CASE 21/93

Members:
BJ McMahon DP

Tribunal:
Administrative Appeals Tribunal

Decision date: 24 May 1993

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BJ McMahon (Deputy President)

The applicant seeks a review of an objection decision affirming an assessment which treated a sum of $6.6 million as part of the gross taxable income of the applicant in the year ended 30 June 1984. The applicant says that the amount in question should be treated as capital. The respondent argues that it is income and is properly taxable under s 25(1) of the Income Tax Assessment Act or, alternatively, under s 25A(1) of that Act. To determine the question, it will be necessary to examine events leading up to a series of legal steps undertaken on 29 June 1984 which resulted in the satisfaction of an obligation to pay the $6.6m to the applicant.

2. The principal persons who have at all relevant times been responsible for the activities of the applicant company, are 2 people to whom I will refer as the scientist and the marketer. Both were the only active directors of the applicant company. The marketer was chairman and the scientist was its public officer. There were other directors from time to time. There were shareholders other than the family companies of the scientist and the marketer. At all times, however, the evidence shows that the scientist and the marketer were the persons responsible for the company's activities.

3. A history of events must start in December 1982 when both the scientist and the marketer attended a scientific meeting in Adelaide. They had previously been at school together and renewed their acquaintance at this conference. As a result of presentations by speakers at the conference and as a result of discussions both of them had with other persons (one of whom was subsequently to become a non-participating director) they all expressed an interest in monoclonal antibody technology. This is a form of biology technology which uses antibodies manufactured as specifics for use in certain biological situations. They discussed the extent to which monoclonal antibodies had been developed in Australia and the fact that these developments were likely to be taken up by foreign interests. The scientist said in his

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evidence - ``Anyway during the course of the night, we talked about how perhaps we could get together to develop Australian monoclonal antibodies and to form some sort of monoclonal antibody company that would develop and market Australian produced monoclonal antibodies for human diagnostics, animal and veterinary diagnostics and also plant diagnostic. At the end of the night we suggested that we should get together at a later date to put together more specific plans and perhaps even write a business plan and select projects which we thought had commercial viability''.

4. Even at this early stage, therefore, it is clear that the scientist and the marketer had in mind a business venture which would be intended for the commercial exploitation of this technology.

5. Early in January 1983, they met again at the home of the non-participating director to review various monoclonal antibody developments in Australia and to look for potential products. During a series of meetings that followed, the 3 interested parties examined more than 100 projects in the plant, veterinary and human areas.

6. They then came upon some data from a scientist at an Australian university, concerning a new monoclonal antibody that had potential for detecting breast cancer in serum. This project appeared to be the most promising of all that they had looked at and it was decided that it should be further investigated. The scientist established contact with the university inventor to discuss the work then being carried on with this specific antibody.

7. The scientist gave evidence that in the meantime, the 3 persons concerned had begun to make plans ``for the commercial company side of things''. Through recommendations, they met an accountant to whom I will refer as adviser one. A number of meetings with adviser one then followed. He told the venturers that he would be happy to put together a company and that he would help them to raise the finance for it because this was his area of expertise. He asked to have a 10 per cent interest of the company and suggested that the other 3 should have the remaining 90 per cent divided equally between them. Adviser one also noted that the syndicate was going to need a lawyer to help in the documentation of any licence agreement or any commercial agreement which the syndicate might have with the university. As a result of introductions from adviser one, a solicitor was chosen. While this was going on, negotiations had got beyond the stage of discussing technology with the inventor. Negotiations with the university itself were put in place with a view to realising some form of acquisition and exploitation of the petty patent held by the university in respect of the invention.

8. In September 1983 the inventor had written to the scientist setting out what he believed would be the basis of what should be included in the commercial agreement. Not only was the technology to be transferred. There was also a cell line, or range of ready manufactured antibodies, which was to be sold for future reproduction. Only about 20 tests had been done on serum at that stage. The university was looking for a payment of $10,000 and for the payment of future royalties in consideration of the grant of a licence.

9. In the meantime, adviser one had come back with a plan for raising money to help the syndicate develop the company. He suggested a limited partnership in which investors would put up the money to help commercialise the antibody and would receive some of the profits from sales of the test. Money was needed in order to develop the technology to make it suitable for mass application. So far, scientifically controlled tests had been carried out in a university laboratory in order to determine the effectiveness of the technique for diagnosing breast cancer in serum. What the syndicate sought was to perfect and simplify this technique to such an extent that it could be applied by an untrained laboratory technician. In this way, diagnoses could be carried out in a manner similar to others commonly executed in a pathology laboratory.

