Hong Kong Case Law: Decisions & Judgments

Topic

Adventure in the nature of trade

Legal area

Court

11 Dec 2003

STANWELL INVESTMENTS LTD v. COMMISSIONER OF INLAND REVENUE

Citation

STANWELL INVESTMENTS LTD v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA4/2003

The Court allowed Stanwell's appeal: the Board's reasoning contained logical inconsistencies and non sequiturs and misapplied the implications of its own factual findings that Stanwell's intentions were identical to those of its controlling minds (LGHK and LG Korea). On the facts found, the acquisition was for long‑term investment by the Group, Stanwell discharged the onus under IRO s.68(4), and no profits tax was assessable on the sale.
9 Nov 1989

BEAUTILAND CO LTD. v. COMMISSIONER OF INLAND REVENUE

Citation

BEAUTILAND CO LTD. v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA1/1989

On the facts found the sale of Rostock shares was an isolated realisation motivated by market opportunity and development difficulties and was not an integral method of carrying on the Appellant's business of land development; the Board lacked sufficient basis to infer an intention to trade in shares as part of the ordinary business, therefore the profit was not trading income and the appeal is allowed.
10 Oct 1989

THE COMMISSIONER OF INLAND REVENUE v. WAYLEE INVESTMENT LTD

Citation

THE COMMISSIONER OF INLAND REVENUE v. WAYLEE INVESTMENT LTD
Court

Court of Appeal
Case number

CACV6/1989

The Court held the profit was revenue in nature because the respondents acquired and held the shares as part of a Bank group rescue operation with the predominant purpose of protecting the Bank's loan and realising a profit when conditions permitted; the respondents acted as a group vehicle and the shares constituted trading stock (an adventure in the nature of trade). The Board of Review's contrary conclusion was positively wrong in law and the profits tax assessment was restored.
21 Nov 1988

COMMISSIONER OF INLAND REVENUE v. WAYLEE INVESTMENTS LTD

Citation

COMMISSIONER OF INLAND REVENUE v. WAYLEE INVESTMENTS LTD
Court

Court of First Instance
Case number

HCIA3/1988

The Board of Review's finding that the profit was capital was supportable on the evidence; the court may look at the reality of the situation and lift the corporate veil to treat Waylee and the Bank together; applying the correct legal tests (intention at acquisition, badges of trade and overall factual matrix) the Board's conclusion that the sale proceeds were not taxable trading income but capital was reasonably open and not perverse, so the assessment must be annulled.
19 Apr 1979

WING TAI DEVELOPMENT CO LTD v. COMMISSIONER OF INLAND REVENUE

Citation

WING TAI DEVELOPMENT CO LTD v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA3/1978

The Court held the Board was entitled to find the appellant's disposal of the Wah Kwong shares constituted a trading adventure, and that the appellant failed to discharge the burden of proving the correct value of the shares on 23 February 1973; the Board was therefore entitled to reject the appellant's valuation evidence and the appeal was dismissed.

Hong Kong Case Law

STANWELL INVESTMENTS LTD v. COMMISSIONER OF INLAND REVENUE

BEAUTILAND CO LTD. v. COMMISSIONER OF INLAND REVENUE

THE COMMISSIONER OF INLAND REVENUE v. WAYLEE INVESTMENT LTD

COMMISSIONER OF INLAND REVENUE v. WAYLEE INVESTMENTS LTD

WING TAI DEVELOPMENT CO LTD v. COMMISSIONER OF INLAND REVENUE