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Pook (inspector of Taxes) Vs. Owen. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Reported in[1969]74ITR125(Cal)
AppellantPook (inspector of Taxes)
RespondentOwen.
Cases ReferredFergusson v. Noble
Excerpt:
- .....airline pilot in nolder v. walters.secondly, it is said that there is a distinction because dr. owens duties commences when the telephone rings. that is because he may, and sometimes does, give over the telephone some instruction as to what is to be done with the patient pending his arrival at the hospital where his work as an anaesthetist, and in this case so far as is relevant as an obstetrician, takes place. it does not seem to me that the fact that the gives some advice, it may be, over the telephone before going out to do his job as an anaesthetist or obstetrician at the hospital, can mean that while he is travelling, he is travelling on duty as part of the duties of his officer. indeed, i think if this were so, as rowlatt j. pointed out in the airline pilots case, if he drove.....
Judgment:
LORD DENNING M.R. - Dr. Owen is a medical practitioner in Fishguard. He had a part-time appointment at the hospital at Haverfordwest. That is 15 miles away from Fishguard. His appointment is an obstetrician and anaesthetist. Under his appointment he is on stand-by duty for emergencies : as an obstetrician one weekend a month : as an anaesthetist one weekend a month, and also on Monday and Friday nights. He has got to be accessible by telephone during that time. All his part-time work is concerned with emergency cases at the hospital at Haverfordwest. As soon as he gets a telephone call telling him of an emergency, he gives instructions over the telephone to the hospital staff. For instance, as an obstetrician, he may tell the to prepare the patient for an operation, or to do what is necessary for the woman. Or, as an anaesthetist, he may have to give instructions relating to the pre-anaesthetic treatment. After giving instructions her usually sets off immediatedly to the hospital by car. Sometimes he advises treatment by telephone and them awaits a further report. Sometimes a telephone call is received while he is out in his roughed and he had to deal with the emergency accordingly. His responsibility for the patient begins as soon as the receives the telephone call.

Now, here is the point. He gets travelling expenses allowed to him at a fixed rate per mile for journeys between Fishguard and the hospital at Haverfordwest. The question which have been raised in this court are two-fold. First : do the money paid to him for travelling expenses count as part of his emoluments which he has to bring into account to tax Second : if they do count as emoluments, is he allowed to deduct on the other side the like amount (or a greater amount) by reason of the expenses he actually incur in getting to the hospital ?

The commissioner decided that, although the money are to be brought into account, nevertheless they are cancelled out immediately because they are expenses which he has necessarily incurred in carrying out the duties of his employment. The commissioner found that the duties of the doctor commenced at the moment he was first contacted by the hospital authorities, and thereafter his travelling expenses to and from the hospital, or to and from an emergency, were wholly, exclusively and necessarily incurred or expended it the duties of that office. So they decided that he was entitled to have his assessments reduced by reason of his travelling expanses. Stamp J. reversed that decision. He though that the case was indistinguishable from the case of the Recorder of Portsmouth, Ricketts v. Colquhoun. He had that the doctor was not entitled to have the expenses allowed. Now there is an appeal to this court.

The first point taken by Mr. Monroe before us was not taken in the court below. He says the mileage allowance which was paid to Dr. Owen ought not to come into account at all as being part of his emoluments. 'Emoluments' are defined in the Second Schedule of the Finance Act, 1956, as including 'all salaries, fees, wages, perquisites and profits whatsoever. ' Mr. Monroe said this mileage allowance was not within those words. He referred us to Hochstrasser v. Mayes, where compensation paid to indemnify an employee against losses was held to be profits from his employment.

The important thing to notice is that this mileage allowance was payable in any case, no matter how Dr. Owen made his way to the hospital. He might spend more than the allowance if he went by a very expensive car. He might spend less than the allowance if he went by bus or by bicycle. Yet he got the allowance just the same. It seems to me that an allowance, which is payable whether the expense is a actually incurred or not, is properly to be regarded as part of his emoluments. It is covered by the case of the detectives allowance in Fergusson v. Noble to which we were referred. It might be otherwise if Dr. Owen kept a note of his actual expenses and was reimbursed exactly the sums he had expended. Those might not be emoluments. But that is not this case.

This brings me to the second point. Is Dr. Owen entitled to deduct his actual travelling expanses getting to and from the hospital This depends on the wording of rule 7 of Schedule 9 to the Act of 1952, which repeats the words of the Act of 1853, when people used horses for their work. It says :

'If the holder of an office or employment of profits is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performances of the duties of the officer or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expand money wholly, exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed.'

