• Version
• Download 8
• File Size 222.56 KB
• File Count 1
• Create Date 5 June, 2015
• Last Updated 11 March, 2021

Aviation Fuel Supply Company Limited v. CIR: — Dismissal of Appeal Due to Concern for “Unfairness” to the Taxpayer

The case provides an in-depth discussion of one of the basic principles of the income tax system, namely the distinction between capital and revenue with respect to the characteristics of gains that we, as tax practitioners, commonly deal with. In particular, it highlights the importance of ensuring that the nature of the taxpayer’s trade or business is characterised accurately in order to determine the chargeability of profits tax under Section 14 of the Inland Revenue Ordinance (“IRO”). The case also provides commentary on the mechanics of the seldom discussed Sections 15(1)(m) and 15A of the IRO and analyses the operation of the relevant balancing charges provisions. From an administrative standpoint, the recent decision of the Court of Final Appeal (“CFA”), which discusses the issue of making an assessment after the expiry of the six-year limitation period, reinforces the importance of upholding the protection purportedly given to taxpayers. However, such a conclusion comes with a disclaimer in that there may be instances where it would not be unfair for the court to exercise its power to make an assessment on a different basis.