Commissioner of Inland Revenue v. Perfekta Enterprises Limited

FAMV Nos. 56 and 57 of 2018

[2018] HKCFA 55

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NOS. 56 and 57 OF 2018 (CIVIL)

(ON APPLICATIONS FOR LEAVE TO APPEAL

FROM CACV NO. 115 OF 2017)

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DETERMINATION

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Mr Justice Fok PJ:

1.We are satisfied that, exceptionally, on the “or otherwise” basis, leave to appeal should be granted to the applicant in FAMV 57/2018 (“the Taxpayer”) to contend that the majority of the Court of Appeal erred in concluding that the Taxpayer changed its intention as to the basis on which it held its property at Cheong Yip Street, Kwun Tong, so that it disposed of the said property as a trading asset in the nature of a trade rather than selling the same as a capital asset.

2.We are, therefore, also satisfied that the appeal involves the following question of great general or public importance for which it is appropriate to grant leave to appeal to the Court of Final Appeal, namely:

“In the event of a successful case stated/appeal vitiating a majority decision of a board of review/tribunal (‘the Majority Decision’), can the Court substitute the finding in the minority decision (‘the Minority Decision’) for that of the board of review/tribunal, with the consequence that any challenge to the Minority Decision is a challenge to a conclusion from primary facts which can only succeed if it is demonstrated to be unreasonable, illogical or plainly wrong? Or should the matter be remitted to the board of review/tribunal with the opinion of the court for proper findings to be made free from the legal errors identified, unless it can be shown that the conclusion of the Minority Decision is the true and only reasonable conclusion?”

3.We refuse leave to appeal to the Commissioner of Inland Revenue (“the Commissioner”) in FAMV 56/2018. We are not satisfied that the appeal involves the question of law posed by the Commissioner in his notice of application for leave to appeal.  For the reasons stated by the Court of Appeal in its Decision dated 21 August 2018,[1] the question posed is contingent.  How any tax assessment is to be computed is a matter to be determined upon any remitter.  Nor do we consider that leave to appeal should be granted in relation to the Commissioner’s proposed appeal on the “or otherwise” basis.

4.The appeal will be heard on 18 June 2019.

Mr Paul Shieh SC and Mr Mike Lui, instructed by the Department of Justice, for the Applicant in FAMV 56/2018 and the Respondent in FAMV 57/2018

Mr Clifford Smith SC and Mr Justin Lam, instructed by Pang & Associates, for the Applicant in FAMV 57/2018 and the Respondent in FAMV 56/2018