10. According to evidence given by the marketer, a shelf company (company one) was acquired which was intended to act on behalf of the limited partnership in the acquisition of the technical rights from the university. It was proposed that units in the limited partnership be offered primarily to accountants. This scheme was settled upon, notwithstanding the reservations expressed by the solicitor concerning the possible necessity for a prospectus.

11. Negotiations continued with the university. The scientist and the solicitor met with the inventor and the university's solicitor to prepare a draft agreement. Correspondence

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between the 2 solicitors concerning drafting amendments to the agreement make it clear that even at this early stage it was proposed that the syndicate would have a right to grant sub- licences to approved sub-licensees. Negotiations by this stage were being conducted in the name of company one.

12. Adviser one was not successful in his endeavours to raise funds. In fact by the end of February 1984, adviser one had succeeded in obtaining only one subscription for one unit of $5,000. Both the scientist and the marketer became ``fairly disenchanted'' with adviser one's efforts and ``we started to look at other possible ways of raising finance or getting shareholders into the company''. A friend of the scientist made $200,000 available through a charitable trust because, as he said, she was interested in medical research projects and wanted to help. It was proposed that she should take up an interest in adviser one's limited partnership but until its future was settled, the money was retained in the solicitor's trust account.

13. While adviser one was vainly seeking his subscriptions, the scientist and, to a lesser extent, the marketer, approached a number of people in the finance industry in an endeavour to interest them in the project. Apart from one offer which was not accepted, nothing firm emerged from these discussions.

14. In January 1984 at a party in the office of the solicitor, the scientist and the marketer met adviser two. He expressed an interest in the project and wanted to be involved. It was decided that adviser one should be bought out and that the relationship should be terminated.

15. In December 1983 the licence agreement with the university had been signed. Although negotiations had proceeded on the basis that the licence would be granted to company one, at the last minute this was changed to company two (the present applicant) which had been incorporated in September 1983 and which had been acquired as a shelf company for this purpose. The reason for the switch was not made entirely clear. It was suggested that possibly the parties were unsure of the extent of adviser one's involvement in the affairs of company one and that consequently it was safer to acquire the rights in the name of a new clean company. Certainly the university did not raise any objection. Indeed, it later entered into a confirmatory agreement endorsing the validity of the original licence, notwithstanding the fact that company two had not then changed its name legally to the name under which the licence agreement was executed at the time the document was in fact executed.

16. Once contact had been established with adviser two, and once the licence agreement with the university had been executed, many meetings followed to discuss ways in which the project could be advanced financially. Ultimately it was agreed that another limited partnership should be formed, but that the target investors should be doctors. Adviser two had access to likely investors of this nature through the client list of an accountant with whom he was associated. Over the next few months, seminars and presentations were held with medical practitioners to assist adviser two and the accountant in obtaining subscriptions. The scientist and the marketer provided the technical resources for these presentations. The exact form of organisation of the limited partnership was never made known to the original syndicate. Adviser two took the view that the syndicate having acquired the technology, it was to dispose of it in a manner nominated by adviser two, who would then raise the necessary cash and who would then arrange for the necessary marketing of tests and the sale of antibodies in the future.

17. Adviser two indicated that he wanted to arrange for a full market survey for the test so that he could be better informed as to how much the process was really worth and so that he would feel more comfortable in the negotiations with the syndicate in coming to a fair and reasonable price. Although adviser two did not give evidence on the hearing, no doubt he also wished to satisfy himself of the value of the rights to be assigned to the limited partnership so that he could demonstrate that value to intending subscribers. Various meetings were held with a person nominated by adviser two as a qualified valuer. Prior to the market survey which was the basis of the valuation, there had been considerable discussion (according to the marketer) concerning what rights were to be available to the partnership. Adviser two initially demanded that all rights not only to the antibody process but also to the cell line be provided. The scientist and the marketer refused as (he said) they were interested in developing a business,

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not in simply selling off rights from the university and acting as consultants.

