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In the present case, moreover, the grant was made in respect of loss of revenue on which military contribution had hitherto been paid, and it was therefore in Their Lordships' opinion the natural and reasonable inference that the grant itself should be treated in the same way. Or the position may be stated differently. The Imperial grant could be regarded as compensation for loss of either gross or net revenue. But the whole course of the correspondence preceding Their Lordships' final decision shows that the basis on which the amount of the grant was determined was not the net revenue but the gross; and it is therefore only fair to regard the grant itself as gross revenue i.e. revenue from which a deduction had to be made in respect of military contribution.
To adopt the view advocated by the Secretary of State would result in a division of the loss of revenue between the Colonial and the Imperial Exchequer in the proportions of 30 per cent and 70 per cent respectively and My Lords cannot suppose that the Secretary of State intended that the arrangement which he recommended
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whereby half the actual loss of revenue should be borne by Imperial funds should in point of fact produce a result so far removed from its apparent purpose. In any event such an intention was never understood or shared by this Board.
Finally, I am to say that the exclusion of the grant from assessment would, in Their Lordships' judgment, be wholly opposed to the principle on which the Colonial contributions to military defence are based and that, apart from the more special reasons already mentioned, They would feel obliged to object to such a policy on general grounds.
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