Braitrim (Far East) Ltd v Commissioner Of Inland Revenue

CourtCourt of Final Appeal (Hong Kong)
Judgment Date22 Aug 2013
Citation(2013) 16 HKCFAR 519
Judgement NumberFAMV18/2013
SubjectMiscellaneous Proceedings (Civil)
FAMV18/2013 BRAITRIM (FAR EAST) LTD v. COMMISSIONER OF INLAND REVENUE

FAMV No. 18 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 18 OF 2013 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV NO. 45 OF 2012)

_____________________

Between:

BRAITRIM (FAR EAST) LIMITED Applicant
and
COMMISSIONER OF INLAND REVENUE Respondent

_____________________

Appeal Committee: Mr Justice Chan PJ, Mr Justice Ribeiro PJ and Mr Justice Tang PJ
Hearing and Decision: 19 August 2013
Handing Down of Reasons: 22 August 2013

_________________________

DETERMINATION

_________________________

Mr Justice Ribeiro PJ:

1. We dismissed this application for leave to appeal with costs, reserving our reasons. We now provide those reasons.

2. The taxpayer sought unsuccessfully in the Board of Review[1] and in the Court of Appeal (on a leap-frog appeal)[2] to challenge the Commissioner’s assessment of its liability to profits tax. The point of contention concerned the deductibility of the taxpayer’s expenditure on certain moulds used in the production of plastic garment hangers. The Court of Appeal refused leave to appeal to this Court,[3] hence the present application for leave to appeal.

3. Mr Barrie Barlow SC argued in the first place that leave to appeal is as of right under the first limb of section 22(1)(a) of the Court’s statute[4] since rejection of the taxpayer’s deductions resulted in an assessment of additional tax payable in the respective sums of $1,829,296, $609,010 and $769,654 for the years of assessment 2000/2001 to 2002/2003, a total exceeding the $1,000,000 threshold.

4. We do not accept that submission. From the outset, the Court has construed the first limb of section 22(1)(a) as referring only to liquidated monetary claims.[5] And it has consistently held that the claim for a known sum resulting from a process of assessment or quantification does not qualify as a liquidated claim.[6] The claim is not a liquidated claim where the dispute is about whether one basis of assessment, producing $X liability, applies as opposed to a competing basis of assessment, producing $Y liability. The present case falls within that category. The Appeal Committee so held in CG Lighting Ltd v CIR.[7] It is a misconception to suggest, as Mr Barlow does, that the proposed appeal concerns a liquidated claim because the charge to tax – after assessment – is enforceable as a statutory debt.

5. Mr Barlow SC submits in the alternative that leave to appeal should be granted on the basis that a question of great general or public importance arises concerning the proper construction of the word “lease” in section 2 of the Inland Revenue Ordinance[8] (“IRO...

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