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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Jardine v. Inland Revenue [1906] ScotLR 44_136 (16 November 1906)
URL: http://www.bailii.org/scot/cases/ScotCS/1906/44SLR0136.html
Cite as: [1906] ScotLR 44_136, [1906] SLR 44_136
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SCOTTISH_SLR_Court_of_Session
Page: 136↓
Court of Session Inner House First Division.
[Exchequer Cause.
v.
Facts:
A parish minister claimed repayment of income-tax, under the Income-Tax Act 1853, sec. 52, in respect of (1) the cost of keeping a horse and carriage; (2) the expenses incurred in a process of augmentation; (3) the outlays for pulpit supply during holidays; and (4) the allowance granted by the Court of Teinds for providing communion elements. The Commissioners for the General Purposes of the Income-Tax Acts allowed claims (1) and (4) in part, not being satisfied that more than the amount allowed had been expended, and disallowed claims (2) and (3).
The minister having appealed the Court affirmed the Commissioners' determination, holding ( a) that the point raised on claims (1) and (4) was a question of fact which the statute laid on the Commissioners to decide, and ( b), following Lothian v. Macrae, December 12, 1884, 12 R. 336, 22 S.L.R. 219, and Charlton v. Corke, May 22, 1890, 17 R. 785, 27 S.L.R. 647, that the claims (2) and (3) were rightly disallowed, inasmuch as they were not for expenses incurred by the minister “in the personal performance of the duty required of him by the law and practice of his church in return for the emoluments of his benefice.”
Question in regard to claim (4) in respect of the allowance for providing communion elements, whether the minister had not mistaken his remedy in not having presented a claim that such allowance was not taxable, and whether such a claim if made could be presented to the General Commissioners or must go to the Special Commissioners.
The Income-Tax Act 1853 (16 and 17 Vict. c. 34), section 52, provides—“In assessing the duty chargeable under any schedule of this Act upon any clergyman or minister of any religious denomination in respect of any profits, fees, or emoluments of his profession or vocation, it shall be lawful to deduct from such profits, fees, or emoluments any sum or sums of money paid or expenses incurred by him wholly, exclusively, and necessarily in the performance of his duty or function as such clergyman or minister; and if such sum or sums or expenses shall not have been deducted as aforesaid, then a proportionate part of the duty charged and paid by such clergyman or minister shall, on due proof to the Commissioners of such sum or sums having been expended as aforesaid, be repaid to such clergyman or minister.”
On 6th December 1905, at a meeting of the Commissioners for the General Purposes of the Income-Tax Acts for the County of Dumfries, the Rev. David Bayne Jardine, minister of the parish of Keir in that county, claimed repayment of £4,0s.8d. of income-tax for the year 1904–5, on the ground that in the performance of his duty as minister of the parish he had incurred in that year expenses amounting to £80,15.3d., made up as follows:—
No. of Item.
Description of Expense.
Amount of Expense.
Repayment of Tax Claimed.
1.
Keep of Horse and Carriage
£30
0
0
£1
10
0
2.
Allowance for Communion Elements under Decree of Locality of Teinds
8
6
8
0
8
4
3.
Expenses of Process of Augmentation of Stipend
32
2
7
1
12
1
4.
Pulpit Supply during Holidays
6
6
0
0
6
3
5.
Attending Meetings of Presbytery and Synod
2
0
0
0
2
0
6.
Stationery
2
0
0
0
2
0
Total
£80
15
3
£4
0
8
The Commissioners allowed the claim to the following extent only:—
No. of. Item
Nature of Item.
Expense Allowed.
Tax to be Repaid.
1.
Keep of Horse and Carriage
£20
0
0
£1
0
0
2.
Allowance for Communion Elements
5
0
0
0
5
0
5.
Attending Meetings of Presbytery and Synod
2
0
0
0
2
0
6.
Stationery
2
0
0
0
2
0
Total
£29
0
0
£1
9
0
The claimant took a stated case.
By decree of the Court of Teinds, dated 19th December 1821, the minister of the parish of Keir was allowed £8, 6s. 8d. for furnishing communion elements. The amount so expended by the claimant was £5, and no particulars of the admitted balance of £3, 6s. 8d. were given by him.
