of Blott (1) and Fisher (2), in respect that the purpose of the transactions in the present case was not a genuine company purpose, but for the individual benefit of the controlling shareholders.

In the first place, their Lordships are of opinion that, as regards the point here in issue, there is no ground for distinction between the Imperial Act and the Indian Act. In Income Tax Comr. v. Shaw, Wallace & Co. (4), at p. 212, SIR GEORGE LOWNDES, in delivering the judgment of the Board, while expressing a general warning against treating questions under these Acts as in pari materia, said:

66

The object of the Indian Act is to tax income," a term which it does not define. It is expanded, no doubt, into "income, profits and gains," but the expansion is more a matter of words than of substance.

This states compendiously the same view as is expressed in regard to the Imperial Act by LORD MACNAGHTEN in London County Council v. A.-G. (5).

In the case of the Swan Brewery Co. (3) the company had passed resolutions by which its capital was increased by a new issue of shares, and a portion of the accumulated profits standing to the credit of the reserve fund corresponding to the amount payable on allotment of the shares was transferred to the credit of the share capital account, the new shares being then allotted as fully paid among the shareholders pro rata. It was held by the Board that these transactions were in effect a declaration of a dividend within the meaning of the Dividend Duties Act, 1902, of Western Australia, under sect. 2 of which the word "dividend " was defined as including "every profit, advantage or gain intended to be paid or credited or distributed among the members of any company." In delivering the judgment of the Board, LORD SUMNER, referring to the argument of the appellant company, said, at pp. 235 and 236 :

The duty claimed is not, it is said, a duty on or in proportion to any advantage either to the company or the shareholder measured by the increased stability of the company's own position or the increased facility to the shareholder in marketing his shares it is measured by and is levied upon the whole nominal value of the new shares allotted, which is not the same thing as the value of the advantage distributed. Is this argument sound? Their Lordships agree with the Supreme Court of Western Australia in thinking that it is not. There can be no doubt that the new shares were distributed and were not the same things as the old ones. They certainly were supposed to be advantages to the members of the company, none the less that the making of the issue was probably an advantage to the company also. In so flourishing a business doubtless they really were advantages. The new shares were credited as fully paid, and, what is more, they were fully paid, for after the allotment the company held £101,450 as capital produced by the issue of those shares and for that consideration, and no longer as an undivided part of its accumulated reserve fund. True, that in a sense it was all one transaction, but that is an ambiguous expression. In business, as in contemplation of law, there were two transactions, the creation and issue of new shares on the company's part, and on the allottees' part the satisfaction of the liability to pay for them by acquiescing

in such a transfer from reserve to share capital as put an end to any participation in the sum of £101,450 in right of the old shares, and created instead a right of general participation in the company's profits and assets in right of the new shares, without any further liability to make a cash contribution in respect of them. In the words of PARKER, C.J.: "Had the company distributed the £101,450 among the shareholders and had the shareholders repaid such sums to the company as the price of the 81,160 new shares, the duty on the £101,450 would clearly have been payable. Is not this virtually the effect of what was actually done? I think it is."

It is unnecessary to resume in detail the facts in the cases of Blott (1) and Fisher (2). In Blott's case (1), the company applied accumulated profits in satisfaction of the amount due on the issue of bonus shares, while in Fisher's case (2) accumulated profits were similarly applied in respect of bonus debentures. In the latter case VISCOUNT CAVE, L.C. (at p. 400) states the principle of the decision in Blott's case (1) by quoting the opinion of VISCOUNT HALDANE in that case, at p. 184, which was as follows:

My Lords, for the reasons I have given I think that it is, as matter of principle, within the power of an ordinary joint stock company with articles such as those in the case before us to determine conclusively against the whole world whether it will withhold profits it has accumulated from distribution to its shareholders as income, and as an alternative not distribute them at all, but apply them in paying up the capital sums which shareholders electing to take up unissued shares would otherwise have to contribute. If this is done the money so applied is capital and never becomes profits in the hands of the shareholder at all. What the latter gets is no doubt a valuable thing. But it is a thing in the nature of an extra share certificate in the company.

