The Commissioner of Inland Revenue, Hong Kong v. Mayland Woven Labels Factory Ltd
Read the full judgment text of HCMP 471/1974 on BabelCite. This High Court CFI judgment.
1. The appellant company purported to make a return of assessable profits for the purposes of Section 51(1) of the Inland Revenue Ordinance Cap. 112 for the year of assessment 1973-1974. The only document submitted to the Commissioner for the purpose of the assessment was the form known as B.I.R. 51, a form which is specifically prescribed by the Board of Inland Revenue for the purpose and which is supplied by the Inland Revenue Department to such business firms in each year of assessment. The f
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HCMP000471/1974 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) MISCELLANEOUS PROCEEDINGS NO. 471 OF 1974 ----------------- IN THE MATTER of Kowloon District Court, Civil Jurisdiction, Case No. 5596 of 1974.
----------------- Coram: Full Court (Briggs, C.J., McMullin, J.) Date of Judgment: 8th January, 1975. ----------------- JUDGMENT ----------------- McMullin J.: 1. The appellant company purported to make a return of assessable profits for the purposes of Section 51(1) of the Inland Revenue Ordinance Cap. 112 for the year of assessment 1973-1974. The only document submitted to the Commissioner for the purpose of the assessment was the form known as B.I.R. 51, a form which is specifically prescribed by the Board of Inland Revenue for the purpose and which is supplied by the Inland Revenue Department to such business firms in each year of assessment. The form thus submitted by the appellant company showed a figure of assessable profits in the sum of $221,278.88. No annual balance sheet, profit and loss account, or auditor's report was supplied with this form although upon the face of that form a printed instruction appears in the following terms:
Those notes specify certain additional documents to be supplied. 2. The single point for consideration upon the appeal was whether or not the return of B.I.R. 51 tout court showing, in the relevant spaces, the details supplied by the appellant company from its own records was sufficient compliance with the provisions of Section 51(1) of the Ordinance to constitute a proper return within the meaning of that provision. The Commissioner's position is that no valid return was made inasmuch as the form was not accompanied with the supporting particulars and schedules. This was indeed the burden of the reply which he made to the purported letter of objection to his assessment dated 29th of December 1973. Under Section 64 any person aggrieved by an assessment made, by notice in writing to the Commissioner, object to it. But the Section goes on to state that:
In their letter of objection dated 29th of December the appellant company referred to the return which they had submitted and which showed the figure of $221,278.88. In his reply dated 8th of January the Commissioner pointed out that he had made his assessment under the provisions of Section 59(3) of the Ordinance by virtue of the fact that the appellant company had not submitted a properly completed return in that no copy of the profit and loss account, annual balance sheet, auditor's report or full supporting schedules had been sent with the purported return. He offered however to validate the objection if these documents were submitted not later than the 22nd of January 1974. This was not done and on the 4th of February 1974 the appellant company wrote once more stating that because of certain practical difficulties which had arisen within the company it had not been possible to supply the desired information within the required time and they asked for a further extension to the end of February. They also asked that their letter of the 29th of December should thereupon be regarded as a valid notice of objection. On the 12th of February the assessor by letter of that date informed the appellant company that no extension was to be granted and that the objection was regarded as invalid. 3. Section 51(1) is in the following terms:
Mr. Lee's point is that the words "any return which may be specified by the Board of Inland Revenue" must be read as restricted solely to that printed form which has been prescribed and which is now known as B.I.R. 51 and that they do not also cover those supporting documents which are actually referred to in that form itself. The effect of this would be that if the form has been completed and details of the assessable profits have been given that is as much as need be done under Section 51(1) and, according to counsel's argument, if further information is desired in validation of those bare details, the assessor may use his powers under Subsections 3 and 4 of Section 51 to compel the submission of fuller information. We can see no reason why the words should be read in this restricted way. The assessors who are charged under the Ordinance with the task of estimating the quantum of tax payable by companies, firms and other bodies or persons will, as a matter of commonsense, require to be assured that details furnished to them on B.I.R. 51 are full, reliable and accurate. Clearly it is desirable that they should have to hand in the first instance such supporting evidence as might reasonable be relied upon in obviating the necessity for using the powers given in the subsequent subsections. If the tax-payers were permitted simply to return the form with a stated figure of assessable profits and nothing further in every case, it is obvious that the officials of the department might in very many cases be put to a degree of labour and a width of inquiry which might not only strain the resources of the department but also greatly delay the whole process of assessment. Section 51(1) gives to the Board of Inland Revenue the power to specify a form of return which must be made. The Board has exercised that power by the issue of a printed document which itself advises the tax-payer not only as to what details are to be noted upon the form itself when the tax-payer is filling it in but also as to the precise range of documents which shall accompany the form when it is submitted. A proper return is therefore not made simply by filling up the form itself and returning that to the Commissioner. In our view a proper return must include not merely a bald recital of statistical and other detail appropriate to the items appearing upon the face of the printed form but all such supporting information as is particularized in the notes and instructions upon the reverse of that form. The assessor in the present case made his assessment under Section 59(3) on the basis that a proper return under Section 51 had not been made. Mr. Lee would have it that a return was made and he points out that the return referred to in Subsection 3 of Section 59 is not described as a return made in accordance with the provisions of Section 51. That is true but by Section 54(1)(b) it is provided that:
This makes it clear that the right of the assessor to make an assessment under Section 59(3) is directly geared to the absence of such return as is required under Section 51. A proper return under that section must include such of the supporting documentation as is available. 4. For these reasons we think that the Commissioner was right to conclude that a proper return had not been made, that the subsequent objection was not valid and that the matter fall to be dealt with under Section 59(3). 5. For these reasons the application for leave to appeal is dismissed. Representation: |