Hong Kong Case Law: Decisions & Judgments

Topic

Inland revenue ordinance s.61a

Legal area

Court

26 Jun 2008

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD
Court

Court of Final Appeal
Case number

FACV9/2007

The Commissioner was the real winner on the central issue (the proper assessments on HITL were those increased by the Board of Review) and, applying the principle that costs follow the event and exercising the Court's discretion under s.61A IRO, the Court awarded the Commissioner the costs of and incidental to the appeals in FACV Nos 8 and 9 of 2007, the cross-appeals in FACV Nos 16 and 17 of 2007 and of and incidental to HCIA Nos 14 and 15 of 2005 (including specified associated applications). The Court declined to deprive the Commissioner of costs despite some unsuccessful points advanced b…
26 Jun 2008

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD
Court

Court of Final Appeal
Case number

FACV8/2007

The court held that the Commissioner was the real winner because the Board of Reviews increased assessments on HITL were confirmed; costs therefore follow the event; applying its discretion under s.61A IRO the court declined to deprive the Commissioner of any costs despite some unsuccessful points, and ordered that the Commissioner be awarded the costs sought.
11 Dec 2007

NGAI LIK ELECTRONICS CO LTD v. COMMISSIONER OF INLAND REVENUE

Citation

NGAI LIK ELECTRONICS CO LTD v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA5/2007

Given the Board's unchallenged findings that prices were fixed after the event by accountants, arbitrary annual discounts redistributed profits among group companies, and management fees were nominal despite substantial services, the scheme operated to transfer assessable profits away from Ngai Lik and the dominant purpose of the transaction was to obtain a tax benefit; accordingly the Board's application of s.61A and its upholding of the Commissioner’s assessments were legally correct.
4 Dec 2007

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

Citation

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD
Court

Court of Final Appeal
Case number

FACV16/2007

The Court held that s.61A applies where features of a transaction (here the introduction of Strategic and the circular borrowing) conferred a tax benefit and were inserted for the sole or predominant purpose of obtaining that benefit; on the facts the Board of Review was entitled to find Strategic was introduced predominantly to secure a tax benefit, so the Commissioner was entitled to disallow interest deductions of Hongkong International Terminals in excess of the net loan proceeds actually received by the group, while assessments on HIT Finance went too far and were dismissed.

Hong Kong Case Law

COMMISSIONER OF INLAND REVENUE v. HONGKONG INTERNATIONAL TERMINALS LTD

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD

NGAI LIK ELECTRONICS CO LTD v. COMMISSIONER OF INLAND REVENUE

COMMISSIONER OF INLAND REVENUE v. HIT FINANCE LTD