has before it what appears to be an unsigned copy of the minutes of a meeting of directors of the proprietary company purporting to be held on 27 November 1970 at which it was resolved inter alia that ordinary shares numbered 2,003

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to 3,001 be allotted to the taxpayer at a premium of $4 making $5 per share payable on allotment. There is no satisfactory evidence that the taxpayer was a director at that point of time. The fact appears to be (from that unsigned minute) that a total of 5,798 ordinary shares was allotted on the same basis. Thus the taxpayer was in error in saying that $30,000 was subscribed for ordinary shares. When the taxpayer sold his holding for $1 on 28 June 1971 the shares were worthless. There is no evidence that the proprietary company prospered at any time.

15. The business of this proprietary company was the underwriting of put and call options in share trading. The taxpayer said ``the exercise involved in this is buying shares and underwriting options'' whereby the company receives ``a certain percentage, roughly 25%''. Thus he said: -

``... if we bought $30,000 worth of shares we would roughly get back in premiums $7,500 cash and ( scil. if) we then proceeded to invest that $7,500 again of which we would have got, say another $1,500 and we were going to invest $1,500 in premiums and get another premium... After 3 months time that $30,000 might be worth $40,000 or $45,000 whatever the amount is. We hoped that if the market kept on going the way it was, after three months we would do the same with that money and so on. It was not necessarily a three months' option. It might have been one month, six months, two months or whatever... We hoped that after 12 months that if everything went all right we might even float the company, or sell our shares but we actually had not made a decision. We talked about what could be done...''

``... in 12 months' time if it had gone as well as we were hoping, and the future did look rosy, we could either bring in more people to build up the capital... If we had $40,000 we could have more premiums... The way we worked it out on paper in theory is that in 12 months' time the $30,000, if all the options were exercised, would have been worth quite a large sum of money, and in 12 months' time we were thinking of doing it in a big way if the future looked rosy, either by floating the company, or bringing in more people or selling our shares in (the proprietary company). We virtually discussed it. We did not make any final decision on it but this is what we were looking at. Unfortunately the market did not continue the way we hoped.''

(Q. The downturn?)

``The downturn of the market. The only way that underwriting call options would succeed would be for the market to continue as a bull market, a strong market. If underwriting in the reverse situation it would have been a different matter but I would say more than 90% of options are call options, but the market did not continue and by underwriting options you are virtually buying shares for the future and if (it) had continued for another 12 months it would have turned out very well for us.''

The taxpayer was also asked in evidence in chief ``What were the specific things you could have done with those shares that you took up?'' His reply was ``I was looking at the fact (sic) that I could perhaps sell them in 12 months and make a very nice profit.'' Thereupon his evidence continued: -

``Q. You and other members?

A. Or somebody outside who could say it was a good company and wanted to come into it.

Q. You mentioned there was something else?

A. Or we could have floated the company.

Q. You are talking fairly generally?

A. There are three other things I was looking at: either in 12 months if the company was going to be worth a lot of money if I could have sold them or sold half, we either floated or applied for public subscription, or somebody outside could have bought our shares to make a profit or come into the company with fresh capital...

Q. Would you have charged those other people share premium? You paid $4 premium. Would you have charged them that or $10 or $20?

A. We never talked about it specifically, but I am sure on the advice of the proper person we would have, yes.

(The Chairman: That would necessarily depend, I suppose, on the profit history of the company? - - Yes. As to what premium you could get from subscriptions? - - Yes.)

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Q. You never envisaged that this company would lose?

A. Naturally we talked about it, yes. You must look at both sides of what could happen. Anything to do with shares you must look at the profit and loss side of it, but the way the market was situated at the time we were in it, a boom market. Whether it can happen again I do not know, but it was probably at the bottom of our minds at the time and we all realised that the money could be lost.

Q. When you were thinking in terms of losing money did you ever specifically discuss what could happen in the event of the money being lost?

A. No.''

16. In cross-examination the taxpayer was asked whether he hoped to get dividends from his shareholding in the company: -

``A. I really do not know. It might have entered our minds on a small basis but that was - our main thinking was (scil. what) the company was going to be worth in 12 months' time - what we could do with our shares... the options were being underwritten at 3 and 6 monthly intervals. It (scil. 1 year, 6 months or 2 years) was just a figure... You know we discussed things on a casual basis and in 12 months or 6 months or 9 months' time, depending on what happened, we would decide. Then we would make our decision but we certainly were not making any decision but we certainly were not making any decisions and saying in 12 months' time (this company) is going to be worth $1 million and we are going to float it because it is impossible to know what was going to happen in the future.

