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Citation: 1971 PTD 864
Court: Chancery Division
Year: 1970
Decision Date: 1970-12-31
Parties: BRITISH-BORNEO PETROLEUM SYNDICATE LTD. vs CROPPER (INSPECTOR OF JUDGMENT
Case cited as 1971 PTD 864
Court Name: Chancery Division Judge(s): Plowman Title:BRITISH-BORNEO PETROLEUM SYNDICATE LTD. vs CROPPER (INSPECTOR OF JUDGMENT Reported As: 1971 PTD 864 Result: Appeal allowed Judgment JUDGMENT PLOWMAN, J.-------This is an appeal by British-Borneo Petroleum Syndicate Ltd. (which I shall call "the company'`) against assessm ents to income-tax Schedule D for 1965-66 and profits tax for the chargeable accounting period April 1, 1964, to March 31, 1965. It is common ground that the decision in the profits tax case must follow that in the income-tax case, and I, therefore, confine my remarks to the latter. The question which I have to decide is whether a sum of --900,000 paid to the company in 1964 in consideration, inter alia, of the surrender and release of the company's rights under a certain royalty agreement was a trading receipt, as the special commissioners held, or a capital receipt, as the company claims. [His Lordship stated the facts set out above and continued:] Mr. Heyworth Talbot, for the company, submitted that it was a capital receipt on two alternative grounds. The first, based on Moriarty v. Evans Medical Supplies Ltd. ((1958) 1 W L R 66), as distinguished in Rolls-Royce Ltd. v. Jeffrey ((1962) 1 W L R 425) and Musker v. English Electric Co. Ltd. ((1964) 41 T C 556) was to the effect that, by entering into the royalty agreement with its "keep out" covenant, the company was not just selling an oil concession which it held as part of its stock-in- trade, but…
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