ZF v Comptroller of Income Tax: Dormitories as 'Plant' under Income Tax Act

ZF appealed against the Income Tax Board of Review's decision, arguing that prefabricated dormitories used in its business of providing worker accommodation should be classified as 'plant' under the Income Tax Act, entitling it to capital allowances. The High Court of Singapore, presided over by Andrew Ang J, dismissed the appeal, holding that while the dormitories satisfied the 'business use' test, they failed the 'premises' test as they primarily served as accommodation, a typical function of premises, and their portability was a property, not a function.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal dismissed with costs to be taxed.

1.3 Case Type

Tax

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding whether prefabricated dormitories qualify as 'plant' under the Income Tax Act. The court dismissed the appeal, finding the dormitories failed the 'premises' test.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
ZFAppellantCorporationAppeal DismissedLostLeung Yew Kwong, Tan Shao Tong
Comptroller of Income TaxRespondentGovernment AgencyWonWonQuek Hui Ling, Foo Hui Min

3. Judges

Judge NameTitleDelivered Judgment
Andrew AngJudgeYes

4. Counsels

Counsel NameOrganization
Leung Yew KwongWongPartnership LLP
Tan Shao TongWongPartnership LLP
Quek Hui LingInland Revenue Authority of Singapore
Foo Hui MinInland Revenue Authority of Singapore

4. Facts

  1. ZF operated a business providing dormitory accommodation for workers.
  2. ZF constructed prefabricated dormitories on a site leased from C Pte Ltd.
  3. The lease was for a short term and could be terminated with 90 days' notice.
  4. ZF argued the dormitories were 'plant' due to their portability and demountability.
  5. The Income Tax Board of Review ruled the dormitories were not 'plant'.
  6. The High Court agreed with the Board, dismissing ZF's appeal.

5. Formal Citations

  1. ZF v Comptroller of Income Tax, Income Tax Appeal No 1 of 2008, [2010] SGHC 14

6. Timeline

DateEvent
Z Pte Ltd was awarded a contract to design, build and operate workers’ dormitories at XXX Road by C Pte Ltd.
BCA sub-leased the site to C for a term of three years.
Judgment reserved.
Decision Date

7. Legal Issues

  1. Definition of 'Plant' under the Income Tax Act
    • Outcome: The court held that the dormitories did not qualify as 'plant' under the Income Tax Act because they failed the 'premises' test.
    • Category: Substantive
    • Sub-Issues:
      • Functional test
      • Premises test
      • Business use test
    • Related Cases:
      • Yarmouth v France (1887) 19 QBD 647
      • Inland Revenue Commissioners v Scottish & Newcastle Breweries Ltd [1982] STC 296
      • Commissioner of Inland Revenue v Barclay, Curle & Co Ltd [1969] 45 STC 221
      • Wimpy International Ltd v Warland (Inspector of Taxes) [1988] STC 149

