The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1908-01-13

income above actual operating and
business expenses including expenses
for materials purchased for manufac.
urc or bought for resale. losses and
interest on bonded and other indcbt |
cdness." Act of August o.. 1894, Sec. !
80 2S stat. $50. Il will be observed !
that this language is very different
from that under which the previous
cases were decided and in effect pres
cribcs the replacement system
In similar manner the provision for
estimating personal incomes has been
altered from the general language of
sections 116 and III of the act of June
80, 1864, by combining necessary eX-
penses to those actually incurred
and expressly excluding "all estimat-
ed depreciation of values and losses
within the year on sales Of real es-
tate purchased within two years" Act
of August o. 1894, Sec. 2S. This ex
clusion of all estimated depreciation
of values first appeared in the act Of
March 2. 1867, oh. 10, and again i'm
act of June II. 1870, Sec. Q. in the
latter case disconnected from the
somewhat confusing reference to loss
es on real estate In Foster and Alb
bolt. Income Tax Law of 1894. each
provision of the act is annotated with
the corresponding provisions of pre-
vious statutes. and an examination of
the development of the law strengthens
the impression that the intent of the
latest statute was to coniine deduc-
tions to actual cash requirements.
In the plantations notice of appeal
from the assessment of its income to
the tax appeal court it is claimed
! that the assessment and levy is lille
gal and void and in violation of the
| Organic Act. Secs 8. 6. 10, 55. 81, SO:
Revised Statutes of the United States
| Secs. 1850, 1851 and 1877 as well as
the taking of property without due
| process of law and a denial of the
equal protection of the law i'm viola
/ ton of article and section I of ar
ticle il of the amendments to the
I Constitution of the United States The
only points urged in support of these
| sweeping objections are first, that
there is no authority except under
! Sec. 1885 to add to the amount of
| the tax payers return. which is 50
! plainly without merit as to require
no discussion, TN re Hayes, 16 Haw.
| 1861 and, second. that the law is
unconstitutional in failing to provide
| fOr notice of an assessment raising
! the amount fthe income from the
! tax payers return, or in the alterna-
! tive that if such notice is required
| by the statute it was not give min this
! case. We are of the opinion that
| Sec 1887 requires notice of an assess
ment in case of the tax payers return
To be given on or before April | in
each year. following the correspond
ing section of property tax act CSec.
l243, amended S. l.. 1905, act 80, Sec
~. The statute is therefore objec
tionable in this repect The alterna.
tive claim that such notice if required
was not given in this case applies only
to the increase and not to- the whole
assessment, was not mentioned OI
covered by the appeal to the tax ap
peal court nor presented to that
court, but appears in the appellate
court for the first time. 1t is too late
to raise this objection here. The func
tpion of such notice is to give the
tax payer an opportunity to take his
appeal and if it is defective either il
substance or in time of sending the
objection should be taken at the out
set.
While We cannot sustain the
decision appealed from. ALLOW
ing the item of depreciation as it ap
ha Of hA 90
+ we are nevertheless of the opinion tina
e the plantation should be permitted t
e show any actual expenditures in tn,
nature of running expenses which
: could properly be included in its tota
; claim of $1,290 l09 .7G expended in tn
production of its crop Under it's sys
, TEN of bookkeeping some OF these item
+ We're included in the account of per
d manent improvements, and the item {
o permanent improvements in anothe
e part of the return was undoubtedl
A. computed by the inclusion of some {
i these items. Ordinarily i'm the al
i sence of mistake or other reasonabl
- excuse a return is binding on the ia
] payer, Dul III lUlS case the return Wa
made under the representation Of III
.r treasurer of the Territory that estima
IS ed depreciation would be allowed as
IF deduction, WHICH arrangement was re
ct cinded by the AFTER only some month
t. after the return was made, in view
8, the decisions of In re Income Tax
81 Honolulu Rapid Transit g. Land G.
~ Is Haw. Is and In re Taxes Laupaho
- hoe Sugar Co., IS Haw. zoo. We thin
,r this sufficient reason for allowing Il
n. plantation to show the facts elaine
ne and that it lost no rights by litigatiT
n the matter of depreciation provide
ny it offered to prove its alternative clai
mt before the tax appeal court, which VI
VI done. It may be observed, hOwevc
al that so far as the year 1906 is concer
~ Cd the offer to prove that of the su
-. of $4O5O2 As only $4,000 81 was for a
,g ditions and permanent improvement