By an indenture, a settlor, now deceased conveyed and assigned properties in Singapore to trustees to be held on trust for certain purposes, all of which were admittedly non-charitable with the exception of two which provided for the distribution of a sum of S$3,200 per annum (either in cash or in the purchase of rice or corn) for the poor in a certain part of Arabia. The Comptroller did not accept the trustees' claim that the income amounting to S$3,200 applied for the purpose described above was exempt under s 13(1)(g) as the income of 'a trust established for charitable purposes only' and accordingly the S$3,200 was included in the assessment on the trustees.

Held: (1) s 13(1)(g) of the Income Tax Ordinance 1947 which exempted from taxation the income of a charitable institution or of any body of persons or trust establishment for charitable purposes only applies to trusts or persons natural or juristic who have an income which is devoted to charitable purposes and who can be assessed; (2) the appellants who are trustees for the purposes of the trust generally and who have an income part of which is devoted to charitable purposes do not come within the scope of the provision.

X & Co v Comptroller of Income Tax [1956] MLJ 43 High Court, Singapore (Murray-Aynsley CJ).

This appeal raised the question whether the words of the amendment made by the Amendment Act A471 ('the Income Tax (Amendment) Act 1980') to para 33 of Sch 9 of the Income Tax Act 1967 ('the 1967 Act') was capable of removing the exemption from tax granted to the appellant tax payer by s 13(1)(f)(ii) of the Income Tax Ordinance 1947 (repealed). The appellant was a co-operative society that qualified for exemption under the 1947 Ordinance, which exemption was continued by para 33 of Sch 9 of the 1967 Act when it came into force. In an earlier case No PKR 256, the exemption status of the appellant had been confirmed by the Special Commissioners of Income Tax. The Revenue, however, contended that the amendment to para 33 of Sch 9 by the Amendment Act had removed that exemption and moreover, that the amendment was made retrospective to the year of assessment 1968. Therefore acting under the Amendment Act, the Revenue had raised fresh assessments on the appellant for the years of assessment 1977 to 1981, resulting in the present appeal. In the High Court, it was held that the appellant no longer enjoyed the exemption by virtue of the said amendment. On appeal, the appellant contended, inter alia, that s 1(5) of the Amendment Act which made the amendment retrospective is bad in law as it deprived the appellant of an existing and acquired right which is protected by s 30(1)(b) of the Interpretation Act 1967; and further, on the authority of Floor v Davis (Inspector of Taxes) [1980] AC 695, one must, when construing provisions of other Acts, have regard to the Interpretation Act. On the other hand, the Revenue contended, inter alia, that retrospective tax legislation is possible if it is expressed in clear terms. Held, allowing the appeal: (1) the presumption is that an enactment is not intended to have a retrospective operation unless a contrary intention appears. In this case, that presumption had been rebutted because s 1(5) of the Amendment Act states in clear terms that the amendment was intended to be retrospective; (2) however, the general principle is that a retrospective operation should not be given to a statute to impair an existing right; moreover, one should avoid a construction that inflicts a detriment; further, where the meaning of a statute is in doubt the ambiguity must be construed in favour of the subject; (3) in this case, it is clear that the appellant had an acquired right to exemption under the 1947 Ordinance when the 1967 Act came into force. That acquired right which was confirmed by the special commissioners in Case No PKR 256 should only be overruled prospectively and not retrospectively; (4) admittedly the legislature had made its intention clear that the amendment effected by the Amendment Act is to be retrospective. However, the Amendment Act did not also expressly provide that Pt I of the Interpretation Acts 1948 and 1967 (Act 388) which includes s 30 of that Act shall not apply; (5) therefore, following Floor v Davis (Inspector of Taxes), the provisions of the 1967 Act must be construed having regard to the Interpretation Acts 1948 and 1967; (6) there is therefore a doubt whether the legislature had intended to impair the existing right of the appellant and inflict a detriment to it by taking away a vested right under the existing law to exemption from tax; (7) as there is a doubt the ambiguity must be construed in favour of the appellant as the said exemption from tax has not been removed by sufficiently clear words to achieve that purpose.

National Land Finance Co-operative Society Ltd v Director General of Inland Revenue [1994] 1 MLJ 99 Supreme Court, Malaysia (Gunn Chit Tuan CJ (Malaya).

This was an appeal by the Comptroller of Income Tax from a majority decision of the Income Tax Board of Review which held that the respondent, a registered trade union, which it was admitted did not engage in any trade or business, should be exempt from income tax under s 13(1)(m) of the Income Tax Ordinance 1947. The points for decision are: (a) whether a trade union, which is also a trade association, is exempt from tax under s 13(1)(m); (b) if it is not, whether the respondents are in fact a trade association?

Held: (1) a trade union is exempt from tax but if in addition to being a trade union it is also a trade association, then under s 11(2) of the Income Tax Ordinance it is deemed to carry on a business and become liable to tax; (2) on the facts of the case, the respondents are a trade association.

Comptroller of Income Tax v Singapore AB Association [1956] MLJ 205 High Court, Singapore (Knight J).

This was an appeal by way of a case stated from an order of the Special Commissioners of Income Tax, confirming the assessment by the respondent to tax, as a gratuity, the sum of RM32,000, under s 13(1)(a) of the Income Tax Act 1967 (Act 53). This sum was paid to the appellant ex gratia on the termination of his fifth contract of service with his employers by the giving of three months' notice as provided under the contract. The Special Commissioners concluded that as the appellant was not a permanent employee of the company, the sum of RM32,000 paid to him was not compensation for loss of office but a gratuity in respect of services rendered and as such liable to income tax under s 13(1)(a) of the Income Tax Act 1967. The main ground of appeal was that as the appellant had a reasonable expectation of continued employment, the sum of RM32,000 was paid to him by way of compensation for loss of employment. The question of law to be decided was whether, on the facts as found by the Special Commissioners, the sum of RM32,000 should be treated as compensation for loss of office under s 13(1)(e), or as a gratuity under s 13(1)(a) of the Act. An additional question was raised as to whether the said sum was a voluntary payment and therefore not a gain or profit from an employment within the meaning of ss 4(b) and 13(1)(a) of the said Act, and as such, outside the scope of the Act.

Held, dismissing the appeal: (1) the payment to the appellant was made in reference to his services and was something in the nature of a reward for his services. It was in no way related to the period for which he could have gone on working had he been kept in employment until the retiring age. Therefore, the ex gratia payment of RM32,000 was liable to tax as a gratuity in respect of services rendered under s 13(1)(a) of the Income Tax Act 1967; (2) in this case, the evidence showed that the payment was made in reference to, and by virtue of the appellant's employment. Therefore, it was not a voluntary payment so as to make it wholly exempt from income tax by virtue of para 15 of Sch 6 to the said Act.

GH v Comptroller General of Inland Revenue [1972] 2 MLJ 202 High Court, Kuala Lumpur (Gill FJ).

The appellant had been employed by United Plantations Ltd ('the company') under three separate contracts of service which ran consecutively. The last contract was terminated by the company in accordance with its terms, the appellant being paid his normal salary and allowances up to his last day of leave in accordance with the contract. Thereafter, the appellant was paid by the company the sum of RM74,954.32 as 'gratuity on retirement'. The Special Commissioners confirmed the assessment of income tax on the basis of that sum. The question for determination was whether the payment was compensation for loss of office or gains or profits in respect of the employment. The Revenue alleged that: (i) the payment was a gratuity within the meaning of the Income Tax Ordinance 1947, viz: gains or profits from employment and was not a retiring gratuity; (ii) it was an ex gratia payment and not compensation for loss of office; (iii) the payment was made in respect of the appellant's employment with the company.

