Hong Kong Case Law: Decisions & Judgments | LexChat

Topic

Artificial or fictitious transactions

Legal area

Court

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

FACV8/2007

Although the transactions were real, the introduction of Strategic and the circular borrowing were found to have the sole or predominant purpose of securing a tax benefit by enabling larger interest deductions; under s.61A the Commissioner was entitled to counteract that benefit by disallowing interest deductions in excess of the net proceeds actually received by the group, so the assessment on Hongkong International Terminals Limited was confirmed while the appeal against Hit Finance Limited was dismissed.
28 Jul 1977

COMMISSIONER OF INLAND REVENUE v. DOUGLAS HENRY HOWE

Citation

COMMISSIONER OF INLAND REVENUE v. DOUGLAS HENRY HOWE
Court

Court of First Instance
Case number

HCIA1/1977

The Court held the employment contract and assignment were not 'artificial' within s.61 on the facts; the taxpayer ceased carrying on authorship on his own account as from 27 July 1971 so royalties paid by OUP after that date belonged to GEC while royalties received by the taxpayer for the year ending 31 March 1971 were the taxpayer's income; an opinion formed by an Assistant Commissioner and confirmed by the Commissioner can validly ground action under s.61; royalties paid to an author are not necessarily sums 'for the use or right to use' within s.15(1)(b)/s.21A such that the 10% rule autom…