Comptroller of Income Tax v ACC: Withholding Tax on Interest Swap Payments & Interpretation of Income Tax Act s 12(6)
The Comptroller of Income Tax appealed against the High Court's decision to grant ACC leave to apply for a quashing order against the Comptroller's letter stating ACC was liable for withholding tax on certain transactions. ACC, a Singapore-incorporated company, acted as a middleman for its Cayman Islands subsidiaries in interest swap agreements. The Court of Appeal dismissed the Comptroller's appeal, holding that ACC had the right to challenge the Comptroller's determination. The court considered whether the Comptroller's determination could be quashed and ultimately dismissed the appeal.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal Dismissed
1.3 Case Type
Tax
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal dismissed the Comptroller's appeal, finding ACC had the right to challenge the tax assessment on interest swap payments under s 12(6) of the Income Tax Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Comptroller of Income Tax | Appellant | Government Agency | Appeal Dismissed | Lost | Jimmy Oei, Usha Chandradas |
| ACC | Respondent | Corporation | Appeal Dismissed | Won | Leung Yew Kwong, Tan Shao Tong |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Jimmy Oei | Inland Revenue Authority of Singapore |
| Usha Chandradas | Inland Revenue Authority of Singapore |
| Leung Yew Kwong | WongPartnership LLP |
| Tan Shao Tong | WongPartnership LLP |
4. Facts
- ACC is a Singapore-incorporated company with subsidiaries in the Cayman Islands.
- ACC's subsidiaries (SPCs) are in the business of leasing machinery.
- SPCs entered into loan agreements with offshore banks at a floating interest rate.
- SPCs leased out their machines at a fixed rental rate, exposing them to interest rate fluctuations.
- ACC acted as a middleman for the SPCs in interest swap agreements with onshore banks.
- The Comptroller determined that payments made to the SPCs fell within s 12(6) of the ITA and were subject to withholding tax.
- ACC paid the withholding tax under protest and sought a quashing order against the Comptroller's determination.
5. Formal Citations
- Comptroller of Income Tax v ACC, Civil Appeal No 96 of 2009, [2010] SGCA 13
- ACC v CIT, , [2010] 1 SLR 273
6. Timeline
| Date | Event |
|---|---|
| Comptroller issued letter to ACC regarding withholding tax liability | |
| Civil Appeal No 96 of 2009 | |
| Court of Appeal decision |
7. Legal Issues
- Withholding Tax Liability
- Outcome: The court held that the respondent had the right to challenge the Comptroller's determination regarding withholding tax liability.
- Category: Substantive
- Sub-Issues:
- Interpretation of s 12(6) of the Income Tax Act
- Applicability of s 45 of the Income Tax Act
- Locus Standi
- Outcome: The court held that the respondent had locus standi to seek a quashing order against the Comptroller's determination.
- Category: Procedural
- Sub-Issues:
- Right to seek a quashing order
- Abuse of Process
- Outcome: The court held that it was not an abuse of process for the respondent to bring judicial review proceedings.
- Category: Procedural
- Sub-Issues:
- Failure to exhaust alternative remedies
- Susceptibility to Judicial Review
- Outcome: The court proceeded on the basis that the Comptroller's determination was susceptible to judicial review.
- Category: Procedural
- Sub-Issues:
- Whether the Comptroller's determination could be quashed
8. Remedies Sought
- Quashing Order
9. Cause of Actions
- Judicial Review
10. Practice Areas
- Tax Litigation
- Appeals
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Singapore Airlines Ltd and another v Inland Revenue Authority of Singapore and another | High Court | Yes | [1999] 2 SLR(R) 1097 | Singapore | Distinguished from the present case regarding locus standi to seek a quashing order. |
| Borissik Svetlana v Urban Redevelopment Authority | N/A | Yes | [2009] 4 SLR(R) 92 | Singapore | Cited for the principle that a person seeking judicial review should normally exhaust all alternative remedies before invoking the jurisdiction of the court. |
| Regina v Statutory Visitors to St Lawrence’s Hospital, Caterham; Ex parte Pritchard | N/A | Yes | [1953] 1 WLR 1158 | England and Wales | Cited for the principle that a quashing order can only lie to bring up to the court and quash something which is a determination or a decision. |
| R (on the application of the Association of British Travel Agents Ltd) v Civil Aviation Authority | English Court of Appeal | Yes | [2007] 2 Lloyd’s Rep 249 | England and Wales | Cited for the principle that there is no need to quash a guidance note which contains erroneous statements of law because it did not affect existing or future rights. |
| Ainsworth and another v Criminal Justice Commission | High Court of Australia | Yes | (1992) 175 CLR 564 | Australia | Cited for the principle that the function of certiorari is to quash the legal effect or the legal consequences of the decision or order under review. |
| Hot Holdings Pty Limited v Creasy and others | High Court of Australia | Yes | (1996) 185 CLR 149 | Australia | Cited for the principle that a decision which operates as a prerequisite to or a step in a process capable of altering rights, interests or liabilities may also be the subject of a quashing order. |
| Regina v Panel on Take-overs and Mergers, Ex parte Datafin Plc and another | English Court of Appeal | Yes | [1987] QB 815 | England and Wales | Cited for the principle that the Panel's decisions were capable of indirectly affecting the rights of citizens and were held to be amenable to a quashing order. |
| Tan Eng Chye v Director of Prisons | High Court | Yes | [2004] 4 SLR(R) 521 | Singapore | Cited for the principle that the pre-sentence medical report was redundant and did not have any legal effect on the applicant. |
| Regina v Secretary of State for Employment, Ex parte Equal Opportunities Commission and another | House of Lords | Yes | [1995] 1 AC 1 | England and Wales | Cited for the principle that a mere opinion clearly does not fall within the category of decisions which have some form of actual or ostensible legal effect, whether direct or indirect. |
| Regina v London Waste Regulation Authority, Ex parte Specialist Waste Management Ltd | N/A | Yes | N/A | England and Wales | Cited for the principle that the public authority’s opinion was not susceptible to judicial review because it was not a ruling or decision. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 53 r 1 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Income Tax Act (Cap 134, 2008 Rev Ed) s 12(6) | Singapore |
| Income Tax Act (Cap 134, 2008 Rev Ed) s 45 | Singapore |
| Income Tax Act (Cap 134, 2008 Rev Ed) s 13(4) | Singapore |
| Income Tax Act (Cap 134, 2008 Rev Ed) s 92(2) | Singapore |
| Income Tax Act (Cap 134, 2008 Rev Ed) s 89 | Singapore |
| Income Tax Act (Cap 134, 2008 Rev Ed) s 4(3) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Withholding tax
- Interest swap
- Special purpose company
- Income Tax Act
- Locus standi
- Abuse of process
- Judicial review
- Quashing order
- Ministerial exemption
- Ministerial remission
15.2 Keywords
- Withholding tax
- Interest swap
- Income Tax Act
- Judicial review
- Singapore
- Tax
16. Subjects
- Taxation
- Withholding Tax
- Interest Rate Swaps
- Judicial Review
17. Areas of Law
- Tax Law
- Income Tax
- Judicial Review