18. It was finally agreed that the rights to be made available to the limited partnership would be the application of the antibody in a serum test (the subject of the university's patent) along with an option, subject to provision of research funding and later negotiation of licence terms, to an application of the antibody for imaging purposes. The applicant company therefore was to retain the primary licence; it was to retain control of the cell line which meant that it had control over any supply of antibody and its possible future application in imaging or any other therapeutic area. By retaining the right to supply antibody, and by retaining the right to exploit if for any other purpose for which it was discovered to be suitable, the marketer said that the syndicate was ensuring a needed cashflow for the business.

19. Based on the market survey, the syndicate suggested to adviser two that somewhere around $10m would be an appropriate amount for the rights to be transferred to the limited partnership. It offered to provide finance to the limited partnership. After ``a fairly heated discussion'' it was agreed that the limited partnership was to pay $6.6m. For this, they were to receive rights in part of the applicant's technology. They would be entirely responsible for the marketing of the test and they would be responsible for all costs associated with marketing and promotion of the test, including expenses which the applicant incurred while helping the partnership in any marketing or promotional activity.

20. For reasons which he did not fully explain to the applicant, adviser two insisted on behalf of the limited partnership that all arrangements must be concluded prior to 30 June 1984. One may speculate that this was to give a taxation advantage to those who subscribed in that financial year, although there is no real evidence of this.

21. The original licence agreement of 23 December 1983 with the university dealt with both the method of detecting breast cancer and with the cell line and monoclonal antibody. Both were the subject of Australian petty patent applications. By clause 2(a) of the licence agreement, the university granted the applicant the exclusive licence to make, use, exercise, manufacture, sell and vend the invention throughout the world for a period of 6 years with a right of renewal for a further 6 years. In consideration of this grant, the applicant was to pay the university a sum of $10,000 and royalties of 5 per cent. The applicant had the right to sub-licence to approved sub-licensees. In exercise of this right, the sub-licence was granted to adviser two's company on 29 June 1984. By clause 2(a) of the agreement, the applicant granted an exclusive licence to the licensee of all the rights the applicant had to the detection process and to a certain trademark. The agreement was to run until 25 November 1989. Clause 3 of the agreement provided for a consideration of $6.6m which was apportioned in clause 4 as to $10,000 to the trademark and as to the balance to the breast cancer test process.

22. The applicant filed its first tax return for the year ended 30 June 1984 on 10 April 1985. It included a copy of the principal licence agreement and of the sub-licence agreement. It described the business of the applicant as medical research. It showed a taxable income of $41 comprising $932 of interest income offset by $891 of expenses of a general nature. Some references were made to the transactions in notes to the accounts. There was however no reference to the intention or purpose of the company in entering into these transactions. Note 1 to the balance sheet explained the capital reserve of $6.6m as the sum paid by adviser two's company to the applicant pursuant to the sub-licence agreement. Note 3 to the accounts refers to a loan agreement made between the applicant and adviser two's company covering the way in which that sum of $6.6m was to be paid. Another note refers to a contingent liability for consultancy fees and a final note refers to the change of name of the applicant company. None of the material in the accounts gives any indication of the events leading up to the transactions of 29 June 1984, other than those appearing in the formal documents and in those notes.

23. The limited partnership was not a success. After approaches to international pharmaceutical organisations, adviser two and the accountant (according to the scientist) ``decided to back the partnership into a public float''. The scientist and the marketer became directors of the new public company. It was from the prospectus issued at the time of the float that the Commissioner became aware of the circumstances leading up to the events

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recorded in the applicant's 1984 taxation return. The prospectus affirmed that the applicant company was acquired by the marketer and the scientist ``for the purpose of facilitating the transfer of biotechnology from Australian research institutions to the market place''. It went on to say that the scientist and the marketer ``were disappointed that the quality of the research conducted in Australia was not attracting the attention which it justified and the companies which might reasonably be expected to participate in advancement and commercial development of certain research projects were failing to take up the challenge of that participation''. It then went on to say that the applicant company had acquired a licence to market the process from the university so as to be in a position itself to market the process. The statements made in the prospectus, of course, are not statements made by or on behalf of the applicant. They are, however, statements for which the marketer and the scientist, as directors of the new public company, must accept responsibility. In so far as the statements give an indication of the purpose and intention of those 2 persons, the statements must be taken to have been approved by them. They would, of course, have signed the prospectus.