Held: the payment made to the appellant was a gratuity paid in respect of the appellant's employment with the company. The payment was not paid upon the retirement of the appellant or following any particular scheme drawn up by the company and neither was it paid pursuant to any provision in the service agreement. Although the company made the payment on its own accord it was clearly meant to be an ex gratia payment made in reference to the services rendered by the appellant in the nature of a reward at the end of the contract. Such payment was therefore gains or profits from an employment in respect of which tax was assessable.

HMT v Director General of Inland Revenue [1974] 1 MLJ 211 High Court, Kuala Lumpur (Abdul Hamid J).

The appellant had been employed on a number of short term contracts, the last of which was due to expire on 26 October 1968. On 31 July 1968 the appellant was given three months' notice of termination of his contract of service and was given a sum of RM32,000 'ex gratia as compensation for loss of employment'. The Comptroller General assessed to income tax the sum of RM32,000. On appeal to the Special Commissioners they held that the sum was not compensation for loss of employment but a gratuity in respect of having or exercising employment and therefore taxable under para (a) of sub-s (1) of s 13 of the Income Tax Act 1967 (Act 53). This decision was upheld by the High Court and the appellant thereupon appealed to the Federal Court.

Held: (1) the payment in this case was not compensation for loss of employment; (2) the payment was a gratuity in respect of having or exercising employment within the meaning of para (a) of sub-s (1) of s 13 of the Income Tax Act 1967 and therefore it was liable to tax.

H v Comptroller General of Inland Revenue [1973] 2 MLJ 40 Federal Court, Kuala Lumpur (Azmi LP, Suffian and Ong Hock Sim FJJ).

[Annotation: The decision of the Federal Court was overruled by the Privy Council on appeal (see [1974] 2 MLJ 135).]

The taxpayer enjoyed the status of pioneer industry during which time 1 January 1968 to 31 December 1972 (five-year period) its profits were exempt from income tax. Revenue however sought to levy income tax on profits derived from hedging, an operation consisting of forward sales and purchases of raw sugar. The Special Commissioners were of the opinion that the taxpayer was neither speculating in the terminal sugar market nor was it engaged in activities amounting to a separate business. Hedging was necessary for the purpose of stabilizing and lowering the costs of the raw sugar used by it in its production of refined sugar. The question before the court was whether the Special Commissioners were right in law in coming to this decision on the facts as found by them.

Held: (1) the court will interfere only 'if the case contains anything ex facie which is bad law and which bears upon the determination'; (2) the Special Commissioners were justified by the facts and evidence in arriving at the conclusion that the terminal transactions entered into by the taxpayer were not merely speculation but hedging operations which formed part of its business as sugar refiners.

Director General of Inland Revenue v Central Sugars Bhd [1978] 2 MLJ 71 High Court, Kuala Lumpur (Chang Min Tat FJ).

This was an appeal from the decision of the High Court (see [1973] 1 MLJ 123). The questions of law submitted before the High Court were formulated as follows: (1) that s 72 of the Income Tax Act 1967 (Act 53) (s 57 of the Income Tax Ordinance 1947) which deals with Hindu joint families does not apply to Hindus whose domicile is Malaya and can only apply to Hindus who are domiciled in India; (2) if s 72 of the Income Tax Act, is held to apply to the appellants it is in violation of art 8 of the Constitution of Malaysia and therefore void. The learned judge declined to consider the second question as he considered that this question was a matter exclusively within the jurisdiction of the Federal Court. He rejected the appellant's contention on the first question. The appellant appealed to the Federal Court.

Held, dismissing the appeal: (1) Hindu law is the personal law of the appellants and by reason of cl (5) thereof art 8 of the Federal Constitution does not invalidate the provision relating to Hindu joint families in s 72 of the Income Tax Act (or s 57 of the Income Tax Ordinance 1947); (2) the two Hindu families in this case have by personal choice regarded their property as that of a joint Hindu property. The basis of their liability to pay income tax was not solely based on the fact that they were of the Hindu religion but also on the fact that they have always regarded their joint property as belonging to one unit and the income of that property as the income of one person.

B v Comptroller of Inland Revenue [1974] 2 MLJ 110 Federal Court, Ipoh (Azmi LP, Gill and Ong Hock Sim FJJ).

This was an appeal by way of case stated from the decisions of the Special Commissioners. The Comptroller General had assessed income tax on the basis of a Hindu joint family and the Special Commissioners had confirmed the assessments. It was argued on behalf of the appellant that: (a) s 72 of the Income Tax Act 1967 (Act 53) which deals with Hindu joint families does not apply to Hindus whose domicile is Malaya and can only apply to Hindus who are domiciled in India; (c) if s 72 is held to apply to the appellant it is in violation of Art 8 of the Constitution of Malaysia and therefore void.

Held, dismissing the appeal: (1) where a Hindu has shown the deliberate preservation of his personal law, as here in case of joint families, he is bound by such personal law, despite the fact that he has now emigrated to another country and has acquired a domicile of choice in the country of his origin; (2) s 72 of the Income Tax Act 1967 (Act 53) merely re-enacts what is the personal law by deliberate election of citizens of Hindu custom and religion; (3) the Special Commissioners were correct in their findings of fact and the inferences they drew from such findings.

B v Comptroller General of Inland Revenue [1973] 1 MLJ 123 High Court, Ipoh (Chang Min Tat J).

ABC v Comptroller of Income Tax [1959] MLJ 162 High Court, Singapore (Buttrose J).

DEF v Comptroller of Income Tax [1961] MLJ 55 Court of Appeal, Singapore (Rose CJ, Buttrose and Ambrose JJ).

In this case, the Comptroller of Income Tax raised four additional assessments against the taxpayer on the basis that they were profits from the sale of houses built by the taxpayer on behalf of his wife on land belonging to her which she had purchased in 1937. The taxpayer objected to these additional assessments, but the Comptroller refused to amend his additional assessments. The taxpayer appealed to the Board of Review on the ground that whatever profits that accrued to the taxpayer's wife resulting from the sale of the houses were not profits from a trade or business within the meaning of s 10(1)(a) of the Income Tax Ordinance (Cap 166, 1955 Ed), or alternatively that the Comptroller in arriving at the profits was wrong in valuing the land at its cost to the taxpayer's wife. The board dismissed the appeal finding on the evidence that the taxpayer was carrying on a trade, but holding that it was just and equitable that the date for valuing the land for the purposes of assessment should be 1 January 1948. The Comptroller now appeals contending that the board erred in law in holding that the date should be 1 January 1948. The taxpayer cross-appealed, contending that the said profits were not from a trade or business.

Held: (1) unless there is statutory provision otherwise, in calculating profits one applies normal commercial principles. There is no room in a taxing statute for just and equitable considerations; (2) in view of the facts in this case, it could not be said that the board's finding was erroneous in point of law. The facts of this warrant a determination either way and, therefore, the board's finding cannot be upset on appeal.

Comptroller of Income Tax v QRS [1961] MLJ 276 High Court, Singapore (Wee Chong Jin J).

CBH v Comptroller of Income Tax [1982] 1 MLJ 112 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Chua JJ).

DEF v Comptroller of Income Tax [1961] MLJ 55 Court of Appeal, Singapore (Rose CJ, Buttrose and Ambrose JJ).

[Annotation: See the reference to the Board of Review's decision in the judgment.]

