§ Sir JOHN RANDLESasked the Chancellor of the Exchequer whether, in searching for ungotten minerals by means of deep bore holes, he would terminate the liability to pay income tax on the cost of such bore holes as charged at present, when the cost was treated as a part of the cost of working?
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)It is not possible to lay down any general rule as to whether the sinking of bore holes is in the nature of a capital expenditure or of an expense incurred in the earning of profits, and each case has to be dealt with by the local Commissioners on its merits. The latter kind of expenditure is alone admissible by law as a deduction in computing income tax liability.
§ Sir JOHN RANDLESCannot the right hon. Gentleman make it clear in some manner that in the case of a bore hole, which is absolute loss after the hole has been made, income tax is not to be charged on the expenditure on that particular bore hole?
§ Mr. LLOYD-GEORGEThis is a question of the interpretation of the present law. I can only go upon the experience of the Revenue officers in the past, and I am told that they judge purely according to the circumstances in each case. They have no clear, definite, precise rules; they must judge according to the conditions obtaining in each particular case.