The case of bonus debentures was held to be indistinguishable from that of bonus shares. Nor does it seem possible to distinguish the facts of the present case from those in Fisher's case (2), apart from the contention of the Crown that the real purpose of the transactions in the present case form a relevant ground of distinction.

The case of the Swan Brewery Co. (3) was referred to in certain of the opinions in Blott's case (1). VISCOUNT HALDANE (at p. 188) says:

...

There the transaction was in many respects analogous to that here. But the taxing statute was couched in very different language. There were expressions in the judgment which may be construed as having gone rather further, and treated the payment made by the company as equivalent in substance to a payment by the company to the shareholders, and by them back to the company. It may have been so, and without a fuller knowledge of the facts in the case and of the local law than the report discloses, it is difficult to be quite sure about the point, but what is clear is that the wide character of the word " advantages was a primary consideration in what was said by their Lordships who took part in advising His Majesty. I therefore do not feel embarrassed by the decision in that case.

VISCOUNT FINLAY (at p. 199) thought that the reasoning in the Swan Brewery Co. case (3) was inconsistent with the decision of the House of Lords in Bouch v. Sproule (6). VISCOUNT CAVE (at p. 202) said that the de

cision in the Swan Brewery Co. case (3) was no doubt fully supported by the definition clause in the Western Australia Act, but that, otherwise, he would hold it to be inconsistent with Bouch v. Sproule (6). LORD Dunedin who dissented in Blott's case (1), stated (at p. 203) that the Swan Brewery Co. case (3) was a decision upon an Australian statute in the words of which if anything became an "advantage " it would fall within the tax. LORD SUMNER, who also dissented in Blott's case (1), and also delivered the judgment of the Board in the Swan Brewery Co. case (3), was clearly of opinion (at p. 217) that what was said by the Judicial Committee in the latter case as to the effect in law and in business of a distribution of bonus shares, was part of the decision and could not be distinguished from Blott's case (1).

Having carefully considered the judgment in the Swan Brewery Co. case (3), and the varying views taken of it in Blott's case (1), their Lordships are of opinion that the judgment must be regarded as having been primarily based on the distribution of the new shares being advantages within the meaning of the particular Act under consideration, while the further expression of opinion in the judgment rather regarded the transaction as involving, in substance, a distribution of accumulated profits among the shareholders and a repayment by them to the company, although the operation was in fact short-circuited. For the purpose of the present question, their Lordships are clearly of opinion that the decisions under the Imperial Income Tax Act are more relevant to to the similar question under the Indian Income-tax Act, than a decision under the different terminology of the Western Australian Act.

Lastly, their Lordships are clearly of opinion that the personal motive or purpose of the individual shareholders, even if they hold a controlling interest in the company, is irrelevant, if it is made out that the company has in fact capitalised the accumulated profits. It is sufficient to quote from the opinion of LORD SUMNER in Fisher's case (2), in the decision of which he concurred, as follows, at p. 411:

In any case desires and intentions are things of which a company is incapable. These are the mental operations of its shareholders and officers. The only intention, that the company has, is such as is expressed in or necessarily follows from its proceedings. It is hardly a paradox to say that the form of a company's resolutions and instruments is their substance. At any rate, in the present case, there is no need to distinguish between form and substance in the transaction itself or to refer to desires or intentions, further than to examine what was done, for everything was carried out in plain terms and without concealment. What the requisite majorities of the shareholders desired and intended is pretty plain too, but that is another matter.

Their Lordships are, therefore, of opinion that the first question of law referred by the commissioner of income-tax should be answered in the negative, that the judgment of the High Court should be affirmed,

and that the appeal should be dismissed with costs. They will humbly advise His Majesty accordingly.

Solicitors: The Solicitor, India Office (for the appellant); Nye, Moreton & Clowes (for the respondents).

[Reported by T. A. DILLON, Esq., Barrister-at-Law.]

MARRIOTT v. MINISTER OF HEALTH.

[COURT OF APPEAL (Slesser and Romer, L.JJ., and Eve, J.), June 22, 24, 1936.]

Public Health Housing Clearance area-Compulsory purchase order-Demolition before local inquiry-Housing Act, 1930 (c. 39), sched. II, part 1,

para. 5.

