Cooper's Case: Californian Copper Syndicate V. Harris

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Californian Copper Syndicate v Harris (1904) 5 TC 159 This principle of this case is to examine the issue of the realisation of a capital asset and determine that the profit from the sales of a land to be mined for its minerals was assessable as ordinary income or is it capital in nature. California Copper Syndicate purchased a land for the purposes of mining copper. However, the company did not mined the land, instead went off to sold the land to a mining company ( Harris) at a profit in exchange for shares. The commissioner classified the sales of the land as an ordinary income as a gain made from carrying on a business is characterised as ordinary income. However the company argued that the sales is capital in nature as the company did…show more content…
Myer Emporium required to borrow some funds for its business but was restricted because of its obligation to the debenture holder. Hence the solution that they came up with is that they lend some money to its subsideries and sold the rights of the loan to the finance company. The finance company then paid the interest as a lump sum to the company. The payment was accessed as ordinary income. The company argued that the payment is not ordinary income as it was a capital gain as it is a extraordinary transaction because its outside the ordinary course of its business. The conclusion is that it falls under ordinary income because the business entered into was on the intention of making a profit. Although the profit made in the ordinary course of business was considered as income, however it does not mean that other transaction entered into the ordinary course of business is not considered as ordinary income. This is so even if the transaction is

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