The appellant which was incorporated on 8 July 1970 developed a block of high-rise apartments on the property known as 'Highpoint'. The sale of the flats commenced in 1971. Of the 59 apartments constructed 51 were sold between 1971 and 1973 and eight were retained by the appellant. Six of the retained flats were sold in 1980. On 27 November 1981 the Comptroller of Income Tax ('the Comptroller') made an additional assessment for the year of assessment 1981 against the appellant in respect of the profits derived from the sale of six of the eight Highpoint flats. The appellant objected to the additional assessment and appealed to the Income Tax Board of Review ('the Board'). Before the Board, counsel for the appellant contended that the surplus from the sale of the six flats was a capital accretion on the ground that the appellant's intention from the start was to develop some flats for sale and to retain some flats for investment and that the appellant was carrying on two activities, ie (1) the principal activity of property development for sale which came to an end in 1973 and (2) a subsidiary activity of letting out flats. Counsel for the Comptroller, however, contended that the surplus arising from the sale of the six flats was a trading receipt on the ground that the appellant was carrying on business of property development, that property development meant property development for sale and that the Highpoint flats were constructed in the course of such business. The appeal before the Board was dismissed. The appellant appealed against the decision of the Board.

Held, dismissing the appeal: (1) the appellant could only succeed in its appeal if it can show that the Board had either misdirected themselves on the law or had proceeded without sufficient evidence in law to justify their conclusion; (2) in the present case, there was sufficient evidence for the Board to reach the conclusion they did.

Mount Elizabeth (Pte) Ltd v Comptroller of Income Tax [1987] 2 MLJ 130 High Court, Singapore (Chan Sek Keong JC).

The appellant, an insurance company registered in Singapore, had a permanent establishment in Malaysia through which it carried on life assurance business. As required by the provisions of the Malaysian Insurance Act 1963, it maintained a separate Malaysian Life Fund for the security of that business. It also owned other investments and property in Malaysia as part of its general life insurance business. The question raised by this appeal was that of the chargeability to Malaysian income tax of the income derived by the appellant from those investments situate in Malaysia which have either been earmarked for the Singapore Life Fund or have not been specifically earmarked for any purpose but are simply held as assets of the general business of life insurance carried on by the appellant outside Malaysia. The appellant received some RM690,000 from Malaysian investments representing the Singapore Life Fund and some RM130,000 from other non-assigned Malaysian funds. These sums and similar income arising in previous years were assessed to tax by the respondent. The appellant appealed to the Special Commissioners who, on Febuary 1981, unanimously confirmed the assessment but, at the appellant's request, stated a case for the opinion of the High Court which upheld the decision of the Special Commissioners. The Special Commissioners held that so far as the law of Malaysia is concerned, the fact that certain investments may have been earmarked for the Singapore Life Fund is irrelevant. Those investments were simply, as were the non-assigned funds, investments producing income which accrued in or was derived from Malaysia and that income was chargeable under ss 3 and 4 of the Income Tax Act 1967 (Act 53) (the Act). There is no inconsistency between s 60 and ss 3 and 4, the former being merely concerned with the method of computation of the income chargeable to tax under the latter. Both the High Court and the Federal Court upheld the assessments and dismissed the appellant's appeal (see [1986] 2 MLJ 301). The appellant appealed to the Board.

Held, dismissing the appeal: (1) their Lordships prefer the approach of the Special Commissioners. The provisions of s 60 of the Act cannot be treated as ousting or supplanting the provisions of ss 3 and 4 from which the chargeability to tax arises except in relation to the particular types of income to which they specifically relate; (2) the appellant's income from Malaysian investments allocated to the Singapore Life Fund or representing non-assigned funds was either a gain arising in Malaysia from the general business which the appellant carried on and so chargeable under s 4(a) or dividends or interest accruing in Malaysia and so chargeable under s 4(c) of the Act; (3) the purpose of sub-s (8) was, ex abundanti cautela, to make it clear that the foregoing provisions of s 60 were not intended to exonerate from computation for the purpose of the charge of tax income not specifically mentioned but otherwise taxable under ss 3 and 4 but to preserve the charge and allocate it to what might be considered a convenient head to cover all residual income of whatever kind.

Great Eastern Life Assurance Co Ltd v Director General of Inland Revenue [1987] 2 MLJ 529 Privy Council Appeal from Malaysia (Lord Templeman, Lord Griffiths, Lord Mackay of Clashfern, Lord Oliver of Aylmerton and Lord Goff of Chieveley).

The appellant taxpayer is an insurance company resident in Singapore. It carries on insurance business in Malaysia through a permanent establishment and maintains a number of funds. By virtue of s 10 of the Malaysian Insurance Act 1963, the taxpayer was required to establish a Malaysian Life Fund in support of its insurance business in Malaysia. The dispute in this case concerns the dividend income of the taxpayer for the years of assessment 1968 to 1974 consisting primarily of dividends and the rest of rents and the interest earned by the taxpayer from investments out of the Singapore Life Fund. The Special Commissioners held that such income was chargeable to tax under ss 3 and 4 of the Income Tax Act. The taxpayer's appeal to the High Court was unsuccessful. On appeal to the Federal Court,

Held, dismissing the appeal with costs: it seems absurd that while income derived from investments of Malaysian Life Fund in Malaysia is liable to tax, the income derived from investments in Malaysia of the Singapore Life Fund or other funds is not assessable to tax. Section 60(8) sweeps away that absurdity and provides a vehicle to catch such income by aptly categorizing it as 'incidental gross income'. The Federal Court saw no reason to disagree with the learned judge in treating the income made up of dividends, interests and rents of the Singapore Life Fund and other funds as 'incidental gross income' as long as the taxpayer is not taxed more than once on that income.

Great Eastern Life Assurance Co Ltd v Director General of Inland Revenue [1986] 2 MLJ 301 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The plaintiffs were carrying out work in Labuan at the methanol and power plants. The defendants agreed by an agreement, which both parties said in evidence was entirely oral, to supply labour at rates agreed with the plaintiffs for use by the latter at the methanol and power plants. During the progress of the agreement, the plaintiffs made certain payments to the defendants. Thereafter, the Inland Revenue Department of Malaysia sought to recover from the plaintiffs 20% of the sums which the plaintiffs had paid to the defendants for the supply of labour. This sum was paid by the plaintiffs to the Inland Revenue Department. In the present case, the plaintiffs sought, inter alia, to recover this sum from the defendants. The defendants also made a counterclaim. The plaintiffs asserted that under s 107A of the Malaysian Income Tax Act, they are obliged to pay to the Inland Revenue Department 20% of all payments made to any non-resident and that it was only when the latter certified the defendants as non-resident that the plaintiffs were obliged to pay.

Held: (1) the plaintiffs must fail in their claim because they were attempting to enforce in Brunei Darussalam the revenue laws of another country; (2) the defendants were entitled to the counterclaim.

DSD Dillinger Stahlbau GmbH v Annie Chong & Anor [1988] 2 MLJ 293 High Court, Brunei (Roberts CJ).

