The Hawaiian gazette., 1902-11-18

DENIES
income
LIABILITY
Sugar Corpora
ton Claims a
Loss.
(From Saturdays Dally)


The Hawaiian Commercial and Sugar
Company yesterday filed an appeal
with Collector J. w. Pratt from an
assessment on an income of 5000. .72S.76.
The sugar company, in its appeal,
claims to be not liable to income tax
at all, and while admitting that the
profits for the year were approximately
the figures given by Pratt, they write
of the income by showing a deprecia-
ton in value of more than the amount
upon which they are assessed.
The hearing upon the appeal is set
down before the tax appeal court for
next Wednesday. Though the tax
court closed its sessions over week
ago, the Hawaiian Commercial Com
panys case was left open for stipula-
ton between the counsel on both sides,
in order that advices might be receiv-
ed from San Francisco regarding the
carrying through of the appeal. There
vas some prospect of settlement, but
this fell through and the case, which
involves several important points, Will
probably not end this side of the su-
preme court.
Though the appeal involves the
amount of over $4,000 in taxes, the
case is of considerable more import
ance than even the mere amount Of
income tax If the Hawaiian CONNER
cial Company wins the appeal, 1t Will
mean the loss to the Territory in the
future of the bulk Of the revenue de-
rived from the income tax, for the ap-
peal strikes at the very root OF the law,
The proposition upon which the ap-
peal is taken is simple enough, though
IL does involve interests Of great mag
nitude. Admitting the correctness of
the estimates of Collector Pratt that the
gain OF the corporation during the year
was $500, ,72S.76, the company contends
that there was in reality loss, in that
there should be written of the income
the sum OF about 100000, being the
depreciation in the property owned by
tho corporation. This loss is accounted
for by the abandonment on the part of
the company OF the old mill, which has
been replaced during the year by new
and modern machinery. A deprecia-
ton is shown also in the railroad and
other buildings and to like causes.
The amount Of loss is not claimed to
be the value of the new Improvements,
but of the depreciation in the old mill
buildings and railroad which became
vaIueless by reason of these improve
ments.
The amounts Of such depreciation are
set out specifically as follows:
Mill and building .......... $3.50, ,749.52
Other buildings ............. 4O,ZoO.oi
y RafIroad " log .695.ZU
The claim of the Hawaiian CONNER
cial is that the depreciation shown
above should be deducted from the in-
come, inasmuch as there is that much
loss by reason OF the abandonment.
Collector Pratt, on the other hand.
claims that profit is income, and that
the law specifically provides that there
should be no deduction for improve
ments, or on loss on buildings. He
holds that there can be no deduction
from the income by reason OF any de-
probation, and the legal fight before
the tax court next week promises TO
be a very interesting one.
This will be the only appeal to be
considered at this late date, the matter
having been left open only by agree
nent, there having been no final ad-
iournment of the tax court.