Commissioner for Inland Revenue v Hickson

• Jurisdiction: South Africa
• Court: Appellate Division
• Judge: Schreiner JA, Beyers JA, Malan JA, Van Blerk JA and Van Wyk AJA
• Judgment Date: 17 December 1959
• Citation: 1960 (1) SA 746 (A)
• Hearing Date: 08 December 1959

Beyers, J.A.:

The respondent is one of two partners in a business which undertakes work as accountants, secretaries, agents, and so forth. The partnership has at all material times acted as secretaries and selling agents for a company known as Comec Mimosa Extract Co. Ltd. (hereinafter

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referred to as the Company). The two partners individually hold shares in the Company; the partnership as such owns no shares therein. For its services as secretaries the partnership receives £1,500 per annum from A the Company. As selling agents it receives a commission of 4s. for every ton of wattle extract sold on behalf of the Company. The partnership employs its own staff and pays the salaries of that staff in carrying out its duties as secretaries and selling agents: the expense of any travelling done on behalf of the Company is borne by the Company. The respondent is in addition a director of the Company. He has held B this position since 1953, after being an alternate director for two years. He devotes approximately threequarters of his business time to the affairs of the Company. His director's fees, which amount to £220 per annum, are paid into the partnership.

C The respondent sustained a spinal injury in 1937 and in 1952 an unsuccessful attempt was made to remedy his condition by surgery. Since that date he has moved about with considerable difficulty.

In 1955 the Company decided that the respondent, who by virtue of being the agent in charge of selling its products, was the director most fully conversant with its selling organisation, should visit the United States D and England for a series of meetings with its overseas agents.

Prior to accepting this assignment the respondent consulted his medical adviser, who advised him that it would be possible for him to make the journey only if he had someone to assist him to get around. At the time E he was using two sticks to assist him in walking, and he could not stand for any length of time: it was therefore essential for someone to accompany him. He accordingly decided that his wife should accompany him, since this would be less expensive than engaging a trained nurse for the purpose.

In August 1955 the respondent and his wife proceeded by air to the F United States, via Amsterdam. After twelve days, spent in New York seeing the Company's agents, they returned to the Union via London. where the respondent also wished to see agents of the Company. During the stay in New York the respondent's wife was engaged for most of the time in looking after him. In London, where she had relations living, she enjoyed some leisure.

G The Company paid the respondent's travelling expenses. He received no special fee for his services abroad. He did not ask the Company to pay his wife's expenses, nor did he charge any portion thereof to the partnership, as he did not think that the Company or the partnership should be put to extra expense because of his own physical disability. H He therefore paid his wife's expenses out of his own pocket, amounting to £609 10s. in all - £532 6s. 4d. for the air trip, and £77 3s. 8d. for hotel expenses in New York. These expenses were additional to those incurred by the respondent in the upkeep during his absence of his home in the Union.

The tonnage of wattle extract sold by the Company in the United States increased considerably after the respondent's visit to New York. One of his objects in making the visit was to endeavour to increase

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such sales. In consequence of this there was an increase in the partnership's income by way of commission from the Company.

In his return of income for the year of assessment ended 30th June, 1956, the respondent sought to deduct from his share of the income of the partnership the abovementioned sum of £609 10s.

A The Commissioner for Inland Revenue, in his determination of the respondent's liability for normal and super tax for the year in question disallowed the...