The argument which had been submitted to the Commissioners as given in the stated case was—“The claimant in person contended (1) that a horse and carriage were necessary to enable him to perform his duties, especially in view of the position of the manse, and that the allowance claimed for the keep of such horse and carriage was reasonable. (2) That the allowance allocated to claimant for communion elements was separate from his stipend; that the balance of such allowance after payment of the communion expenses must be expended by him for pious purposes; and that the whole amount was trust money and exempt from income tax in terms of section 105 of 5 and 6 Vict. cap. 35. (3) That so long as there is unexhausted
Page: 137↓
teind in a parish the minister, in honour to the church, is bound to petition the Court of Teinds every twentieth year for an augmentation of his stipend, and that consequently the expenses of the augmentation process in 1904–05 were necessarily incurred by him in the performance of his duties. (4) That a minister requires an annual holiday for health's sake; that the cost of pulpit supply during such holiday is expense necessarily incurred by the minister in the performance of his duties, and that the allowance claimed under this head was reasonable. “The Surveyor of Taxes maintained—(1) That having regard to the population and area of the parish and the number of communicants the keeping of a horse and carriage was not necessary to the performance of the claimant's duty as a minister, and that, in any case, the sum claimed on that account is excessive, and not having been wholly, exclusively, and necessarily incurred by the claimant in the performance of his duty as a minister, is not a proper deduction from income. (2) That the sum claimed for communion elements having been provided by the heritors of the parish under decree of the Court of Teinds, was not an expense incurred by the claimant, and formed no part of his income, and is therefore not a proper deduction; or, alternatively, if it be held that the expenses of providing communion elements was an expense incurred by the claimant in the performance of his duty as a minister, that it is a proper deduction only to the extent actually expended for that purpose. (3) That the sum claimed for the expenses of the augmentation process is of the nature of capital expenditure, and was not an expense wholly incurred for the particular year in respect of which the claim is made, but for the general benefit of the claimant and his successors in office, ministers serving the cure of the kirk and parish of Keir, and is not a proper deduction from income. (4) That the sum claimed for pulpit supply during holiday, if incurred, was not expenditure wholly, necessarily, and exclusively incurred by the claimant in the personal performance of his duty as a minister, and is not a proper deduction from income — Lothian v. Macrae, 1884, 12 R. 336, 2 Tax Cases, 65.”
Argued by the appellant (in addition to the argument stated in the case)—Item 1 fell within the exemption granted by the statute— Charlton v. Corke, May 22, 1890, 17 R. 785, 27 S.L.R. 647. Item 2, the allowance for communion elements, fell to be given exemption in toto, for if there was any balance after providing the communion elements, such balance fell to be expended upon the poor of the parish—Duncan's Ecclesiastical Law, 1903 edition, p. 623, sec. 13; Birnie v. Nithsdale, (1678) M. 2489; Heritors of Abdie v. Corsan, (1713) M. 2490; Heritors of Strathmiglo v. Gillespie, (1742) M. 2491—and the appellant being thus a trustee for charitable purposes was entitled to exemption—Income-Tax Act 1842 (5 and 6 Vict. cap. 35), sec. 105. Items 3 and 4 were also covered by the statute, and were moderate in amount.
Argued for the respondent (the Court having asked for a reply with regard to item 2 only)—No repayment should be allowed in respect of item 2, the sum given for providing communion elements. The claim was made under the Income-Tax Act 1853, sec. 52, which allowed exemption of the “profits, fees, or emoluments” of the profession to the extent of the expense incurred in the performance of the duty, but the sum for providing communion elements was no part of such profits. It did not form part of the appellant's income. If the sum was, as now contended, not taxable at all, the appellant had mistaken his remedy. He should have applied to the Special Commissioners—Income-Tax Act 1842 (5 and 5 Vict. cap. 35), secs. 60 and 61; Dowell's Income-Tax Laws, 5th edition, pp. 85 and 86—and there must therefore first be a remit to them if the appellant was to obtain a repayment—Taxes Management Act 1880 (43 and 44 Vict. cap. 19), sec. 59; Dowell's Income Taxes Laws, 5th edition, p. 354. The claim for repayment in regard to this item was therefore outwith the jurisdiction of the General Commissioners, and was not properly before the Court. It fell to be disregarded altogether, and the partial allowance by the General Commissioners should be disallowed.
