J
+
98
should be treated under the first portion of the Section as a productive undertaking.
The fact is that the Section of the Hong Kong Ordinance quoted by the Deputy Treasurer is only of a permissive nature made wide in its terms to obviate the necessity of amending ordinances, It is not general in its application to all productive undertakings in a Colony and neither the whole of the Section nor a portion of it can be extended to any particular undertaking, not previously approved for treatment on net receipts, without the prior authority of His Majesty's Government. There has thus, in the opinion of the Army Council, been no error in law in the past treatment of waterworks receipts in Hong Kong.
In brief, it is considered that the above
statement shows that there is no evidence to support the suggestion that the allowance was intended to be permitted in all cases of capital expenditure met from revenue, and indicates that it is only made in respect of productive undertakings which it has been agreed should be assessable on net receipts. As the Council are not prepared to recognise that the waterworks revenue should be assessable on a net receipts basis, it follows that they cannot agree that an allowance is permissible in this case.
9.
with regard to the remaining point in connection with the waterworks revenue, i̟.e., the deductions. madé
from revenue under Section 15 of Ordinance No. 14 of 1927
A
*
in respect of the service of that part of the Public Works Ioan of 1927 which was used for expenditure on waterworks,
I am to explain that exemption from assessment for military contribution of revenue used for the service of loans raised for public works or such purposes has never been generally sanctioned.
'
In the case to which reference is made, the River and Harbour Improvements in the Straits, Settlements in 1906, the exemption which was agreed to as a special case (see penultimate sentence of War Office letter to the Treasury
کا
6
/No.
C