BZZ v Comptroller of Income Tax: Capital Allowance & Income Tax Act Interpretation
In BZZ v Comptroller of Income Tax, the High Court of Singapore heard an appeal by BZZ against the decision of the Income Tax Board of Review regarding a balancing charge levied by the Comptroller of Income Tax. The charge arose from the sale of a property by BZZ to BMT, as trustee of FCOT. BZZ argued that Section 24(1) of the Income Tax Act should nullify the balancing charge because the sale was not a true commercial sale due to FCL's control over both the seller and the buyer. The court dismissed the appeal, holding that FCL's influence over FCOT did not constitute control over BMT, the buyer, as required by Section 24(1) of the Income Tax Act.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Appeal dismissed
1.3 Case Type
Tax
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court dismissed BZZ's appeal, affirming the Comptroller's balancing charge on the sale of property. The court held that Section 24(1) of the Income Tax Act did not apply.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Comptroller of Income Tax | Respondent | Government Agency | Judgment for Respondent | Won | Pang Mei Yu of Inland Revenue Authority of Singapore (Law Division) Quek Hui Ling of Inland Revenue Authority of Singapore (Law Division) Desiree Sim Wei Yen of Inland Revenue Authority of Singapore (Law Division) |
| BZZ | Appellant | Corporation | Appeal dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Choo Han Teck | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Pang Mei Yu | Inland Revenue Authority of Singapore (Law Division) |
| Quek Hui Ling | Inland Revenue Authority of Singapore (Law Division) |
| Desiree Sim Wei Yen | Inland Revenue Authority of Singapore (Law Division) |
| Ong Sim Ho | Drew & Napier LLC |
| Keith Brendan Lam Xun-Yu | Drew & Napier LLC |
| Emma Gan Xin Ci | Drew & Napier LLC |
4. Facts
- BZZ sold property AT to BMT, acting as trustee of FCOT.
- FCAM manages FCOT and is 100% owned by FCL, as is BZZ.
- The Comptroller levied a balancing charge of $40,476,347 against BZZ.
- BZZ disputed the balancing charge, claiming s 24(1) of the Income Tax Act applied.
- FCL owns the appellant and the Manager, and has a 22.2% stake in FCOT.
- The Trust Deed requires BMT to exercise its powers as directed by the Manager.
- FCOT's accounts are consolidated with those of FCL.
5. Formal Citations
- BZZ v Comptroller of Income Tax, Tax Appeal No 8 of 2019, [2019] SGHC 252
6. Timeline
| Date | Event |
|---|---|
| Assessment raised for the Year of Assessment 2010 | |
| Appeal dismissed by the Income Tax Board of Review | |
| Hearing date | |
| Judgment reserved | |
| Judgment date |
7. Legal Issues
- Applicability of Section 24(1) of the Income Tax Act
- Outcome: The court held that Section 24(1) of the Income Tax Act did not apply because FCL's influence over FCOT did not constitute control over BMT, the buyer.
- Category: Substantive
8. Remedies Sought
- Nullification of balancing charge
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Taxation
- Tax Appeals
11. Industries
- Real Estate
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Armitage v Nurse | High Court | Yes | [1998] Ch 241 | England and Wales | Cited regarding the irreducible core of duties of a trustee, but found not applicable in defining control under s 24(1) of the Income Tax Act. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Income Tax Act (Cap 134, 2008 Rev Ed) | Singapore |
| Income Tax Act (Cap 134, 2008 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Balancing charge
- Capital allowance
- Income Tax Act
- Control
- Trustee
- Beneficiary
- Real estate investment trust
- Tax written-down value
15.2 Keywords
- Income Tax
- Capital Allowance
- Balancing Charge
- Singapore
- Property Sale
- Control
- Trust
- FCL
- FCOT
- BZZ
- Comptroller of Income Tax
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Revenue Law | 95 |
| Income taxation | 95 |
| Capital allowance | 95 |
16. Subjects
- Taxation
- Corporate Law