The appellant was owing taxes to the Director General of Inland Revenue ('DGIR') who on 27 June 1988 issued a certificate under s 104(1) of the Income Tax Act 1967 ('the Act') to the Director of Immigration requesting the latter to prevent the appellant from leaving Malaysia until he had settled the tax. The certificate was not enforced immediately because the appellant was allowed to travel overseas until 20 April 1990. The appellant subsequently commenced an action in the High Court for a declaration that the certificate was null and void as it was made contrary to s 104 of the Act, mala fide and against established principles of natural justice. The application was dismissed and the appellant appealed. The main issue before the court was whether the certificate was valid although the DGIR did not give the appellant the right to be heard before making a decision to issue it, and had served a notice of it on the appellant very late on 16 May 1991. Held, dismissing the appeal: (1) as to the appellant's submission that the words 'leaving Malaysia' in s 104(1) of the Act must be interpreted to mean leaving Malaysia permanently, the court found that the words used in the section are plain and clear, and it is not appropriate to read the word 'permanently' into that section; (2) in forming the opinion that the appellant was about or likely to leave Malaysia, the DGIR would have to base his opinion on information and reports received by him, and on knowledge gathered in the course of dealing with the appellant's tax affairs. On the evidence, between June 1988 and April 1990, the appellant travelled extensively overseas and stayed longer in foreign lands than in Malaysia. In the circumstances, the court found that the DGIR was justified in forming the opinion that the appellant would leave the country without settling his tax; (3) it is not the intention of the law that the appellant should be given a notice to show cause why the DGIR should not issue the certificate, because it would defeat the object and purpose of the certificate. Such a notice would only serve as a warning and afford the appellant the opportunity to leave the country before the certificate could be issued. The DGIR was not bound to give notice and hear the appellant before issuing the certificate; (4) s 104(3) of the Act does not impose any time limit within which the DGIR must notify the appellant that a certificate had been issued under s 104(1) of the Act. Applying the provision of s 54(2) of the Interpretation Acts 1948 and 1967, it should be done with all convenient speed; (5) 'convenient speed' has been held by the courts to mean reasonable time within which an act has to be done, having regard to the peculiar circumstances of each case. It would be futile if the DGIR were to send to the appellant the notice of the issuance of the certificate unless the DGIR had information that the Director of Immigration had taken the necessary action on the certificate. In this case, the DGIR was aware that the Director of Immigration had not taken any action on the certificate because the appellant was allowed to leave on overseas travels until 20 April 1990 when the appellant was told by an immigration officer of the certificate. Once the appellant knew of the existence of the certificate, the provision of s 115 of the Act would apply to him. Thus, the delay in the service of the notice under s 104(3) of the Act on the appellant was not fatal so as to render the certificate null and void.

Tai Choi Yu v Government of Malaysia & Ors [1994] 1 MLJ 677 Supreme Court, Malaysia (Abdul Hamid Omar LP, Eusoff Chin and Mohamed Dzaiddin SCJJ).

In this case, the learned magistrate had acquitted the accused on a charge under s 120(a) read with s 81 of the Income Tax Act 1967 (Act 53). The charge against the accused was that he had without reasonable excuse failed to comply with the notice served under s 81. The learned magistrate acquitted the accused without calling for his defence as he found that there was no evidence at all that the defendant failed to furnish the information without reasonable excuse.

Held, allowing the appeal: the onus of proving 'reasonable excuse' in this case was on the accused and, therefore, he should have been called upon to enter on his defence.

Public Prosecutor v Phua Thian Kang [1971] 2 MLJ 149 High Court, Muar (Sharma J).

This was an appeal against the conviction and sentence of the appellant for an offence under s 120(a) of the Income Tax Act 1967 ('the Act'). The appellant had failed without reasonable excuse to furnish the Director General of Inland Revenue ('DGIR') with information required of him which were specified in a notice ('the notIce') sent by the DGIR. At the trial, the prosecution tendered evidence which showed that an assessment officer had prepared the notice which was signed by his immediate superior, an assistant director of the Inland Revenue Department ('the IRD'), before it was sent to the appellant under AR registered post. The main ground of appeal was that the notice was invalid for non-compliance with s 79 of the Act. It was argued that only the IRD officer, who actually prepared and studied the notice and who would subsequently act on the information furnished, could issue the notice 'under his hand'. Thus it was the assessment officer and not his superior who should have signed the notice. It was also argued that the notice sought particulars which were not within the class of information required for which a notice could be issued under s 79 of the Act. The appellant further submitted that the use of AR registered post meant that the notice was not effected in accordance with s145(2) of the Act and the deeming provision of that section did not apply. The appellant lastly contended that the trial magistrate had misdirected himself on the burden of proof when he stated that the burden of proving 'reasonable excuse' as to why the appellant could not reply to the notice was on the appellant. Held, dismissing the appeal: (1) the act of issuing the notice by an IRD officer cannot be equated with the excercise of judicial function and should not be construed in the manner relating to the excercise of powers under s 141(i) of the Criminal Procedure Code and under s 15(4) of the Copyright Act 1969. As long as the IRD officer who signed the notice was an officer vested with powers under s 136(4) of the Act, the act of signing the notice was valid and proper. In this case, the assessment officer did not have authority to sign the notice and it was only his superior who could sign the notice by virtue of s 136(4) of the Act; (2) inasmuch as the subject matter of the particulars sought by the IRD in the notice came within the ambit of all facts bearing upon the appellant's present or past chargeability to tax as laid down in s 79(e) of the Act, the IRD was justified in requiring the appellant to furnish such particulars. The court found that the information sought in the notice fell within the class of information required for which the notice could be issued under s 79(e) of the Act; (3) although s 145 of the Act specifies personal service or service by ordinary or registered post, the issuing of a notice by way of AR registered post is a recognized mode of service of notices to taxpayers. Although the deeming provision in s 145(2) is inapplicable to service by AR registered post, in this case there was evidence that the appellant had been served with the notice and the IRD had in fact received back the AR card duly signed by the recipient. The service by AR registered post was thus valid and proper; (4) s 120 of the Act, in defining the offence under which the appellant was charged, created an exception. The trial magistrate was right when he stated that the burden of proving the existence of circumstances bringing the case within that exception was upon the appellant.

Public Prosecutor v Mohd Isa bin Din Criminal Appeal No 51-74-94 High Court, Taiping (Zulkefli Ahmad Makinudin JC).

R was charged with failing to furnish the Comptroller of Income Tax with his statements of assets and liabilities for the years 1969 to 1983. His defence was that his records had been seized by the Inland Revenue Department and they had declined to return them to him. R was told that if he wanted copies of documents he could have them photostated for a fee. R took the view that the imposition of a fee for photocopies was unreasonable and declined to avail himself of the service. R also pleaded that as a practising lawyer he was too busy to attend at the Inland Revenue Department to obtain the necessary information. The magistrate held that R had established a reasonable excuse for non-compliance with the notices requesting information and acquitted him. The public prosecutor appealed.

Held, allowing the appeal: (1) the Inland Revenue Department had given R access to the documents. Had he inspected them, he could have complied with the notices. As a matter of principle, a taxpayer's professional commitments or unwillingness to incur the expenses of compliance with the notices could not in law amount to reasonable excuse for non-compliance; (2) in fact, R did not evince any intention to comply with the notices. He took every technicality and evasive action to avoid having to comply; (3) R was therefore convicted and fined S$500 on each of three charges.

Public Prosecutor v Wee Soon Kim Anthony Magistrate's Appeal No 170 of 1986 High Court, Singapore (Lai Kew Chai J).

The accused was convicted of three offences of failing to furnish returns of income tax and sentenced to RM25 on each charge. The Deputy Public Prosecutor appealed against the sentences imposed.

Held: (1) income tax offences are of a very grave character and the learned magistrate in this case should have considered not only the interest of the accused but also the interest of the public; (2) the sentences were inadequate and should be increased to a fine of RM150 on each charge.

Public Prosecutor v Lee Seng Seh [1966] 1 MLJ 266 High Court, Kuala Lumpur (Raja Azlan Shah J).

The accused had been charged with two offences of wilfully and with intent to evade tax giving a false answer in writing to a request for information by the senior investigation officer of the Income Tax Department, or alternatively of giving incorrect information without reasonable excuse. The first charge related to the giving of information on 1 October 1955, and the second to the giving of information on 14 April 1954. It was alleged that the accused had failed to disclose certain assets belonging to him in his statement. The accused was tried on the first charge and acquitted. When he was tried for the second charge he pleaded autrefois acquit and he was acquitted. The Public Prosecutor appealed.

