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

233. "a note says: 1T was admitted ON
the argument that the company had
written of q certain amount for the
repairs actually executed, and that
they might properly do So I'm Queen
v. Midland Railway Company 10 "A.
a. Ell. n. 5. 1868. 3Gi the court speaks
Of an expense as IAN uuobioCtiouable
form of deduction when &c should
either be actually incurred or provided
for" I'm Grant v. Hartford and New
Haven Railroad Company, 90 u. $. 225, !
counsel for the taxpayer argues that
the company is entitled TO deduction
of a fair percentage for depreciation,
reproduction. etc. although the amount
has not been actually expended. These
instances merely illustrate the con-
struction OF language which appears
to us not only to require the eXclu-
sion of an estimated depreciation but
to have been definitely intended for
that purpose. We therefore affirm on
this point the decision In re Income
Taxes Honolulu Rapid Transit & Land
Co. Is Haw. 10.
with regard to the claim that esti-
mated depreciation should be allowed
as an amount expended under that
portion of section 1880 including as
income the amount of sales of all
movable property less the amount eX-
pended i'm the purchase or production
of the same" it is apparent that an
allowance of this claim would put cor
porations engaged in the production
of movable property at a considerable
advantage as compared with corpora
lions in other lines of business A
corporation engaged i'm buying and
selling movable property suffers the
same depreciation as the corporation
| in this case. but it could hardly be
urged that depreciation upon their
/ buildings or office furniture was an
amount expended in the purchase oil
the goods in which they dealt Cor
porations not dealing in movable pro-
perty. as. for example, railroad and
street railway companies, would OF
course have no possible claim under
this section. 1t is sufficient to say
that we do not consider that this Ian
I guage can be made to cover deprecla-
ton of plant but that the word de
Dreciation" is more properly contrast
ed as in the instance in Grant V. Hart
ford and New Haven Railway, supra,
with amount actually expended 1t
may be true. as stated in the opinion
of the tax appeal court that the
/ wasting of a steam boiler is as real
an expense as the consumption OF
the fuel beneath it, but We believe
neither one to be deductable under this
| section but only the amount of cash
paid in each instance; in other words,
ii the corporation found it advisable
to buy two years supply of coal in one
year the whole amount expended for
the coal would be properly deductable
i'm that year and not distributed &C
cording as the fuel was consumed. 1t
may also be true that no corporation
could make true showing to its
stockholders by any other method thar
that of allowing for depreciation. Blu
the same remark is applicable as ha.
been made with regard to schedule
ID" of the English income. tax act
1T is clear from these enactment
that the law does not permit, as re
CARDS such assessments. all deduc
tions which a prudent trader would
make in ascertaining his own profits.
ALBANIA Co. V. Bell G905), X. Il
1874, 1876.
The language of our statute wa,
largely taken from the federal in
p come tax law of 1894 which was de
clared unconstitutional before beinl
construed in detail by the courts. Tn,
language of other statutes is so dis
, similar that decisions under them al
/. ford but little aid. BY the Englisl
income tax act of 1912 it was provid
ed that the duty shall b
: computed on a sum not less than tn
full amount of the balance of tn
j.. profits or gains of such trade, mani
! facture or adventure or concern NJ
!, on a fair or just average of thre
: years" After the case of Forder '
Handyside, l.. r. Exch. Div. 80
n denying the right 10 deduct estima
Y ed depreciation, the act was amende
n in 1878 giving specific authority
1 the assessors to ALLOW such dedu
r ton as they may think just and re-
sonable as representing the diminis
$ ed value by reason of wear and tei
: during the year of any machinery {
5 pant uStu lOl tut purposes Oh IL
y concern" See Cunard Steamship c
Il V Coulson GS99), | Q. b. SOS.
r In the United States on the 9th,
d hand the legislative tendency seen
s. to have been against the allowance
81 estimated depreciation. By the a
ie of June 30 1864, Sec. 1879, 10 Sta
i 2S4, amended by the act of July /
~ 1866 IA Stat. 1879, certain enumeTat,
~ companies that had paid interest {
>, Indebtedness or that, may have d
10 clared any dividend as pa
N OF the earnings, profits, income
no gains of such company, and all pl
h. fits Of such company carried to Il
m account of any fund or used for CO
r struction shall be subject to and p
m a tax of Ave per cent. ON the amou
r of all such interest, or coupons, di
n dends or profits" Under the genel
language of this section the supreI
all court allowed deduction of su
or losses by depreciation. though es
e. mated, as actually occurred duri