Union Carbide Singapore Pte Ltd v Comptroller of Income Tax
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 March 1979 |
| Docket Number | Privy Council Appeal No 27 of |
| Date | 15 March 1979 |
| Court | Privy Council |
[1979] SGPC 1
Privy Council
Viscount Dilhorne
,
Lord Russell of Killowen
and
Lord Keith of Kinkel
Privy Council Appeal No 27 of 1977
Michael Nolan QC and Lim Chor Pee (Douglas Goldberg & Co) for the appellant
Charles Potter QC and James Chia (Charles Russell & Co) for the respondent.
Economic Expansion Incentives (Relief from Income Tax) Act (Cap 135, 1970 Rev Ed) ss 30, 32 (consd); ss 10, 20
Income Tax Act (Cap 141, 1970 Rev Ed) ss 16, 18A, 19, 23
Revenue Law–Income taxation–Exemption–Economic expansion incentives–Exemption of export profits–Computation of exempt income–Whether taxpayer's exempt profits limited to sums remaining after rateable capital allowances deducted–Sections 30 and 32 Economic Expansion Incentives (Relief from Income Tax) Act (Cap 135, 1970 Rev Ed)
The appellant taxpayer company was exempt from tax of a part of its export profits under the Economic Expansion Incentives (Relief from Income Tax) Act (Cap 135, 1970 Rev Ed) (“the EEA”). The respondent Comptroller of Income Tax took the position that in calculating the quantum of the appellant's profits which were tax exempt, a rateable part of the appellant's capital allowances had to be deducted from its export profits that would otherwise have been exempt.
The Income Tax Board of Review affirmed this contention as did the High Court and the Court of Appeal. On appeal before the Privy Council, the appellant taxpayer argued that the amount of export profits which were exempt from tax was not affected by the fact that it was entitled to capital allowances, and similarly, that its right to capital allowances was also unaffected by its entitlement to have its export profits exempted from tax.
Held, allowing the appeal:
(1) Capital allowances are in respect of capital expenditure, and there was no provision in the Income Tax Act (Cap 141, 1970 Rev Ed) (“the ITA”) which either expressly or impliedly supported the contention that capital allowances to which a taxpayer was entitled were to be deducted rateably from all parts of the income from a single trade. Capital allowances to which a person is entitled are deductible in ascertaining the gains or profits chargeable to tax. Expenses and outgoings are not deducted rateably from gains or profits, and neither are capital allowances: at [9].
(2) Section 32 (1) could not be read to hold that it requires a rateable portion to be deducted. The totality of the capital allowances for the year must be deducted: at [18].
Judgment reserved.
Viscount Dilhorne(delivering the judgment of the Board):
1 The Income Tax Act of Singapore enables capital allowances in certain circumstances to be made to a taxpayer. The Economic Expansion Incentives (Relief from Income Tax) Act of 1967 provides, inter alia, for the exemption from tax of a part of the export profits of a company which has been approved by the Minister as an export enterprise and issued with an export enterprise certificate.
2 The appellants have been recognised as an export enterprise and it is not disputed that they have export profits, a part of which by virtue of the...
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