24. An amended assessment was issued on 2 April 1991 to include the amount or value received from the limited partnership of $6.6m. Deductions of $358,249 (principally being the amount paid to the university and consultancy fees paid to adviser two and the accountant) were allowed leaving an amended taxable income of $6,241,792 upon which tax was levied. Additional tax for an incorrect return was also assessed on the basis of a per annum component of 14.026 per cent and a culpability component of 45 per cent. There was also a consequential assessment under Division 7 for undistributed profits.

25. Before one can deal with whether the Commissioner was authorised by s 170 to issue the amended assessments because of a failure to make a full disclosure, and whether the additional amounts of tax are justified, it is necessary to establish first of all whether the gross amount of $6.6m was a capital receipt or whether it was income according to ordinary concepts. The right to issue an amended assessment can arise only if tax was avoided.

26. The applicant's case is that what happened was not planned in advance. There was a gap between the execution of the university agreement in December 1983 and the events of June 1984. Discussions during that gap were critical in characterising the nature of the subsequent transactions. Although 2 men were searching for finance generally, they were not trained in finance or accounting matters and had no clear idea that the ultimate result would be obtained. It was only the accident of meeting adviser two at the party in January 1984 that led to the ultimate result. It was submitted, therefore, that there was no continuum of a commercial enterprise. Fortuitous and unplanned events did not provide the necessary links.

27. Furthermore it was submitted that the licence was not acquired for the purpose of granting a sub-licence at a profit. Clause 8 of the Principal Licence Agreement permitting this to be done was simply (it was submitted) a device to protect the university's reputation and to give it some degree of control over further development in the antibody field. It was submitted that the concept of granting a sub- licence did not arise until March 1984 when adviser one was bought out and the scale of activity with adviser two intensified. It was submitted that the above facts led to an inference that the intention of members of the syndicate was merely to commercialise the invention by breaking it down to a product which could be used by pathologists. In my view, however, this submission simply cannot be supported by the facts. From the earliest days of the venture, it was contemplated that some sort of commercial realisation would be attempted and that the asset the syndicate had to exploit, was the licence agreement it negotiated from the university. It was always intended, as will be seen from correspondence and negotiations between the parties, that the licence would not be operated by the syndicate directly. It was always intended that outside assistance, through the granting of suitable sub- licences, would be recruited.

28. Finally it was submitted that by June 1984, there was no business in existence. The applicant company was simply getting ready to do business. For that purpose it realised an asset. It is true that a surplus was created on the realisation but nonetheless it was a capital realisation for the purpose of funding further work by the applicant on the manufacture and

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supply of antibodies and for research into the use of antibodies in other areas.

29. The applicant submitted that negotiations carried out in the name of company one should be ignored. The present applicant could be responsible only for what was done in its own name. In my view this is commercially unreal. It is also not a correct legal reading of the facts. It is clear that at all times it was the intention of the scientist and the marketer to enter into a commercial venture. They were not concerned with altruistic developments. They readily agreed in evidence that they were seeking a profit or reward for themselves as well as for others. In my view, company one was merely the first stepping stone. By the time company two was acquired, the intentions of its directors had been well clarified. When company two executed the principal licence agreement with the university, it was in business because of the prior activities of its directors and guiding actors. Upon taking control of company two the scientist and the marketer brought with them attitudes of mind, the experience of the previous 12 months, a firmly formed intention to embark upon a commercial enterprise and consequently fixed company two with this attitude and intention from the day they acquired it. Certainly these relevant intentions were present at the time the licence agreement with the university was executed.

30. The factual matrix begins in December 1982 at the Adelaide conference when these actuators first conceived a commercial plan for the development and exploitation of antibody technology. By September 1983, that plan was well advanced. Further exploitation of the rights acquired from the university was contemplated from the outset. Long before the agreement was signed, documents tendered in evidence showed that the parties had discussed not only exploitation in Australia but also the possible exploitation outside the country through a Singapore based company. The series of transactions before and after December 1983 have all the hallmarks of a commercial enterprise. From the outset, the parties (and therefore the applicant) had a purpose of realising and exploiting patent rights and other more inchoate rights to technology. It is, in my view, apparent that moneys generated as a result of such an enterprise (whether those moneys originated in the manner originally planned or not) must be regarded as income in accordance with ordinary concepts.

