Scottish Court of Session Decisions

The Taxes Management Act 1880 (43 and 44 Vict. cap. 19), by section 60 provides—“ Double Assessments.—Whenever it appears to the satisfaction of the Board that a person has been assessed more than once to the duties for the same cause and for the same year, they shall direct the whole or such part of such one or more of the assessments as appears to be an overcharge to be vacated, and thereupon the same shall be by such order vacated accordingly.”

At a meeting of the Commissioners for the general purposes of the Income-Tax Acts, and for executing the Acts relating to Inhabited House Duties for the Cowal district of the county of Argyll, held at Dunoon on the 5th day of November 1888, Donald Macgregor of Ardgartan appealed against and claimed relief from an assessment of £659, duty £16, 9s. 6d., under Schedule A of the Property and Income-Tax Acts, made upon him for the year 1888–89, being the annual value of the lands of Ardgartan and others belonging to the said Donald Macgregor, and situated in the said district of Cowal, on the ground of having been called upon to pay and having paid to his Grace the Duke of Argyll, as superior of the lands, on 30th May 1888, a casualty of superiority amounting to a full year's rental of the lands, which he claimed to have deducted from or set against the assessment appealed against.

The appellant contended that he had derived

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no income for the year from the estate; that payment of the casualty was made by the appellant to the Duke without deduction of income-tax, because his Grace refused to allow deduction thereof, in respect that, as was admitted by the Surveyor, he was required by the Commissioners to make a special return of, and pay income-tax directly upon, all casualties received by him, and that had he allowed the appellant to retain tax in the manner provided by rules 9 and 10 of No. 4 of the general rules enacted under Schedule A of 5 and 6 Vict. cap. 35, sec. 60, he would have been submitting to a double charge. The said Duke had since made his special return, and been assessed upon the casualty. The assessment sought to be imposed upon the appellant was thus doubly charged, and as an overcharge fell to be vacated in manner provided by the Taxes Management Act 1880, section 60. The appellant therefore claimed relief from the assessment made upon him.

The Surveyor of Taxes maintained that the casualty of superiority paid by the appellant in the circumstances set forth was of the nature of a capital payment; the statute contained no provision for allowing such a payment to be deducted from or set against the rent or yearly value in assessing lands and heritages to property and income-tax, and that it was incompetent to make any such allowance. He referred to the deductions and allowances detailed in No. 5 of Schedule A of 5 and 6 Vict. cap. 35, sec. 60, also to rule 14 of No. 4 of the said section, and section 159 of the said Act, providing that no other deductions are to be allowed than such as are expressly enumerated in the Act.

The Commissioners found that the statute contained no provision authorising any allowance from an assessment under Schedule A in respect of the payment of a casualty of superiority, and therefore refused the appeal.

The appellant took a case, and argued—What was demanded was not a deduction of an assessment; it was the vacating of an assessment which was not chargeable. The rent for the year was not income or profit in the hands of the appellant, because he had been obliged to pay it all to the superior. The superior under the former law could have entered into possession to recover the amount— Hill v. Caledonian Railway Company, Dec. 21, 1877, 5 R. 86, per Lord Deas, 390; Allan's Trustees v. Duke of Hamilton, Jan. 12, 1858, 5 R. 510, where the Lord Justice-Clerk pointed out that where lands were in non-entry the superior is presumed to be in possession, and what the singular successor must render for his entry is the value of the beneficial enjoyment or income of the lands. See also Sharpe v. Parochial Board of Latheron, July 12, 1883, 10 R. 1163, where subjects being twice entered in a valuation-roll did not warrant the collection of poor-rate in assessing twice for them. He paid the whole rent of the lands for the year to the superior, he himself derived no benefit from them. The superior paid income-tax upon the sum so paid to him, and if the vassal was required to pay income-tax he not only paid upon value he did not receive, but the Commissioners exacted the duty twice upon the same sum, which was contrary to the terms of the Taxes Management Act 1882, sec. 60.

The respondents argued—A composition was not payment to the landlord of the rent actually drawn from the lands for that year, it was the price paid for the entry. It was a mere accident that the two sums corresponded in amount. They were two different subjects. The superior was therefore not the proprietor of the rent as contended by the appellant. The superior could only uplift the rents by virtue of legal proceedings.

At advising—