Chapter 3

Business Income & Losses

 Definition of Business
• Section 2, ITA 1967 – definition of business
– Profession, vocation, trade, every manufacture, adventure
or concern in the nature of trade
• Profession (series of appointments)
– Carried out by intellectual skills
– FY v DGIR
• Vocation (how a person passes his life and requires
large work)
– Partridge v Mallandaine [(HL) 2 TC 179]
– Billam v Griffith (22 TC 757)
 Definition – cont.
• Trade
– anything that occupies time and an attention and
labour of a man for the purpose of profit
– Involves exchange of goods, services for reward;
must be bilateral
• Manufacture
– Original material must undergo transformation so
that a new and different article or product
emerges
 Definition – cont.
• Adventure or concern in the nature of trade
– May have some characteristics of a trade
– Refer to badges of trade
• Subject matter
• Period of ownership
• Frequency of transactions
• Supplementary work
• Organization set up to dispose of the goods
• Motive for the transaction
 Badges of trade
• Subject matter
– Rutledge v IRC [(1929) 14 TC 490]
– Cooke vs Haddock (39 TC 64)
• Period of ownership
– Wisdom v Chamberlain [(1968) 2 All ER 714]
– Mount Elizabeth (Pte) Ltd v The Comptroller of Income
Tax [(1987) 2 MLJ 130 (HC)]
• Frequency of transactions
– Series vs isolated
– Pickford v Quirke (13 TC 251)
 Badges of trade
• Supplementary work prior to sale
– Cape Brandy Syndicate v I.R Commissioners (12 TC 358)
• Organisation set up to dispose goods
– Martin v Lowry (11 TC 297)
• Motive for the transactions
– Normally not the focal point
– Circumstances leading to the transaction (HCM v DGIR)
– Profit motive (California Copper Syndicate v Harris); KLE
S/B v KPJHDN