1903 BELL v. NATIONAL BANK OF ENGLAND. respect of the profits of their entire business; they cannot be assessed a second time in respect of the profits of a part of that business. If, instead of starting a new branch, the respondents had given up an old one, the profits of their busi- PROVINCIAL ness would nevertheless have been computed on the average of the three preceding years, and in that case the average would have worked out in favour of the Crown. Ferguson v. Aikin (1) shews that the fourth rule only applies where there is an identity between the business succeeding and that succeeded to. There a company took over the business of a firm of whisky distillers and blenders, and worked a distillery which had been owned though not worked by the firm, and it was found as a fact by the Commissioners that the company had not succeeded to the business of the firm within rule 4. The Court treated the question as one of fact, and refused to disturb the finding of the Commissioners. There is no identity between the business formerly carried on by the Stafford Bank and that now carried on by the respondents at their Wolverhampton branch. The following passage in the judgment of A. L. Smith L.J. in Prescott, Dimsdale & Co. v. Bank of England (2) supports this view: "An amalgamation between two banks need not necessarily cause the business thereafter carried on to be the same as was theretofore carried on by either: it must depend upon the nature and character of the businesses amalgamated, and how the amalgamated business was subsequently carried on. In each case it must be a question of fact." The respondents have merely enlarged the locality and extent of their transactions, but they still carry on the same business with its headquarters in London. Rowlatt replied. May 28. RIDLEY J. read the following judgment:-This was la case stated by the Income Tax Commissioners for the City of London, raising a question as to the proper assessment of the National Provincial Bank of England under the Income Tax Acts. It appears that the National Provincial Bank of England 1903 BELL v. NATIONAL BANK OF Ridley J. (hereinafter called the respondent bank), which was established in 1833 and is now registered under the Companies Acts, has a nominal authorized capital of 15,900,000l., on which 3,000,000l. PROVINCIAL has been paid, and has its head office in the City of London, and numerous branch establishments in London and elsewhere. By agreements dated February and March, 1899, the respondent bank acquired for 225,000l. as from December 31, 1898, the business of the County of Stafford Bank, Limited, which for some years previously had carried on business at Wolverhampton with a capital of 800,000l. This County Bank had no branch establishments, although the company had power to establish them. After December 31, 1898, the business of the County Bank was carried on as usual, though for the benefit and at the expense of the respondent bank until March 5, 1899, when the premises were closed, on the following morning to be opened as the Wolverhampton branch of the respondent bank. None of the books were taken over except some ledgers, which, being found to be in the same form as those used by the National Provincial Bank, were continued in use till the end of the current year. All new cheques and pass-books were in the name of the respondent bank. From December 31, 1898, the profits earned at the Wolverhampton branch merged in the general profits of the respondent bank without distinction as to their origin, and it was stated in the case that there are no means of ascertaining whether there were any profits, or the proportion of increase or decrease, if any, in the profits of the bank which has arisen from the business so purchased. The general assessments of the respondent bank included some portion of the profit, if any, made by the Wolverhampton branch-that is to say, for the year ending April, 1901, the profits on average for the preceding years 1899 and 1900-but merely as a portion of the general profit, there being no means of differentiating the profits made by the Wolverhampton branch from the general profits, nor to make any return of the profits of the branch as distinguished from the general profits. In the years 1896, 1897, 1898, the County of Stafford Bank had made profits as follows: 1896, 48017.; 1897, 47507.; 1898, 49047.; and the present additional assessments of 48181. for 1903 BELL v. 1900, 32187. for 1901, 16347. for 1902, are the assumed profits made by the National Provincial Bank calculated for 1900 on the average for the three years preceding; for 1901 on onethird of the profits for 1897 and 1898; and for 1902 on onethird of the profits for 1898. No assessment was made for ENGLAND. 1900, 1901, 1902 on the County of Stafford Bank. It was contended for the Crown that the bank was liable to these additional assessments in order to cover the estimated profits arising from the acquisition of the Stafford Bank; that there was a succession on the part of the National Provincial Bank according to the fourth rule of the first and second cases Sched. D to s. 100 of 5 & 6 Vict. c. 35, and that, therefore, such estimated profits should be calculated on an average of the profits for the said three years respectively of the County Bank. It was also argued in the alternative that the business had been "set up" anew under the first rule of the first case under the same schedule, and that, therefore, the assessment should be computed "for one year on the average of the balance of the profits and gains from the period of first setting up the same." For the respondents it was contended