Held: (1) as the alleged offences disclosed by the charges related to two independent criminal acts committed on two different dates, the plea of autrefois acquit was not available to the accused; (2) as the accused had been acquitted of the first charge, this amounted to a finding that up to 1 October 1955, he was unaware that any item of assets had been omitted from the statement made by him and that issue must be regarded as determined and settled for all times by the acquittal of the accused; (3) therefore the prosecution could not re-open the issue by attempting to prove that the accused was aware of the omission of the assets at an earlier period as it would be barred by the principles of issue estoppel as well as res judicata. Application of the principles of issue estoppel to criminal proceedings discussed.

Public Prosecutor v Lee Siew Ngock [1966] 1 MLJ 225 High Court, Penang (MacIntyre J).

This was an appeal against the magistrate's sentence cautioning and discharging the respondent on his plea of guilty to not filing his income tax returns within 30 days from the date they were sent to him. In fact the returns had not been filed when the summons was taken out some five months after the returns were sent to him.

Held: in the circumstances of this case, it cannot be properly said that the respondent had no sufficient time to compile the returns and submit them and the sentence should be set aside and a fine of RM150 imposed.

Public Prosecutor v Periasamy [1968] 2 MLJ 167 High Court, Ipoh (Chang Min Tat J).

'One of the principles to be followed in assessing sentences in income tax offences in this. Income tax forms part of the revenues of the country which are required to pay for schools, hospitals, rural development and other multifarious services. If a man, a businessman in particular, does not play his full part by declaring his existence to the government, the revenue will suffer. A most serious effect of evasion may be to persuade the government to cut down on services or to increase the rates of taxes payable by willing members of the community by not paying. An income tax dodger cheats not only the government but he cheats his fellow men as well.': per Suffian J.

Public Prosecutor v Choo Swee Huat [1963] MLJ 28 High Court, Alor Star (Suffian J).

In this case, the appellant was tried on nine charges of tax evasion. The first charge was under s 96(1)(c) for understating the net value of his assets by S$248,939.46. The second to ninth charges under s 96(1)(a) for omitting from his returns of income for the Years of Assessment 1965, 1966, 1967, 1968, 1969, 1970, 1971 and 1972 interest received from fixed deposit accounts. The appellant was the precedent partner of Poh Hua Granite Quarry Co, the other partner being his father, Ng Tham. On 12 November 1971, the Department first sent a Notice under s 65A of the Act to the appellant requiring him to furnish particulars of assets and liabilities of himself, his wife and dependent children as at 31 December 1969. He did not comply with this request. On 1 March 1972, a Notice under s 65A was served personally on him requiring him to submit a statement of assets and liabilities of himself, his wife and dependent children as at 31 December of each year from 1960 to 1971. On 24 October 1972, the appellant through his accountant submitted a net worth statement. Relying substantially on his net worth statement, the Department compiled a net worth computation statement showing total discrepancy of S$255,638. From this amount, additional tax of S$89,545.95 would arise. On 29 November 1973, the matter was settled for a sum of S$150,000 representing additional tax of S$89,545.95 and penalty of S$60,454.05 in lieu of prosecution. As part of the settlement, the appellant signed a Certificate of Disclosure declaring that he had disclosed all his assets to the Department. One month after this settlement, the bank wrote to the Department that it had inadvertently omitted several fixed deposits in the name of the appellant. Further investigation revealed that he had omitted seven fixed deposits in his own name and in that of his wife totalling S$248,939.46. The Department then compiled a second Net Worth Computation Statement by incorporating these seven fixed deposits which produced a further discrepancy of S$311,926 which if disclosed at the time of settlement would have given rise to further additional tax of S$155,967.70. It was also found that interest earned from these fixed deposits, totalling S$41,618 had not been declared in the appellant's annual tax returns for the Years of Assessment from 1965 to 1972. The above-mentioned nine charges were preferred against the appellant and he was tried in the 8th District Court from 21 October 1975 to 29 November 1975 when he was convicted on all the charges and sentenced as follows: (a) on the first charge to nine months' imprisonment and to pay a penalty of S$467,909.10; (b) on each of the other eight charges to six months' imprisonment and to pay a total penalty of S$51,002.40, all the terms of imprisonment to run concurrently. On appeal, the appellant's three main contentions were: (1) that the Comptroller of Income Tax Notice under s 65A requested for 'a statement of assets and liabilities of himself, his wife and dependent children' but nowhere in the section is dependent children mentioned. It is argued that the purported request contained in the Notice is considerably in excess of the powers given by s 65A and is therefore not 'asked or made in accordance with the provision of this Act' as required by s 96(1)(c) of the Act under which the charge is brought and the charge consequently discloses no offence. Thus the Notice under s 65A of the Act, relied upon by the respondent and referred to in the first charge is ultra vires and void and, therefore, the charge is void; (2) that the prosecution had not proved beyond reasonable doubt that the appellant hjad acted 'wilfully with intent to evade tax' and the trial judge should have acquitted the appellant; (3) that the profits of Poh Hua Granite Quarry Co are, in law, payable equally to both partners, and the appellant is, in law, required to account to his co-partner his share of the firm's moneys which the appellant has in his account or which he may have utilized. The legal position is that half the net money of the firm which is in the appellant's possession belongs to his co-partner and the co-partner is to that extent a creditor and the apparent asssets of the appellant must be, to that extent, reduced to give a true picture of his worth. The factual result of the application of the law is that the understatement was only S$16,394.08 and not S$248,939.46 as set out in the first charge.

Held: (1) there is no substance in the argument as para (e) of s 65A of the Income Tax Act (Cap 141, 1970 Ed) is wide enough to enable the Comptroller to ask for information as to the assets of the taxpayer's dependent children; (2) from the evidence, the appellant was very much aware of the existence of the fixed deposits at the time he submitted the net worth statement on 24 October 1972. The evidence showed that he had been keeping constant track of the fixed deposits. On the receipt of the first Notice under s 65A he embarked upon a sudden programme of withdrawals of all the fixed deposits and then employed a complicated scheme whereby he concealed his identity and had effective and actual control substantially over the withdrawn fixed deposits. In every year from 1965 to 1971, the appellant had been keeping two sets of accounts. At the close of the case for the prosecution, there was evidence that the appellant acted wilfully with intent to evade tax; (3) the Income Tax Act does not recognize a partnership as a distinct taxable person. Therefore, a partnership is not a separate entity and has no direct liability for the payment of tax. The partnership is liable only to lodge a return of income through its partners; (4) the question of apportionment of the profits of a partnership arises under s 36 of the Act but it clearly refers only to declared taxable income submitted in the return in order to allow the Comptroller to determine the individual partner's share of profits and consequently their individual liability to tax. If profits from the partnership are not declared in a partnership return, the question of apportionment of the evaded profits does not arise; (5) the Act does not provide for any apportionment of evaded taxable income among its partners where a prosecution has already been instituted against one partner in respect of that evaded taxable income.

Ng Chwee Poh v Public Prosecutor [1977] 2 MLJ 230 High Court, Singapore (Chua J).

In this case, the taxpayer and X entered into a partnership agreement on 13 April 1950, with the Y Co for the development into a building estate of a large piece of land owned by the latter as trustees for Z. Z died on 16 April 1951. After his death, the company entered into an arrangement with the appellant and X to sell the land which had meanwhile appreciated considerably in value and the difference between the sale value and its original value was shared between the partners in accordance with the terms of the partnership agreement. The taxpayer's share was assessed as partnership income and the Board of Review upheld the assessment. On appeal, the taxpayer contended that his share should not have been assessed as partnership income.

Held: on the facts of the case, it was clear that capital appreciation during the continuance of the partnership would be 'income' for the purpose of taxation in view of the objects of the agreement. The capital appreciation was rightly assessed as partnership income as there was no evidence that the partnership had been dissolved. It had not been determined by the death of the taxpayer nor by the agreement of the parties.

Re Taxpayer (No 2) [1956] MLJ 196 High Court, Singapore (Murray-Aynsley CJ).