The first item consists of a claim for deduction in respect of a sum of £30 for the keep of a horse and carriage which it is said that the minister is obliged to keep for the due performance of his duty. The Commissioners have allowed £20, but not the full sum of £30, and that raises a question which we cannot possibly determine. The ground upon which they have allowed the smaller sum of £20 is simply this, that they are not satisfied that more than £20 has been expended for the purpose in question, and the statute lays it upon them and not upon us to determine that question of fact. We have no materials before us which would enable us to determine that, and therefore we must leave that item undisturbed.
Passing over in the meantime the second item, because it raises a different kind of question altogether from the others, the next is a claim for the expenses of process of augmentation of stipend, which the
Page: 138↓
The next point really depends upon the same kind of consideration. He claims a deduction for payment of six guineas for pulpit supply during holidays. Now, I think that is decided in the case of Lothian v. Macrae, and the ground of judgment was simply this, that since what the statute allows is the deduction of expenses incurred in the personal performance of his duty by the minister himself, it is impossible to say that money paid by him in order to get somebody else to perform a part of his duty is an expense incurred by him in performing his duty himself.
The remaining point raises a different kind of question. He claims deduction for an “allowance for communion elements under decree of locality of teinds, £8, 6s. 8d.,” and the Commissioners have allowed this claim to the extent of five guineas and disallowed it to any further extent. This part of the case is not satisfactorily stated. The claim as presented was, like the other claims before the Commissioners, a claim for deduction on the ground of expenses incurred on the assumption that the money taxed was taxable income. But it became perfectly apparent as soon as the counsel for the appellant began to state his case that the real course that the minister might take, and might have taken in this case, is not that this is a claim for deduction, but that this money is not taxable income at all. Unfortunately the case is put before us in such a shape that we cannot decide that point. It is not before us, because we are sitting as a Court of Appeal from the Commissioners, and it was not put before the Commissioners, and Mr Young says—and in the meantime I have no difficulty in taking his statement, because he is so very familiar with all the procedure under these statutes—that it could not competently be brought before these General Commissioners at all, because he says that if the view which was in this Court suggested on behalf of the minister is right, he has a different remedy, which would bring him before a different set of Commissioners (that is, the Special Commissioners). Now, I express no opinion upon this question of procedure any more than upon the question of the merits, because it is not before us. It was not before the Commissioners, and it cannot be before us, and therefore we cannot decide it, and the question is, how are we in these circumstances to deal with the decision of the Commissioners? The counsel for the Crown maintained that we should not only refuse the appeal upon this point, but that we should go further and recall the decision of the Commissioners in so far as it allowed a deduction of £5. I am unable to see how we could possibly do that in accordance with their own argument, because we cannot do so except by deciding that the minister's true claim was that this was not taxable income. If it is not taxable income, then it may be that the claim for deduction is irrelevant altogether, but if it is taxable income then the claim arises exactly as it has been dealt with by the Commissioners, and we cannot say at present that the footing on which it was put before the Commissioners was wrong, because we cannot decide upon the Crown's own argument the ground on which it is said to be wrong. But the real question for us is, what is it just that we should do? And it appears to me that the only logical course to follow is simply to disregard this
Page: 139↓
The remaining questions are three in number. The first is a claim for return of tax on the sum of £8, 6s. 8d. awarded under the decree of locality for the supply of communion elements. This sum, as I understand it, was paid to the minister under deduction of tax. I am unable to see how this question can be stated as a claim in respect of expenses necessarily incurred within the meaning of section 52 of the Act of 1853 under which the present case is stated. If such a question is to be tried, it must be under some other section, and possibly before some other body of Commissioners. I concur in all Lord Kinnear has said upon that head.
As to the expenses of process in the augmentation proceedings, I think the appellant has found some difficulty in making a relevant averment for deduction. No doubt the proceedings issued in an increase of stipend, which presumably will enable the minister the better to discharge the duties of his cure, but we cannot bring that within the somewhat narrower expression in the statute as to expenses necessarily incurred in the performance of his duties as minister of the parish, and I observe that in the appellant's statement he does not put it higher than that a minister is bound in honour to sue for an augmentation every twentieth year.
On the question as to pulpit supply I also agree that the appeal must fail.
The Court affirmed the determination of the Commissioners and dismissed the appeal with expenses.
Counsel for the Appellant— C. N. Johnston, K.C.— W. Thomson. Agents— J. Douglas Gardiner & Hill, S.S.C.
Counsel for the Respondent — Hunter, K.C.— A. J. Young. Agent— P. J. Hamilton Grierson, Solicitor of Inland Revenue.