8. Remedies Sought

  1. Declaration that the dormitories are 'plant' under the Income Tax Act
  2. Capital allowances for the dormitories

9. Cause of Actions

  • No cause of actions

10. Practice Areas

  • Tax Litigation

11. Industries

  • Construction
  • Accommodation

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Yarmouth v FranceQueen's Bench DivisionYesYarmouth v France (1887) 19 QBD 647England and WalesCited for its classic definition of 'plant' as apparatus used by a business for carrying on its business.
Inland Revenue Commissioners v Scottish & Newcastle Breweries LtdHouse of LordsYesInland Revenue Commissioners v Scottish & Newcastle Breweries Ltd [1982] STC 296United KingdomCited for the principle that the word 'plant' should not be accorded its ordinary dictionary meaning but should be read in light of decided authorities.
Munby v Furlong (Inspector of Taxes)Court of AppealYesMunby v Furlong (Inspector of Taxes) [1977] 2 All ER 953England and WalesCited for the principle that the word 'plant' has acquired a special meaning in tax cases.
Commissioner of Inland Revenue v Barclay, Curle & Co LtdHouse of LordsYesCommissioner of Inland Revenue v Barclay, Curle & Co Ltd [1969] 45 STC 221United KingdomCited for establishing the 'functional' or 'business use' test in determining whether something is 'plant'.
Bridge House (Reigate Hill) Ltd v Hinder (H M Inspector of Taxes)N/AYesBridge House (Reigate Hill) Ltd v Hinder (H M Inspector of Taxes) [1971] 47 TC 182United KingdomCited to illustrate that what is 'plant' for one trade may not be 'plant' for another.
Schofield (HM Inspector of Taxes) v R & H Hall LtdCourt of Appeal of Northern IrelandYesSchofield (HM Inspector of Taxes) v R & H Hall Ltd [1974] 49 TC 538Northern IrelandCited for the principle that 'plant' does not require to be mechanically active in its operation.
Jarrold (HM Inspector of Taxes) v John Good & Sons, LtdN/AYesJarrold (HM Inspector of Taxes) v John Good & Sons, Ltd (1962) 40 TC 681United KingdomCited for the principle that buildings or structures and machinery and plant are not mutually exclusive.
Broken Hill Proprietary Company Limited v Commissioner of Taxation for The CommonwealthHigh Court of AustraliaYesBroken Hill Proprietary Company Limited v Commissioner of Taxation for The Commonwealth [1967–68] 41 ALJR 377AustraliaCited for the principle that 'plant' includes every chattel or fixture which is kept for use in the carrying on of the mining operations, not being merely in the nature of a general setting.
St John’s School v Ward (HM Inspector of Taxes)High CourtYesSt John’s School v Ward (HM Inspector of Taxes) [1974] 49 TC 524United KingdomCited to distinguish the current case, noting that the dormitories are the very premises in question, similar to how the structures in St John's School were considered buildings.
Benson (HM Inspector of Taxes) v Yard Arm Club LtdCourt of AppealYesBenson (HM Inspector of Taxes) v Yard Arm Club Ltd [1979] 53 TC 67United KingdomCited for the distinction between premises in which a business is carried on and the plant with which a business is carried on.
Cole Brothers Ltd v Phillips (H M Inspector of Taxes)N/AYesCole Brothers Ltd v Phillips (H M Inspector of Taxes) [1982] 55 TC 188United KingdomCited to explain that if the ship had been engined and used as a vehicle for gastronomic cruises on the river, it would have served an additional function in a composite business of restauranteurs and carriers.
Quarries Ltd v Federal Commissioner of TaxationHigh Court of AustraliaYesQuarries Ltd v Federal Commissioner of Taxation (1961) 106 CLR 310AustraliaCited to argue that sleeping units intended to be moved from place to place by virtue of the nature of the trade constituted the 'tools of trade' or 'plant' of the taxpayer, but distinguished because the sleeping units did not form part of the premises.
Wimpy International Ltd v Warland (Inspector of Taxes)N/AYesWimpy International Ltd v Warland (Inspector of Taxes) [1988] STC 149United KingdomCited for the enunciation of the 'premises' test, stating that even if an embellishment for the purposes of trade passes the 'business use' test, it still has to pass the 'premises' test.
Wimpy International Ltd v Warland (Inspector of Taxes)Court of AppealYesWimpy International Ltd v Warland (Inspector of Taxes) [1989] STC 273United KingdomCited for the principle that if an item functions as part of the premises, it is not plant.
Carr (H M Inspector of Taxes) v SayerN/AYesCarr (H M Inspector of Taxes) v Sayer [1992] 65 TC 15United KingdomCited for the principle that buildings do not cease to be buildings and become plant simply because they are purpose-built for a particular trading activity.
Attwood (Inspector of Taxes) v Anduff Car Wash LtdCourt of AppealYesAttwood (Inspector of Taxes) v Anduff Car Wash Ltd [1997] STC 1167United KingdomCited for the principle that the question in each case is whether the item functions as premises or plant.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Income Tax Act (Cap 134, 2008 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Plant
  • Capital allowances
  • Prefabricated dormitories
  • Business use test
  • Premises test
  • Functional test
  • Portability
  • Demountability

15.2 Keywords

  • Income Tax
  • Plant
  • Capital Allowances
  • Dormitories
  • Singapore
  • Tax Appeal

16. Subjects

  • Taxation
  • Income Tax
  • Capital Allowances
  • Definition of Plant

17. Areas of Law

  • Tax Law
  • Income Tax
  • Capital Allowances