Scottish Court of Session Decisions

At a meeting of the Commissioners for the

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General Purposes of the Income-Tax Acts for the county of Edinburgh, held at Edinburgh on 31st March 1890, Mr Robert P. Stevenson, Town-Clerk of the burgh of Portobello, appealed against an assessment made upon the Magistrates and Council of the burgh of Portobello, as “the Parochial Board of the Statutory Parish of Portobello, under the Burial Grounds (Scotland) Act 1855,” under the Income-Tax Acts, on the sum of £185, being excess of income over expenditure, as shown in their cemetery account, and brought out as follows:—

Burial Stances and Lairs sold	£253	0	0
Interment dues received	96	10	0
Sums received for borders, monuments, and plants	52	12	6
Total Receipts,	£402	2	6

Less, Salaries and fees	£85	0	0
Labourer's wages	86	6	0
Taxes, insurance, &c.	45	14	0
	217	0	0
	£185	2	6

The Commissioners refused the appeal and confirmed the assessment, and at the appellants' request the present case was stated for the opinion of the Court of Exchequer. The case stated—The Portobello Cemetery was provided by the appellants under the Burial Grounds Act of 1855 in the year 1877 in consequence of the Parish Burial Ground at Duddingston Church and the burial ground at the quoad sacra Parish Church of Portobello being fully used and closed against the public.

In order to implement the obligation imposed on them by the said Burial Grounds (Scotland) Act to provide a public burial ground for the burgh of Portobello, one-half of which should be free ground for the parishioners, the appellants purchased from the Benhar Coal Company a piece of ground measuring three and a-half acres or thereby, at the price of £2977 (with a nominal feu-duty), which was enclosed and laid out as a burial ground or cemetery at a cost of £3772.

The appellants having no means of making these outlays except by assessing the ratepayers and mortgaging the assessment, borrowed from the Standard Insurance Company, on the security of the rate, the sums of £6300 and £450.

The assessing and borrowing powers are contained in the 26th and 27th sections of the said Act, which provide that the expenses incurred by the parochial board in carrying the Act into execution, in so far as the sums received for exclusive right of burial, or as fees or other payments in respect of interments shall be insufficient, shall be raised by assessment to be levied in the same way as the rate for relief of the poor; and that it shall be lawful for the parochial board to borrow any money required for providing and laying out any burial ground under the Act, and to charge the future assessments under the Act with the payment of such money, and the interest thereon, provided that there shall be paid in every year in addition to the interest of the money borrowed and unpaid, not less than one-twentieth of the principal sum borrowed, until the whole is discharged.

The appellants have assessed the ratepayers every year since 1877 to provide for the amount of the annual deficiency, the rate being for six years 4d. per £, for four years 3 1 2d. per £, for two years 2 1 2d. per £. The balance of the debt is now £2768.

The appellants contended that their case is distinguishable from the cases of The Paddington Burial Board and The Edinburgh Southern Cemetery Company on the following grounds —(1) In the Paddington case the money required for the purchase of the ground was borrowed from the Public Works Loan Commissioners and was repaid, and there was no income-tax imposed until after the loan had been repaid, and then it was held by the Court that the cemetery was carried on for the benefit of the ratepayers. But in the present case that stage has not yet been arrived at, and the appellants conceive that so long as there is a necessity to tax the ratepayers, the decision in the Paddington case does not apply. (2) In The Edinburgh Southern Cemetery case the Court dealt with a commercial company trading in the lairs for profit to the shareholders; but in the present case the appellants are acting without regard to profit under compulsion of an Act of Parliament, which requires them to provide a public burial ground and to assess the ratepayers for that purpose, and until they attain the position of not requiring to assess it cannot be maintained that there is any pecuniary benefit. When the time comes that the ratepayers are relieved from taxation it may be better contended by the assessor that the Paddington case should apply.

The Surveyor of Taxes, Mr Philip Sulley, maintained in support of the assessment that the Corporation of Portobello carry on an actual business as proprietors of the cemetery, and that the result of their trading for the year to Whitsunday 1889 was an excess of income over all expenditure of £185, 2s. 6d., and that the assessment was rightly made on this amount, in addition to the assessment separately made upon the interest paid out of the rate. He referred to the case of The Mersey Docks and Harbour Board v. Lucas, No. 64 Tax Cases, as showing that surplus income was assessable as profit, without reference to the manner in which such surplus income was applied. Further, that the distinction sought to be established between the present case and that of The Paddington Burial Board v. Commissioners of Inland Revenue, No. 66 Tax Cases, and 15 Q. B. D. 9, was not real or effective. In that case the profit earned by the burial board was applied to the relief of the poor rates; here to the relief of the actual cemetery rate, which must be levied at a considerably higher rate were it not for the profit earned in the working of the cemetery.

The Commissioners were of opinion that the appeal fell to be decided in conformity with the above decisions.

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The appellant referred to the following additional authorities at the discussion— Glasgow Corporation Water Commissioners v. Solicitor of Inland Revenue, May 26, 1875, 2 R. 708; Glasgow Corporation Water Commissioners v. Miller, January 22, 1886, 3 R. 489; Edinburgh Southern Cemetery Company v. Surveyor of Taxes, November 29, 1889, 17 R. 154; Attorney-General v. Black, January 26, 1871, 6 Exch. 78 and 308.

At advising—