Government of Malaysia v Dato' Mahindar Singh [1996] 5 MLJ 626 High Court, Kuantan (Arifin Zakaria J).

D was assessed to income tax. They filed an objection to the assessment. The tax was not paid on time. The comptroller brought the present action to recover the tax assessed. D put in a defence. The comptroller sought to strike out the defence and enter judgment. The matter was heard before an assistant registrar, who struck out D's defence. D appealed to the High Court.

Held, dismissing the appeal: (1) the summary procedure of striking out a defence under O 18 r 19 of the Rules of the Supreme Court can only be adopted when it is clear that the defence is not arguable; (2) the defence in this case was not arguable. The Income Tax Act provides that a taxpayer must pay the assessed tax first even though he had objected to the assessment and had invoked the procedures of the Act to have the assessment revised. D's appeal was accordingly dismissed.

Comptroller of Income Tax v Goodearth Realty Pte Ltd [1988] 3 MLJ 312 High Court, Singapore (Chao Hick Tin JC).

Once the Comptroller of Income Tax has made an assessment and issued a notice of assessment to a taxpayer calling upon him to pay the tax mentioned in the notice, the taxpayer, under s 86 of the ordinance, is bound to pay such tax within one month even though he may be dissatisfied with the assessment.

Comptroller of Income Tax v A Co Ltd [1966] 2 MLJ 282 High Court, Singapore (Choor Singh J).

The plaintiff applied by way of originating summons for, inter alia: (a) a declaration that the document ('the certificate') issued by the second defendant under s 104 of the Income Tax Act 1967 (Act 53) ('the Act') was null and void as being made ultra vires and/or mala fide and/or contrary to the established principles of natural justice; and (b) a declaration that the order of the third defendant to refuse and/or reject the plaintiff's application for a passport and/or to stop or refuse or revoke the issue of a passport to the plaintiff is null and void on the same grounds. A sum of RM231,016.95 was adjudged against the plaintiff as tax due and payable under a High Court order dated 9 October 1989. The plaintiff made some payments between 1987 and 1988 leaving the balance of RM239,482.39 when the certificate dated 27 June 1988 was issued by the second defendant (the Director of Inland Revenue) to the third defendant (the Director of Immigration). Although the certificate was issued, the plaintiff was not prevented from leaving Sarawak and Malaysia. He was also not informed of the certificate. Further payments were made by the plaintiff on 14 June 1988 but as a second additional tax assessment was made, the outstanding tax due and payable amounted to RM368,744.89 as of 15 June 1991. On 20 April 1990 the plaintiff applied for the renewal of his passport at the Immigration Department as the pages of his then existing passport had been used up although its validity only expired on 9 September 1990. He enclosed the original extract copy of his birth certificate and payment of RM100 with his application form. On 22 April 1990 the plaintiff, on making a telephone call to the Immigration Department to inquire about his application, was informed of the existence of the certificate. Between 20 April 1990 and 23 April 1991 there were communications between the plaintiff and the Department of Inland Revenue, Sarawak ('the Department'). The Department initially accepted the plaintiff's offer to pay by monthly instalment the sum of RM10,000 but later informed the plaintiff that it could only revoke the certificate when the plaintiff has furnished a bank guarantee for settlement of the tax outstanding. The plaintiff apparently did not comply with this. On 23 April 1991 the plaintiff commenced this action and the notice of issuance of the certificate dated 16 May 1991 was served on the plaintiff by the second defendant on 17 May 1991. The main issue which arose was the scope of s 104 of the Act in relation to the actions of the second and third defendants which were complained of. The plaintiff contended, inter alia, that: (a) s 104 of the Act conferred statutory discretion to the relevant persons and that the second defendant did not exercise this discretion. He submitted that before the second defendant could reasonably exercise his statutory discretion, he must have the relevant evidence to form an opinion that the plaintiff was about or likely to leave Malaysia for good; (b) he had been discriminated against, in violation of art 8 of the Federal Constitution as he was prevented from leaving the country even for a short period; (c) the exercise of discretion by the second defendant was not in compliance with the rules of natural justice and/or fairness. The necessary notice under s 104(3) had not been served on him in that the service of the notice was mandatory and not directory; (d) s 104 was unconstitutional, being contrary to arts 5, 8, 11 and 13 of the Constitution; and (e) the third defendant had no power, upon the second defendant's request, to refuse and/or 'defer his decision' indefinitely on his application for the renewal and to impound his birth certificate and RM100 in order to prevent him from leaving Malaysia.

Held, dismissing the action: (1) the fact that the certificate was issued by the second defendant pursuant to s 104 of the Act indicates that the second defendant did exercise his statutory discretion; (2) it is settled law that the construction of any statutory provision in the nature of s 104 of the Act will have to be based on the subjective test requirement. As such, it is a matter for the second defendant to decide and cannot be substituted by an objective test in a court of law. Further, it is not for the court to consider whether there was reasonable cause or ground for the second defendant to form an opinion and thereby issue the certificate. Section 138(3) of the Act can be relied on also by the second defendant so as not to reveal the evidence which led him to form the opinion. Therefore, the nature of 'leaving' the country by a person is not crucial; (3) s 104 comes under Pt VII of the Act with the main heading of 'Collection and Recovery of Tax'. Thus, the primary objective is to collect and recover taxes payable. As such, a person may be prevented from leaving Malaysia until he has paid his taxes or has furnished security for their payment. Accordingly, even if the interpretation of the word 'leave' or 'leaving' in s 104 is crucial, its meaning should not be restricted to mean 'leaving for good'; (4) further, to do so would entail adding the words 'for good' which Parliament did not do. The suggested interpretation by the plaintiff would also defeat the primary objective since no person knowing that he has taxes to pay would declare or even make it easily available any evidence that he is about to leave the country permanently. Further, there is no constitutional right of a Malaysian citizen to leave the country; (5) as long as the second defendant acts within the law, ie s 104, it cannot be said that he has violated art 8 of the Constitution. Firstly, there is no constitutional right to leave the country, and secondly, there is no evidence that the second defendant had acted mala fide or unfairly; (6) s 104(3) is only directory. No general rule can be laid down in construing whether the provisions of a statute are directory or imperative, and in every case the object of the statute must be looked at. Further, in view of the proviso to s 104(3), if Parliament had intended to make the issuance of a notice a condition precedent to the validity or effectiveness of a certificate issued under s 104, it would have stated so and the proviso would not have been included. Also to say that a 'notice' must be served before or on the issuance of a certificate under s 104 will defeat the purpose and effectiveness of Pt VII of the Act. Would-be evaders of income taxes will be able to know first of the issuance of certificates before the relevant authorities such as the Immigration or Police, and would hasten their exit without paying their outstanding taxes; (7) even though the certificate was dated 27 June 1988, it is not disputed that up to 20 April 1990 the plaintiff was not barred from going out of the country. The plaintiff has therefore no reason to say that he has been prejudiced by the issuance of the certificate especially since he knows he owes the Department in income tax; (8) there was no merit in the defendant's argument regarding the violation of arts 5, 8, 11 and 13 of the Constitution; (9) the third defendant had the discretion to defer his decision on the matter and in this case, he had acted reasonably and within the law in the exercise of that discretion; (10) the plaintiff was told of the reason for withholding the renewal of his passport, and if the reason was unjustified, the plaintiff should have made representation to rebut the reason given. The plaintiff's argument on the rules of natural justice was therefore without merit.

Tai Choi Yu v The Government of Malaysia & Ors Originating Summons No MR 17 of 1991 High Court, Kuching (Richard Malanjum JC).

Comptroller of Income Tax v Goodearth Realty Pte Ltd [1988] 3 MLJ 312 High Court, Singapore (Chao Hick Tin JC).