The Nottingham Corporation on June 4, 1934, resolved that a certain area should be a clearance area, and on the same day made a compulsory purchase order in respect of part thereof. Upon that part of the area there were 39 houses of which 27 were the property of the applicant. On July 21 the applicant instructed a builder to demolish all the 27 houses, and the demolition work began on July 26 and was completed before Oct. 2. Notice of the order was served on the applicant on July 30, and he lodged his objection on Aug. 15. On Oct. 2 the public local inquiry began at which the fact of the demolition was proved. On Jan. 16, 1935, the Minister confirmed the order. The applicant questioned the validity of the order and applied under the Housing Act, 1930, s. 11 (3), to have it quashed :

HELD: before confirming an order the Minister ought to consider matters as they are at the time of the local inquiry, and as there was at that time no subject-matter on which the Act could operate, the Minister ought not to have confirmed the order either with or without modification.

[EDITORIAL NOTE. The point here is confined within quite narrow limits and is this: the Minister cannot confirm an order that could not have been put into force at the time the local inquiry in respect thereof was held. A compulsory purchase order under a clearance scheme cannot be put into force if the area to be purchased is cleared by demolition before the local inquiry is held, and still more is this the case where this fact is proved at the inquiry. The enforcement of such an order is based upon the existence of insanitary property upon the ground included in the area.

FOR CLEARANCE AREAS, see HALSBURY, Supplement to Vol. 23, paras. 10341042; and FOR CASES, see DIGEST, Supp. Public Health, Nos. 502 (g) to 502 (r).] Cases referred to:

(1) R. v. Minister of Health, Ex p. Davis, [1929] 1 K.B. 619; Digest Supp. (2) Errington v. Minister of Health, [1935] 1 K.B. 249; Digest Supp.

APPEAL by the Minister of Health from a judgment of SWIFT, J., given on Oct. 29, 1935, on a notice of motion under the Housing Act, 1930, s. 11.

On June 4, 1934, the Nottingham City Council made an order for compulsory purchase of some property in the City of Nottingham

belonging to a Mr. Marriott. This compulsory purchase order followed upon a declaration that the area in question should be a clearance area. On July 21, 1934, Mr. Marriott instructed builders to demolish the property, and on Oct. 2, 1934, the demolition was completed. On Oct. 2, 1934, the local public inquiry was opened by the inspector appointed by the Minister of Health. On Jan. 16, 1935, the order of the local authority was confirmed by the Minister without qualification so far as the property of Mr. Marriott was concerned.

The Attorney-General (Sir Donald Somervell, K.C.) and Valentine Holmes, for the appellant.

R. M. Montgomery, K.C., and Arthur Capewell, for the respondent. The Attorney-General: The learned judge took too narrow a view of the machinery of the Housing Act, 1930. The words which can be relied upon to favour the applicant are those in sect. 1 (3). Having regard to the Act as a whole, the learned judge gave to the words too great a weight because the Act has other purposes than the mere demolition of houses. The application of the learned judge's principle would be this. Nothing was done by the landlords until the local authority took action. One man says: if we can pull down our houses before this matter goes to the Minister, we can defeat the scheme and prevent the local authority having any power over the future development of the land. Looking at the Act as a whole, demolition is only one of the purposes for which the local authority are entitled to purchase.

A further point is the relevant date. Is the Minister compelled in law to disregard the facts existing at the date the local authority made the order and to consider the facts as they existed at the time the order comes up for confirmation ? The Act does contemplate the local authority having powers other than those of merely effecting demolition. The local authority may sell or let the land subject to such conditions as they think fit. That is an important right conferred by Parliament upon local authorities in respect of land properly included within a clearance declaration. That purpose can be defeated-if the learned judge is right by owners pulling down their property before the date of confirmation by the Minister. The relevant date is the date on which the local authority acts. If a man demolishes his houses, he is in fact admitting that the local authority was right in including them in the order. The person holding the inquiry would have to direct his mind to the state of the houses on the date the council made the order.

One commences with the condition of affairs when the local authority makes the order. Objections can be put in and a public local inquiry can be held. The houses can be looked at. The Minister, or the officer who makes the report to him, in his discretion may have regard to undertakings by property owners as to what they will do in the future. But in matters of jurisdiction in confirming an order made by the local