that the business of the County of Stafford Bank was extinguished, and that, therefore, there was no succession to it within the meaning of the rule above quoted; nor was the business set up anew; and that the increase in the business of the bank must be regarded simply as development, so that the profits of the Stafford Bank for 1896, 1897, and 1898 were not to be taken into account. It would seem upon these facts that one or other of the following three inferences must be correct-first, that the business now carried on by the respondents is to be regarded as a new business set up and commenced within the period of the three years preceding the day of assessment, and, therefore, to be dealt with under the first rule applying to the first case in Sched. D. Secondly, that this is a case of succession to a trade, adventure, or concern, and that, therefore, it is to be dealt with under the fourth rule applying to both cases in Sched. D. Thirdly, that the business now carried on by the respondents is the old and former business enlarged by the acquisition of the County of Stafford Bank, but still the old NATIONAL PROVINCIAL BANK OF Ridley J. 1903 BELL V. NATIONAL PROVINCIAL BANK OF Ridley J. business, and, not coming within either of these two provisions, is to be assessed simply on the average of three years previous to the date of assessment. As to the first contention, it appears to me that the case of ENGLAND. Prescott, Dimsdale & Co. v. Bank of England (1) is of importance. In that case a suit was brought to recover from the Bank of England compositions due as was alleged to the plaintiff bank as compensation for the loss of their privilege of issuing their own bank-notes under the Bank Charter Act, 1844. It appears that the plaintiff company was registered in 1890, and that it had acquired the business then carried on by four banks at London, Bristol, Clifton, and Bath, and did accordingly carry on such businesses in its own name, there being no other apparent change, except that the name of the company was substituted for those of the old firms. Cave J., at the trial, thought the case governed by the previous decision of Capital and Counties Bank v. Bank of England (2), and that the former banks still continued to carry on business; but the Court of Appeal decided that in the true view of the facts the former businesses had ceased and a new one had come into existence. They also distinguished the earlier decision of Capital and Counties Bank v. Bank of England (2), in which case a bank called the Hampshire Bank had absorbed into itself other banks, and was held (not as a matter of law, but as of fact) to be carrying on, after such absorption, the same business as before. In the present instance the National Provincial Bank is in the same position as was the Hampshire Bank in the Capital and Counties Bank Case (2): it has absorbed the business of another bank, and, in my opinion, it would be contrary to that decision to say that it carries on a new business; and I would add that, reading the words in their ordinary meaning, I should, even without that decision, have come to the same conclusion. It follows from this, in my opinion, that this adventure or concern has not been "set up or commenced within the period of three years," and, therefore, the first alternative fails. But, secondly, is this a case of succession to a trade, 1903 BELL v. BANK OF ENGLAND. Ridley J. adventure, or concern within the meaning of the fourth rule, applying to both cases? The intention and scope of this rule appear to me to deal with two cases-first, a change of the NATIONAL persons engaged in any trade or profession in partnership PROVINCIAL together, either by reason of death, dissolution, or admittance of a new partner before the time of making the assessment or within the period for which it ought to be made; secondly, the case where any person shall have succeeded to such trade or profession within that period. In both cases the duty payable is to be computed according to the profits and gains of the business during the respective periods mentioned in that behalf as though no such change or succession has occurred. The change in the partners or the succession of any person to the business is not to alter the assessment, which is to be made on the average of the number of years applicable as though there had been no such change or succession. Thus in Ryhope Coal Co. v. Foyer (1), where a partnership which had worked coal mines for over five years was incorporated as a limited company, and the company bought the assets and took over the liability and the partners became holders of all the shares, it was held that the company had succeeded to the concern within the meaning of this rule; the association was new, but the concern was old. Now there is, indeed, a sense in which the National Provincial Bank (if it be conceded that the business carried on by the County of Stafford Bank still exists at all) may be said to have succeeded to it. A man succeeds to an estate which devolves upon him although he was previously owner of other and larger estates. But in this rule is the word "succeeded" used in that sense and with that intention? It appears to me that it is not so used, but that it refers to cases where the undertaking or concern is the same, but there has been a change of the partners who carry it on, or a set of new partners. In Ferguson v. Aikin (2), a company called the "old company" had carried on business as blenders of whisky, wine merchants, and exporters, and had an interest in a distillery, which they did not work. In 1896 a new (2) 4 Tax Cases, 36. (1) 7 Q. B. D. 485. |