The defendant was assessed to pay S$303,555, being income tax due for the years of assessment 1951, 1952 and 1953. He lodged a notice of objection under s 76(2) of the ordinance. The Comptroller of Income Tax asked for further particulars, but before reaching a decision or issuing a notice of refusal to amend, final judgment was entered against the defendant. In an appeal to set aside the judgment it was contended by the defendant that the right of the comptroller to sue for payment did not arise until the assessment has been finalized.

Held: under s 86 of the ordinance it is clear that at the end of one month after the issue of the notice of assessment the sum assessed becomes payable although the assessment had not become final and conclusive.

Comptroller of Income Tax v RST [1962] MLJ 216 High Court, Singapore (Tan Ah Tah J).

An action was brought by the Comptroller against the defendant to compel payment of income tax in accordance with s 86 of the Income Tax Ordinance (Cap 166, 1955 Ed). The defendant, by way of summons-in-chambers, asked for an order that the plaintiff deliver to him particulars of certain matters comprised in the claim.

Held: (1) the statement of claim as presented contained all material facts necessary for the purpose of formulating a complete cause of action under s 86 of the ordinance; (2) as the dates of the Notices of Assessment referred to in the statement of claim and the dates of service were within the knowledge of the defendant, no additional particulars as to the Notices of Assessment were necessary to put the defendant on his guard as to the case he had to meet; (3) the particulars which the defendant was seeking were neither facts necessary to the complete formulation of a claim under s 86, nor were they necessary to put the defendant on his guard as to the case he had to meet.

Comptroller of Income Tax v RST (No 2) [1962] MLJ 287 High Court, Singapore (Ambrose J).

The defendant company was incorporated on 31 December 1971 and on 19 July 1972, the members resolved that the company should be voluntarily wound up. A notice of the winding up of the company and calling for creditors to submit particulars of their claim by 22 August 1972 was published in the newspapers on 22 July 1972. No proof of debt had been lodged by the plaintiff in respect of the present claim. The plaintiff assessed the company to tax for the year of assessment in the sum of S$11,602,014. The company's application to the plaintiff for the said assessment to be reviewed and revised was rejected. The company then filed with the Income Tax Board of Review (hereinafter called 'the Board') a Notice of Appeal. On 3 March 1978 the plaintiff issued a writ claiming S$11,602,014 arrears of tax and penalty for non-payment of tax amounting to S$580,100.70 making a total claim of S$12,182,114.70. The plaintiff then applied on 11 March 1978 for judgment under O 14. The company prayed for an order that the writ be stayed until the appeal had been heard by the Board.

Held: (1) the court had power to stay proceedings against a company after a voluntary winding up had commenced. The onus lay on the liquidator to show that an action against the company should be stayed. In an application of this kind the court has a discretion and the court would not normally order a stay of action unless the liquidator could show some sufficient reason to justify such interference; (2) in a voluntary winding up, after the winding up had begun, a creditor of a company had an option as to his remedy for the purpose of enforcing a claim which he had against the company; (3) in this case to allow a stay would defeat the clear intention of Parliament and every unwilling taxpayer could circumvent s 86 of the Income Tax Act by just lodging an objection and could thereby cause considerable delay in the collection of the tax. The proper course for every aggrieved taxpayer was to pay his tax and present his arguments against the assessment made upon him before the Board.

Comptroller of Income Tax v BS Pte Ltd [1978] 2 MLJ 182 High Court, Singapore (Chua J).

The plaintiff had claimed the sum of S$200,725 being the amount of income tax alleged to be due and payable by the defendant. Appearance was entered for the defendant and a statement of defence denying liability was filed. The plaintiff thereupon took out a summons-in-chambers for leave to enter final judgment under O XIV of the Rules of the Supreme Court. The registrar after hearing both parties gave the plaintiff leave to enter final judgment for the sum claimed. On appeal, it was contended that there was a triable issue as the defendant claimed that the tax had not been levied in accordance with the provisions of s 43 of the Income Tax Ordinance (Cap 166, 1955 Ed).

Held: once the Comptroller of Income Tax has made an assessment and issued a Notice of Assessment to a taxpayer calling upon him to pay the tax mentioned in the notice, the taxpayer is bound by law under s 86 of the ordinance to pay such tax within one month even though he may be dissatisfied with the assessment; (2) the provisions of O XIV of the Rules of the Supreme Court must be read together with the provisions of the Income Tax Ordinance and in this case the registrar had rightly given the plaintiff leave to sign final judgment.

Comptroller of Income Tax v A Co Ltd [1966] 2 MLJ 282 High Court, Singapore (Choor Singh J).

On 3 July 1964, the Comptroller of Income Tax obtained judgment against the appellant in the sum of RM309,660, being the amount of tax due from him, and 5% penalty imposed by virtue of the provision in s 84(1) of the Income Tax Ordinance 1947. After the judgment, the appellant's objection to the assessed tax came before the Board of Review. By agreement the tax payable was reduced by RM191,839.20. The sum was further reduced by payments made by the appellant. In 1967, the appellant received a bankruptcy notice dated 17 August. The amount of tax payable at that date was RM50,240.45. The notice specified the amount of RM54,826.68 owing from the appellant the excess being the penalty under s 84(1) of the Income Tax Ordinance. Within the time specified in s 3(2) of the Bankruptcy Ordinance 1959, the appellant gave notice disputing the validity of the notice. Two objections were raised to the notice; (1) the sum specified in the notice exceeded the amount actually due, as the comptroller was not entitled to impose the penalty under s 84(1)(a) of the Income Tax Ordinance without the prior service of a demand note as required by s 84(1)(b) of the ordinance; (2) the notice was not issued and expressed to be issued by the Chief Justice of the High Court in the name of the Yang di-Pertuan Agong, as required by s 7(1) of the Courts of Judicature Act 1964.

Held, the appellant's objections failed for the following reasons: (1) s 84(1)(b) of the Income Tax Ordinance requires the demand note to be served only when a person has been assessed to tax for the first time. It does not require the comptroller to serve a demand note on a judgment debtor like the appellant, before the penalty could be added to the tax payable. The amount specified in the bankruptcy notice was therefore the amount actually due from the appellant; (2) a bankruptcy notice, to be valid, need only comply with s 3(2) of the Bankruptcy Ordinance 1959. It need not be issued and expressed to be issued by the Chief Justice in the name of the Yang di-Pertuan Agong.

Rengasamy Pillai v Comptroller of Income Tax [1968] 2 MLJ 42 Federal Court, Penang (Barakbah LP, Ismail Khan Ag CJ (Malaya).

A traded in timber but was not assessed timber profits tax for a period of time. D subsequently came to know about this and duly assessed A. A did not appeal against the assessment and paid the tax. D was of the view that A had provided incorrect information which was intended to evade payment of tax. D accordingly imposed on A a penalty pursuant to s 113(2) of the Income Tax Act 1967 (Act 53). A's appeal to D against this penalty was dismissed. A then appealed to the special commissioners but D did not forward the appeal to them. A then applied to the High Court for a certiorari to quash D's decision in dismissing A's appeal and for a mandamus to direct D to refer A's appeal to the commissioners. A claimed that there was a technical and bona fide error on its part and there was no intention to mislead D. D, however, argued that the penalty imposed was not an 'assessment' and A therefore had no right of appeal to the commissioners under s 99(1) of the 1967 Act.