Looking at this case apart from authority, I should have though that the expenses of Dr. Owen in travelling to and from Fishguard on an emergency call were expenses which he was 'necessarily obliged to incur...... in the performance of the duties' of his employment. That seems to be so plain as to be almost beyond argument. The only thing which is cited against this view is an authority of the House of Lords, Ricketts v. Colquhoun. Mr. Ricketts was the Recorder of Portsmouth. He practiced at the Bare in London. He went down to Portsmouth every quarter in order to sit as recorder and try cases there. He asked to be allowed his railways fare from London to Portsmouth, his hotel expenses, and the cost of carrying his tin be to the court. The House of Lords said he was not to be allowed them. Viscount Cave L. C. said :

'In order that they may be deductible under this Rule from an assessment under Schedule E, they must be expenses which the holder of an office is necessarily obliged to incur - that is to say, obliged by the very fact that he hold the officer and has to performs its duties - and they must be incurred in - that is, in the course of - the performance of those duties.'

The House held that it was Mr. Ricketts own choice that he lived in London and he was not 'necessarily obliged' to incur any of those expenses in regard to his office. They were only his expenses as an individual.

That case binds this court in any case which is strictly comparable. But it should not be carried any further than its own particular circumstances. To may mind the position of Dr. Owen is quite distinguishable. He is a person whose works is in two places. He is like a Member of Parliament who is in London during the week and goes at he week-end to his constituency. His work is in both places. When he is travelling to and for, his expenses can be deducted because they are expenses which he is 'necessarily obliged to incur' in the course of his office. That was recognised by the Crown in Ricketts v. Colquhoun and accepted by Rowlatt J. and in the House of Lords.

So in this case Dr. Owen is on duty when he is in his surgery in Fishguard, or who he is out on his rounds, or on a farm delivering a woman of a child. He is on duty -standby duty. As soon as he gets a telephone call, he takes on the case then and there. He gives direction on the telephone about the treatment to be given. At that moment he is during his work - performing the duties of his employment - just as much as when he gets to Haverfordwest and administers and anaesthetic. I see no difference between his position and that of the archdeacon. He had to have a horse to taken him to the perished and was allowed the expenses of it. So now he has to have a car and is allowed his travelling expense. Quite generally, when a man is necessarily obliged top travel it he course of his employment, he is entitled to deduct his expenses. In many case it is a question of degree and, therefore, a question for the commissioners. The commissioners have directed themselves quite properly. They found that 'his travelling expenses to and from the hospital or to and from an emergency were wholly, exclusively and necessarily incurred or expended in the duties of that office. ' It seems to me on that finding it was entirely proper for Dr. Owen to be allowed his expanses against the assessment. I would allow the appeal.

DIPLOCK L. J. - As regard the first point taken by Mr. Monroe in this court, which was perhaps advisedly not taken in the court below, namely, that the mileage allowance was not part of the emoluments of Dr. Owen, I agree with what the Master of the Rolls has said and have nothing to add.

With regard to the second point, namely, whether this mileage allowance is a deductible expense within rule 7 of Schedule 9 to the Income Tax Act, 1952, I agree with the Master of the Roll to this extent, that the only thing against Mr. Monroes argument is a judgment of the House of Lords, one which I should myself be only too happy to overruled if I though I had the power to do so. What, of course, is binding on us is the ratio decidendi of their Lordships in Ricketts v. Colquhoun. I would read here a passage from the speech of Lord Blanesburgh which in my view expresses, I regret to say, the ratio decidendi which appealed to their Lordships. Dealing with the rule which has, as my Lord has said, gone on for many years - I do not agree, however, that the day of the horse is past -Lord Blanesburgh said this :

'Undoubtedly its most striking characteristic is its jealously restricted phraseology, some of it repeated to heighten effect. But I am also struck by this, that, as it seems to me, although undoubtedly less obtrusively, the language of the rule point to the expenses with which it is concerned being only those which each and every occupant of the particular officer is necessarily obliged to incur in the performance of its duties - to expenses imposed upon each holder ex necessitate of his office, and to such expenses only.'

I pause to interpose there the observation that the words it the rule are 'necessarily obliged' which are tautologies unless one gives to 'necessarily obliged' the meaning which Lord Blanesburgh gives to it. 'It says, ' said Lord Blanesburgh :

'If the holder of an officer -the words, be it observed, are not If any holder of an Office - is obliged to incur expenses in the performance of the duties of the officer - the duties again are not the duties of his officer. In other words, the terms employed are strictly, and, I cannot doubt, purposely, not personal but objective : the deductible expenses do not extend to those which the holder has to incur mainly and, it may be, only because of circumstances in relation to has officer which are personal to himself or are the result of his own volition.'

