1) Explain the respective outcomes reached by the courts in the following case involving sales of land: Californian Copper Syndicate Ltd v Harris. (250 words) 2) Surfs Up P/L is a national retailer...

ASSIGNMENT HI6008
ANSWER TO QUESTIONS
TABLE OF CONTENTS
    Sl. No.
    Contents
    Page Number
    1.
    Question 1
    3
    2.
    Question 2
    4
    3.
    Question 3
    5
QUESTION 1
The main issue in the case of Californian Copper Syndicate v Harris (1904) was the realization related to capital assets that it has and whether or not profit from the sale of the property to be exploited for its minerals was assessable as an ordinary income or is capital in nature. Here, as discussed in the case the main objective of California Copper Syndicate was to acquire land that contained the mineral copper and further carry out mercantile, financing, and trading business on it. But it was seen that instead of extracting copper from the land, the company subsequently sold the land to another company for fully paid shares as consideration in that company. It was mentioned in the memorandum of association that the purpose of the company is to acquire and resell the property and thus profits on such resale will be chargeable to tax under section 2, schedule D of Income Tax Act 1853. The profits will be assessable whether the consideration is received in cash or shares of other companies.
The court gave its decision that the profit which is made from the sale of land was to be assessed for tax as the company had intentions of making a profit from the sale of land. Though it was done to increase its working capital and was a part of business activity, it will be considered as assessable income for taxation purposes as mentioned above. It was an ordinary incident of the business of taxpayers and proceeds will be considered as having the characteristics of an ordinary income. Thus, finally, the court decided that the company copper Syndicate had to pay taxes (at normal tax rates) on the difference...