31. This conclusion is reinforced by the fact that only part of the applicant's rights was realised. In
Rolls-Royce Ltd v Jeffrey (Inspector of Taxes) (1962) 1 All ER 801 a distinction was drawn between the characterisation of moneys received for the disposition of an entire enterprise, contrasted with moneys received where there is not an entire exhaustion of the taxpayers' intellectual property rights. Like Rolls-Royce Limited, the present applicant did not dispose of the entirety of its assets. It retained the cell lines and the right to sell antibodies. What it sold was what it always intended to dispose of, and which provided for it funds which were to be used in its residual activities. Another example of moneys derived in such a manner being treated as income can be seen in
Ducker v Rees Roturbo Development Syndicate Ltd (1928) All ER 682, to which approving reference was made in Myer. This characterisation is supported by the fact that the period of sub-licence in the present case was relatively short.

32. The principles to be considered in cases such as the present were authoritatively stated by the High Court in
FC of T v The Myer Emporium Ltd 87 ATC 4363; (1986-1987) 163 CLR 199. At ATC pages 4366-4367; CLR pages 209-210 the Court said-

``Although it is well settled that a profit or gain made in the ordinary course of carrying on a business constitutes income, it does not follow that a profit or gain made in a transaction entered into otherwise than in the ordinary course of carrying on the taxpayer's business is not income. Because a business is carried on with a view to profit, a gain made in the ordinary course of carrying on the business is invested with the profit- making purpose, thereby stamping the profit with the character of income. But a gain made otherwise than in the ordinary course of carrying on the business which nevertheless arises from a transaction entered into by the taxpayer with the intention or purpose of making a profit or gain may well constitute income. Whether it does depends very much on the circumstances of the case. Generally speaking, however, it may be said that if the circumstances are such as to give rise to the inference that the taxpayer's intention or

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purpose in entering into the transaction was to make a profit or gain, the profit or gain will be income, notwithstanding that the transaction was extraordinary judged by reference to the ordinary course of the taxpayer's business. Nor does the fact that a profit or gain is made as the result of an isolated venture or a `one-off' transaction preclude it from being properly characterized as income (
F.C. of T. v. Whitfords Beach Pty. Ltd. 82 ATC 4031 at pp. 4036-4037, 4042; (1982) 150 CLR 355 at pp. 366-367, 376. The authorities established that a profit or gain so made will constitute income if the property generating the profit or gain was acquired in a business operation or commercial transaction for the purpose of profit-making by the means giving rise to the profit.''

33. Their Honours then referred to the Californian Copper test for support at ATC page 4367; CLR pages 210-211-

``This test was approved by the Privy Council in
Commissioner of Taxes v. Melbourne Trust, Limited (1914) A.C. 1001, at p. 1010 and was applied by the House of Lords in Ducker v. Rees Roturbo Development Syndicate Ltd. (1928) A.C. 132 at p. 140. There a company was formed primarily for the purpose of acquiring, developing and exploiting an invention relating to a centrifugal turbine pump by way of granting manufacturing licences under patents. In the course of its business the company acquired additional English and foreign patents in connection with the invention. Although its main business was the grant of manufacturing licences, the company always contemplated the possibility of a sale of its interest in the foreign patents. Receipts from the sale of that interest were held to constitute income. Lord Buckmaster stated (at pp. 141-142) that this was not `a mere accidental dealing with a particular class of property' but `was part of their business which, though not of necessity the line on which they desired their business most extensively to develop, was one which they were prepared to undertake'.

The important proposition to be derived from Californian Copper and Ducker is that a receipt may constitute income, if it arises from an isolated business operation or commercial transaction entered into otherwise than in the ordinary course of the carrying on the taxpayer's business, so long as the taxpayer entered into the transaction with the intention or purpose of making a relevant profit or gain from the transaction.''

34. The present circumstances can fairly be described as an ``adventure in the nature of a trade''. The applicant may have wished to continue its business in medical research. Nevertheless the acquisition and disposal of licensing rights was an essential element in its planning. The fact that it did not know when it acquired the rights, how those rights were finally to be disposed of, is irrelevant. The fact that they were disposed of in a one-off transaction is also irrelevant. What has been examined, relevantly, is a scheme of profit- making or a scheme for deriving assessable income. In
Westfield Ltd v FC of T 91 ATC 4234, the court pointed out that it did not follow from the decision in Myer Emporium Ltd that every profit made by a taxpayer in the course of his business activity would be of an income nature. Their Honours said that to so express the proposition would eliminate the distinction between an income and a capital profit. It was necessary, they said, that the purpose of profit- making must exist in relation to the particular operation.