Q. You are saying about discussing the matter on a casual basis but surely the incorporation of the company was a serious matter. What was the dominant consideration you had at the time before you incorporated the company?

A. The dominant consideration was the monetary value which we could turn our shares into if the time ever came of selling them or whatever we decided to do with them.''

17. The Board Member, Mr. O'Neill, drew the attention of the taxpayer to the 1971 return by the company which shows $98,000 income from options underwritten and the losses on share trading as $138,000 resulting in a net loss for that year of $35,000, and the taxpayer was asked for an explanation as to the relative importance to this company of its share trading options and of its options in underwriting. The response was as follows: -

``I can explain that quite clearly and simply. Just going back to a simple exercise if the company underwrote a three months' call option, we turned around and bought 1,000 shares at $2, whatever the market value was and, say, in 3 months' time the shares were worth 10 cents, naturally the option would not be underwritten but we would still have 1,000 shares and although we had received the share premium at $550 when we first underwrote the shares, we then had 1,000 shares costing us $2 on the market and the market was only 10 cents or whatever it was, we would either have to sell them or hold on to them.''

The taxpayer further said that so far as he knew ``under the Institute Act it was illegal to underwrite shares without actually buying them or having them.''

18. The opening remarks of the taxpayer's representative in his final address were these:

``We have heard that the taxpayer was involved in share trading from 1966 right up to the end of this financial year before us 1971. He discovered while he was working in the stock broking firm what he regarded as a method of making money. He described it as a method of just putting capital in and then buying shares with that capital and selling the option which he would receive from more capital, so his operations would be that in exchange for this capital he would get shares and cash, that cash could then be reinvested to get more shares... The company was a short term venture so short term as to be even before a dividend would normally be declared. His idea was to put in his $5,000 and in some way unknown to himself precisely at the time, turn that into a larger sum of money - whether by sale, whether by getting in other people at higher share premium, or converting into a public company in which he would have a large number of shares instead of his private interest and then sell those shares. He was not sure how he was going to make his money but he knew he had got a good scheme and if he got a lot of money he could turn his $5,000 investment - and (sic) I

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hesitatingly use that word - the $5,000 subscription in this company to profitable use.''

19. By and large I think that the taxpayer's representative has made an accurate summation of his client's evidence. But the instant case is poles apart from the primary authority relied on, viz.
Buckland v. F.C. of T. (1966) 34 A.L.J.R. 60 ; 12 A.T.D. 166 . The taxpayer's representative stressed, in distinguishing cases which were relied on by the Commissioner, that the first limb of sec. 26(a) has no bearing on the matter. However, the principles set out in some sec. 26(a) first limb cases are helpful by way of analogy. (In any event cf.
Wall v. F.C. of T. (1965) 13 A.T.D. 530 at pp. 535 to 541 .)

20. The material point for consideration is not what the proprietary company proposed to do or in fact did in the course of its business but whether the taxpayer's stated purpose (accepted at its face value) at the times when he put money into the proprietary company to acquire shares is a purpose within the purview of the second limb of sec. 26(a) of the Act. His proposals in respect of his shareholding seem to me to be illusory. He had boundless optimism that the company would prosper and he was contemplating what he would prosper and he was contemplating what he would do with his shares if his hopes were fulfilled. I regard his expressed ``purposes'' as being remote from anything which has ``a commercial character (so as) to wear an aspect of dealing'' (
Steinberg v. F.C. of T. 75 ATC 4221 at p. 4225 ); and remote from anything which is akin to the acquisition of property to be the vehicle for making a gain - whether designated as capital profit or income profit - in the course of a transaction in the nature of a commercial dealing (ibid at p. 4228). In any practical sense there was no formulation of a scheme in definitive principle (ibid) in respect of shares in the proprietary company. What the taxpayer called the ``dominant consideration'' (para. 16 hereof) can be seen to be merely a hope that one of various things might occur if stock exchange movements were in a favourable direction. I reject the submission that there was a scheme to turn the shares in the proprietary company to profitable account within the principle of Buckland's case (supra). The intentions of the taxpayer lack the indicia of profit-making in any realistic appraisal of what was held and what could be achieved only by the fulfilment of hopes and aspirations in circumstances outside the control of the taxpayer and his associates in the proprietary company.

21. I would uphold the Commissioner's decision on the objection which is referred to in para. I hereof. In light of the existence of the amended assessment (para. 11 hereof) it is not appropriate to make at the present juncture any pronouncement in respect of the assessment which is referred to in para. I hereof (cf. Shell Co. of Australia Ltd. v. F.C. of T. (1930) 44 C.L.R. 530 at p. 543.)

Claim disallowed


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