Cape Brandy Syndicate vs. Inland Revenue Commissioners

CASE stated by Commissioners for the Special Purposes of the Income Tax Acts. In October, 1919, the appellants, Mr. Norris, Mr. White, and Mr. Browning (called for the purposes of the assessments and this appeal the "Cape Brandy Syndicate"), appealed against assessments to excess profits duty for the accounting periods March 11, 1916 - December 31, 1916, and January 1, 1917 - September 17, 1917. The three appellants were members of different firms, but the assessments in question were made in respect of profits arising from certain transactions undertaken by them on their joint account and not on behalf of their respective firms. In 1916 the appellants agreed to purchase certain brandy from the Cape Government on joint account. They first bought 100 casks, at the same time inquiring how much more was available, and, later in the same year, they bought two further lots of 1500 casks each. These 3100 casks constituted the whole amount the Cape Government had to offer, and the fact that the purchase was made in three instalments was because the appellants were not aware, in the first instance, how much there was for sale. Their intention was to buy all that was available. After the purchase the appellants sold some of the brandy for shipment to the East; the remainder they shipped to London, where, on its arrival, it was blended with French brandy purchased by the appellants for the purpose. The brandy so blended was sold on commission on behalf of the appellants. There were about 100 transactions of sale in all, the first taking place on July 1, 1916, and the last on September 17, 1917. The appellants received the profits of the sales after deduction of the agents' selling commissions and the expenses incurred on the appellants' behalf. It was admitted that the appellants' intention in purchasing the brandy was to sell the whole of it at a profit. None of the appellants had previously or since been engaged in a similar transaction. For the appellants it was