35. However, Hill J at page 4243 specifically adverted to the situation where the taxpayer has the purpose or intention of making a profit by turning an asset to account although the means to be adopted to generate that profit have not been determined. In my view, this present case is exactly the type of case to which his Honour referred. The granting of the specific sub- licence to adviser two's company may not have been in the contemplation of the applicant at the time it acquired the principal licence from the university. The granting of some sub-licence of some nature, however, was clearly within its contemplation. If the transaction was isolated, it was nevertheless entered into in the ordinary course of the carrying on of the applicant's business as the applicant entered into the series of transactions with the intention or purpose of making a relevant profit or gain.

36. I have come to the conclusion therefore that the sum of $6.6m, paid as it was against a background of the facts and circumstances to which I have referred, is assessable income in the hands of the applicant. The next question to

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be determined is whether the Commissioner had the power to issue an amended assessment because the taxpayer had not made a full and true disclosure of all the material facts necessary for the Commissioner's assessment and that there had consequently been an avoidance of tax. I have held that there has been an avoidance of tax. Was there a full and true disclosure of all the material facts? A knowledge of the applicant's purpose and intention and a knowledge of the surrounding facts would have been necessary in order to characterise the sum of $6.6m as gross income. That purpose and intention was not disclosed in the return. In
AL Hamblin Equipment Pty Ltd v FC of T 74 ATC 4001 at 4011-4012; (1973-1974) 130 CLR 159 at 175 Stephen J said-

``The failure to disclose this purpose is not the omission of mere `explanatory detail confirmatory of a conclusion' which the Commissioner `could and should have reached on the facts before him':
W. Thomas & Co. Pty. Ltd. v. F.C. of T. (1965) 115 C.L.R. 58 at p. 75 per Windeyer J. Unlike the facts of that case the Commissioner was not, in the present instance, placed in any position, having regard to the material in the taxpayer's return, to infer that the taxpayer possessed the relevant purpose at the date of acquisition, a purpose not only of re-selling but of re-selling at a profit. In
Austin Distributors Pty. Ltd. v. F.C. of T. (1964) 13 A.T.D. 429 at p. 433, Menzies J., having stated that a disclosure which left the Commissioner to speculate as to some of the material facts was not a sufficient disclosure, went on to test the adequacy of disclosure by asking whether-

`If advice were to have been sought by the taxpayer whether or not the sum in question was a taxable premium, would the person from whom that advice was sought have required more information than this return disclosed to the Commissioner?'

If that test be applied in the present case it leads to only one conclusion, that there was lacking any full disclosure.''

37. This explanation of the application of s 170 (as it was at the relevant time) has been followed on a number of subsequent occasions. In
Cole v FC of T 89 ATC 4792 Lockhart J affirmed that full disclosure calls for disclosure of the taxpayer's purpose in entering into the relevant transactions.

38. It would not have been possible in examining the returns as lodged to understand the true nature of the $6.6m. In my view, the applicant did not make a sufficient disclosure and the Commissioner was accordingly entitled to raise the amended assessment at the time he did.

39. The remaining matter to be dealt with is the question of additional taxation or penalty. There is no escaping the late payment penalty calculated at the going rate of 14.026 per cent per annum. The only question is whether a culpability component of 45 per cent is excessive. In my view, it is. In the Commissioner's own guideline (IT 2517) a culpability component of this magnitude is imposed only where there has been deliberate evasion without aggravating factors. It seems to me that this cannot be supported on the present facts. There is no evidence that the applicant deliberately went out of its way to evade tax. As far as one can tell from the evidence, what happened was simply a failure to advert to the possible consequences of structuring the business arrangement in the way it was and a failure to advert to the consequence of disclosing this arrrangement in full. What characterises the conduct of the applicant in relation to its return is carelessness, rather than deliberate evasion. For such a reason the Commissioner's guideline calls for a culpability component of 15 to 30 per cent. In my view a proper component would be 20 per cent in the present circumstances.

40. The objection decision is varied by reducing the amended assessment to such an amount as would reflect a culpability component of 20 per cent. In all other respects, the objection decision is affirmed.