The expenses in the form of mileage allowance which Dr. Owen seeks to deduct in this case are the result of his living in Fishguard, some 15 miles from the hospital where he was employed in Haverfordwest. It seems to me that his position is indistinguishable from that of the recorder so far as that ratio decidendi is concerned.

Mr. Monroe has sought to make distinctions on three grounds. First, he says that, unlike the recorder, Dr. Owen was only required to travel in an emergency because he was employed only for emergency cases. I do not think that giving a label to the occasions on which he travels as 'emergencies' helps one way or the other. It merely involves the feature, that he has to travel immediately or very promptly after a telephone call is received. But that was the position of the airline pilot in Nolder v. Walters.

Secondly, it is said that there is a distinction because Dr. Owens duties commences when the telephone rings. That is because he may, and sometimes does, give over the telephone some instruction as to what is to be done with the patient pending his arrival at the hospital where his work as an anaesthetist, and in this case so far as is relevant as an obstetrician, takes place. It does not seem to me that the fact that the gives some advice, it may be, over the telephone before going out to do his job as an anaesthetist or obstetrician at the hospital, can mean that while he is travelling, he is travelling on duty as part of the duties of his officer. Indeed, I think if this were so, as Rowlatt J. pointed out in the airline pilots case, if he drove his car negligently while travelling to or from the hospital, the hospital would be victoriously responsible for his negligence, and I do not think anyone would think that was the consequence of his office.

Finally, it is pointed out that where as a recorder may live, as Scrutton L. J. pointed out, 400 or 4 miles from his brought, it is a necessary consequences of this particular employment of Dr. Owen that he should live in an area which is accessible to the hospital where he has to carry out his function. Again that feature was a feature of the airline pilots case. It does not seem tome that the fact that holder of an officer must necessarily be drawn from a restricted area can make any relevant distinction between this case and Ricketts v. Colquhoun or can be brought outside the ratio disdained of Lord Blanesburgh which I have read.

For my part, therefore, much as I regret to differ in this respect from the Master of the Rolls and much as I regret - though I must declare an interest in this - beings unable to overrule the decision in Ricketts v. Colquhoun, I feel bound to dismiss this appeal.

EDMUND DAVIES L. J. - Two questions arise in this appeal. I am aware that in expressing regret that, having regard to the decision in Ricketts v. Colquhoun, in my judgment both have to be answered adversely to Dr. Owed, I am repeating an oftsung dirge. But my regret is none the less real on that account.

The first question is : do the two sums of Pound 100 Pound 82 received by Dr. Owen in respect of travelling expenses constitute emoluments which have to be taken into consideration when his assessable income falls to be determined Schedule 2 to the Finance Act, 1956, provides that - '..... the expression emoluments shall include all salaries, fees, wages, perquisites and profits whatsoever. ' Mr. Monroe, in the course of an attractive argument, submitted that what the doctor revised was reimbursement of his actual expenditure on travelling. We do not know as a matter of fact that this was so, but I prepared to assume that that was indeed the case. Even so, it seems to me, by analogy to Fergusson v. Noble, that these two sums must be regarded as emoluments. Indeed, quite apart from authority, and simply applying the ordinary standered of speech, where I think he would surely reply : 'Oh, I get X guineas per visit and my travelling expenses.'

The second question is perhaps a little more difficult : are Dr. Owens actual travelling expenses deductible The test is proved by the rule 7 of Schedule 9 to the Income Tax Act, 1952, which I refrain from quoting in the course of this short judgment because it is already some familiar. Can it be said that Dr. Owens travelling expenses from Fishguard to Haverfordwest were such as he was 'necessarily obliged to incur and defray' out of the emoluments of his officer With all respect to the views expressed by Lord Denning, M. R., I do not see how that question can be answered in a manner favorable to Dr. Owen. It seems to me nihil ad rem that the duties he was called upon to perform were emergency duties or that his responsibility for the patient begin a t the moment when he answered the telephone call. Both of these features might equally be present were Dr. Owen resident in Haverfordwest and able to stroll up the hill to the hospital with the expenditure of nothing except a little shoe-leather. The car journeys actually performed were, in my judgment, in no sense inherent in the officer itself of and the expense thereof not such as each and every holder of the office would be 'necessarily obliged to incur or defray.' Unfortunately for Dr. Owen, he was obliged to incur such expenses if he desired to hold the officer while continuing to raised in Fishguard, but that is not the test to be applied.

Accordingly, on both points I regret to have to say that I agree with Diplock L. J. in holding that this appeal should be dismissed.

Appeal dismissed with costs.

Leave to appeal granted.


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