| 10/2/2012 |
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| Board of Special Commissioners - Cases |
| Case No. 18/52 |
Decided: 13 July, 1953 |
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Partnership deemed to be real and not fictitious; disposition made during the life of appellant for the benefit of his unmarried son - article 21, now 51, Income Tax Act
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Appellant maintained that he should have been taxed on only one-third of the partnership profits. Commissioner contended that the partnership agreement was artificial and fictitious; besides, the profits derived by appellant's son who was single at the time, was to be taxed on appellant as well, in terms of article 21.
After a detailed examination of the partnership's trade records, the Board concluded that the partnership was not fictitious. Appellant's son's involvement in the business had been real and consistent and he had repaid almost the whole amount of the consideration (Lm4,333).
The Board however accepted the Commissioner's second request. According to article 21 of the Act - now 51(3) - where as a result of any disposition (in this case, the partnership agreement) made during the life of the disponer, any income is payable to a child, the income shall, if at the beginning of the year the child was unmarried or was below eighteen years of age, be treated as the income of the disponer and not as the income of the child. The Board held that for the basis year 1949 the income of appellant's son from the partnership was to be taxed on appellant.
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