BCH Retail Investment v Chief Assessor: Property Tax & Deduction of Advertising Expenses
BCH Retail Investment Pte Ltd (“BCH”), the owner and operator of Parco Bugis Junction, appealed to the High Court of Singapore against the Chief Assessor’s refusal to allow it to deduct the entire amount that it had spent on advertising and promotion of the shopping centre in 2003 from the actual gross sums paid by its tenants for the purpose of computing the annual value of Parco Bugis Junction. The court dismissed BCH's appeal, holding that the additional advertising and promotion expenses incurred by BCH were business expenses which may be relevant for income tax purposes but that is a different matter altogether from the annual value of the property and the property tax.
1. Case Overview
1.1 Court
High Court1.2 Outcome
BCH Retail Investment Pte Ltd’s appeal is dismissed with costs.
1.3 Case Type
Tax
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
BCH Retail Investment appeals the Chief Assessor's refusal to deduct advertising expenses from gross rental for property tax assessment. Appeal dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chief Assessor | Respondent | Government Agency | Won | Won | Foo Hui Min of Inland Revenue Authority of Singapore Joyce Chee of Inland Revenue Authority of Singapore |
| BCH Retail Investment Pte Ltd | Appellant | Corporation | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Lee Meng | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Foo Hui Min | Inland Revenue Authority of Singapore |
| Joyce Chee | Inland Revenue Authority of Singapore |
| David De Souza | De Souza Tay & Goh |
| Jeanette Lee | De Souza Tay & Goh |
4. Facts
- BCH owns and operates Parco Bugis Junction.
- BCH appealed against the Chief Assessor’s refusal to allow it to deduct the entire amount that it had spent on advertising and promotion of the shopping centre in 2003.
- Tenants pay BCH a basic rent, an additional rent, and an advertising and promotional contribution.
- BCH spent $2,591,707.00 on advertising and promotion in 2003.
- The definition of “annual value” in s 2 of the Property Tax Act (Cap 254, 1997 Rev Ed) is relevant.
5. Formal Citations
- BCH Retail Investment Pte Ltd v Chief Assessor, OM 30/2005, [2006] SGHC 133
- BCH Retail Investment Pte Ltd v Chief Assessor, , [2002] 4 SLR 844
6. Timeline
| Date | Event |
|---|---|
| BCH spent $2,591,707.00 on advertising and promotion of Parco Bugis Junction. | |
| Case filed as OM 30/2005 | |
| Judgment reserved. |
7. Legal Issues
- Deductibility of Advertising and Promotion Expenses
- Outcome: The court held that the additional advertising and promotion expenses incurred by BCH were business expenses which may be relevant for income tax purposes but that is a different matter altogether from the annual value of the property and the property tax.
- Category: Substantive
- Related Cases:
- [2002] 4 SLR 844
8. Remedies Sought
- Deduction of advertising and promotion expenses from gross rental for property tax assessment.
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Taxation
- Property Assessment
11. Industries
- Retail
- Real Estate
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| BCH Retail Investment Pte Ltd v Chief Assessor | High Court | Yes | [2002] 4 SLR 844 | Singapore | Dealt with whether A&P contributions from tenants could be deducted from gross rent to determine annual value. The court in the present case distinguished the current case from this case. |
| Tan Lark Sye, Trustees for Rubber Trade Assn v Chief Assessor | N/A | Yes | [1959–1986] SPTC 7 | Singapore | Cited for the principle that landlords cannot evade property tax by disguising part of the gross rent as deductible expenses. |
| Chartered Bank v The City Council of Singapore | N/A | Yes | [1959–1986] SPTC 1 | Singapore | Cited regarding the deduction from gross rent of the owner’s expenses for hiring watchmen, cleaning, lifts, air-conditioning and supervision. |
| Bell Property Trust, Limited v Assessment Committee for the Borough of Hampstead | N/A | Yes | [1940] 2 KB 543 | England | Cited regarding deductions from the gross rent of the owner’s expenses for providing hot water, central heating and other services in high-end service apartments. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Property Tax Act (Cap 254, 1997 Rev Ed), s 2 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Annual value
- Property tax
- Advertising and promotion expenses
- Gross rental
- Parco Bugis Junction
- Chief Assessor
- Advertising and promotional contribution
15.2 Keywords
- property tax
- annual value
- advertising expenses
- shopping centre
- Singapore
- BCH Retail Investment
- Chief Assessor
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Revenue Law | 90 |
| Property Law | 70 |
| Taxation | 60 |
16. Subjects
- Property Tax Assessment
- Deductible Expenses
- Valuation