Rhodesian Metals Ltd (In Liquidation) v Commissioner of Taxes

• Jurisdiction: South Africa
• Judge: Vicsount Maugham, Lord Atkin, Lord Russell of Killowen, Lord Wright and Lord Porter
• Judgment Date: 27 May 1940
• Court: Appellate Division, Privy Council
• Hearing Date: 27 May 1940
• Citation: 1940 AD 432

Lord Atkin:

This is an appeal from the Appellate Division of the Supreme Court of the Union of South Africa who affirmed a decision of HUDSON, J., in the High Court of Southern Rhodesia, dismissing an appeal by the liquidator of the appellant company from an assessment to income tax in the sum of £146,000 for the year ending 31st March, 1936 The assessment was made under the provisions of the Ordinance of Southern Rhodesia No 20 of 1918 It is desirable to set out some of the sections of that Ordinance:-

"Sec 4 (1): There shall be charged, levied and collected throughout the Territory, subject to such conditions and to such exemptions and abatements as are hereinafter provided, an income tax, at the rate and calculated in the manner specified hereunder, in respect of any taxable income received by or accrued to or in favour of any person . . . .

Sec 5: For the purposes of this Chapter -

'gross income' means the total amount other than receipts or accruals proved by the taxpayer to be of a capital nature, received by or accrued to or in favour of any person in any year or period assessable under this Chapter from any source within the Territory or deemed to be within the Territory . . . .

an amount shall be deemed to be derived from a source within the Territory if it is received by or accrues to or in favour of any person ordinarily resident in the Colony or whose principal

place of business is situate therein or whose business is wholly or partly managed therefrom . . . .

'income' means the amount remaining of the gross income of any person for any such year or period after deducting therefrom any amounts exempt from income tax in the hands of such person:

'taxable income' means the amount remaining after deducting from the income of any person all the amounts other than abatements allowed as deductions under this Chapter;

Sec 10: Income shall be deemed to have accrued to any person from a source within the Territory, where it has been received by or has accrued to or in favour of such person by virtue of -

(1) any contract made within the Territory for the sale of goods, whether such goods have been delivered or are to be delivered in or out of the Territory;

(2) any service rendered or work or labour done in the carrying on in the Territory of any business, trade, profession or occupation . . . .

Sec 35: (12) (b) Where a non-resident person produces, grows, mines, creates, manufactures, fabricates, improves, packs, preserves or constructs in whole or in part anything within this Colony, and exports the same without sale prior to the export thereof, he shall be deemed to be carrying on business within this Colony and to have derived from a source within this Colony a proportionate part of any profit...