Held, allowing the application: (1) the basic rule of interpretation of a statute is that Parliament's intention is expressed in the legislation concerned. If the words are plain and unambiguous, they will be applied. If, however, there is doubt or ambiguity in the construction of a penal statute, it is to be construed in favour of the person subjected to the penalty; (2) the Director-General of Inland Revenue has a discretion in deciding whether to impose a penalty or not under s 113(2) of the 1967 Act. Such a discretion can only be exercised after due consideration of all the relevant facts and circumstances. The Director-General would have to consider whether A's incorrect information was given either dishonestly with the intention to evade tax or negligently. Only then could the Director-General impose a penalty. Moreover under s 124(3) of the 1967 Act, the Director-General once again has a discretion to abate or remit the penalty. The Director-General, in considering all the relevant facts and circumstances, is in truth and effect making an 'assessment'. Accordingly, A could therefore appeal against the penalty to the commissioners.

Kim Thye Co v Ketua Pengarah Jabatan Hasil Dalam Negeri, Kuala Lumpur [1991] 3 CLJ 2507 High Court, Muar (Richard Talalla J).

In this case, the plaintiff sued the defendant for a total sum of RM105,911.85 made up of (a) 93,983.50 penalty and RM9,328.35 increased penalty imposed in respect of the year of assessment 1971; (b) RM3,000 penalty and RM300 increased penalty in respect of the year of assesment 1974. The plaintiff applied for liberty to enter judgment and the defendant asked for unconditional leave to defend. The defendant contended (a) that the Director General could impose a penalty only if the conditions specified in s 113 of the Income Tax Act 1967 existed and these conditions did not exist in this case; (b) the action was time-barred under s 6(4) of the Limitation Ordinance.

Held: (1) by virtue of s 125(2) of the Income Tax Act 1967, ss 103 to 106 of the Act are made applicable to penalties, in that penalties under s 113(2) of the Act are to be treated as tax payable; (2) the defendant's contention that the penalty was incorrectly assessed could not therefore be entertained as s 106 of the Act precluded such a plea being entertained; (3) s 106(3) of the Income Tax Act 1967 clearly provides that the court shall not entertain any plea that the amount sought to be recovered is incorrectly increased under s 103(4) of the Act; (4) s 125(2) of the Income Tax Act being a specific provision introduced after the enactment of s 6(4) of the Limitation Ordinance, prevails over the general provision in s 6(4) of the ordinance, so far as penalty under s 113(2) of the Income Tax Act is concerned; (5) a contention that the assessment of tax was made out of time in contravention of s 91(1) of the Income Tax Act is a plea that the tax was incorrectly assessed and therefore could not be entertained under s 106(3) of the Act.

Government of Malaysia v Preston Corp (M) Sdn Bhd [1982] 1 MLJ 293 High Court, Kuala Lumpur (Wan Hamzah J).

In this case as a result of back-duty investigation Notices of Additional Assessment of tax were served on the appellant. From these assessments, the appellant appealed to the Special Commissioners who made further increases (see [1956] 4 MLJ 95). The appeal by way of case stated to the High Court was dismissed (see [1977] 1 MLJ 67) and so was the appeal to the Federal Court (see [1977] 2 MLJ 63). An appeal to the Yang di-Pertuan Agong was awaiting the advice of the Privy Council. In exercise of powers under the Income Tax Ordinance and the Income Tax Act, the Director General of Income Tax imposed penalties and levied the increases for the years 1953, 19571962, 19661972. Notices of the additional demands were issued on 24 January 1976. The appellant sought declarations that the imposition of the penalties should not be made since there was pending an appeal to the Privy Council and the matter was sub judice and further that it was ultra vires and void. He also sought other declarations that the levy of a 10% increase for late payment was ultra vires and void. A further declaration was sought that Revenue was not entitled to claim the penalty in respect of the year 1972. The respondent thereupon applied by a summons-in-chambers to strike out the statement of claim and to have the action dismissed on the grounds that it disclosed no reasonable cause of action, it was frivolous and vexatious and an abuse of the process of the courts. The summons was adjourned into court for hearing and the learned judge made the order sought for in the summons. The appellant thereupon appealed to the Federal Court.

Held: (1) although the court has jurisdiction to grant a declartion, the relief claimed in the action was in substance for the modification, if not the cancellation of the assessment made under the ordinance and the Act. The question was whether the application of the provisions for tax penalties and the increases in certain circumstances and at rates set by statute were challengeable by declarations; (2) the intention of the Legislature in imposing the penalties and the increases is expressed in clear and unequivocal terms in ss 91 and 113(2) of the Income Tax Ordinance and, if applicable, ss 112 and 103(4) of the Income Tax Act 1967 (Act 53) and having regard to the provisions in the ordinance and in the Act the distinction between a penalty and a tax has been obliterated and the imposition of the penalty and the increase may therefore be proceeded with despite the appeal to the Privy Council; (3) on a proper interpretation of the relevant provisions of the Income Tax Ordinance 1947 and the Income Tax Act 1967, the penalties and increases objected to may be validly imposed by the Director General and recoverable even before the final determination of the taxpayer's liability by the Privy Council, as the court of last resort, and therefore the writ clearly disclosed no reasonable cause of action and must be struck out; (4) the taxpayer in this case should have been allowed a deduction in respect of losses incurred by his adventure in newspaper publishing in Singapore under the provisions of the Double Taxation (Republic of Singapore) Order 1966.

Arumugam Pillai v Government of Malaysia [1980] 2 MLJ 283 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The Director-General of Inland Revenue ('DGIR') imposed a penalty on the respondent under s 113(2) of the Income Tax Act 1967 (Act 53) on the ground that the respondent had made an incorrect income tax return. The respondent sent to the DGIR a notice of appeal against the penalty to the special commissioners of income tax ('the commissioners'). The DGIR, however, treated the respondent's appeal to the commissioners as an appeal to the DGIR and dismissed the appeal. The respondent applied to the High Court, inter alia, for a mandamus to direct the DGIR to refer the respondent's appeal to the commissioners. The High Court allowed the application and the DGIR appealed to the Supreme Court. The DGIR firstly argued that a penalty under s 113(2) of the 1967 Act was not an 'assessment' which was appealable to the commissioners under s 99(1) of the 1967 Act because an 'assessment' must be in the nature of assessment of tax and not of penalty. The DGIR further contended that there were express provisions for the appeal against the imposition of such a penalty in Commonwealth countries other than Malaysia. Accordingly, the DGIR contended that such a penalty was not appealable in Malaysia.

Held, dismissing the appeal: (1) the dictionary, though not to be taken as an authoritative exponent of meaning of words used in statutes, is an important means of ascertaining the ordinary sense of words in accordance with the primary rule of literal construction of words; (2) if there is an ambiguity in a taxing statute, such an ambiguity ought to be resolved in favour of the taxpayer as a taxing statute is penal in nature; (3) in Form J, the prescribed form of notice of assessment of income tax, the penalty under s 113(2) of the 1967 Act is to be added to the main body of income tax as part of the income tax payable within 30 days from the receipt of Form J. The contents or format of Form J therefore makes it look likely that the penalty is part of assessment appealable to the commissioners.

Ketua Pengarah Hasil Dalam Negeri v Kim Thye & Co [1992] 2 MLJ 708 Supreme Court, Malaysia (Mohamed Azmi, Peh Swee Chin and Edgar Joseph Jr SCJJ).

This was an appeal in respect of additional assessments raised against the appellant for the years of assessment 19561967 after an assets accretion exercise. The Board of Review had given credit for cash in hand and on the appeal it was argued that as the Board of Review had given credit for the cash in hand it must also accept the calculations on which the cash in hand were made. The other contentions on appeal related to (a) the amounts claimed by the appellant for the maintenance of his two children in India; (b) tax credits for United Kingdom profits tax; and (c) bank charges in respect of United Kingdom dividends received by the appellant. An appeal to the High Court was dismissed and the appellant appealed to the Court of Appeal.

Held, dismissing the appeal: (1) there was no substance in the appellant's contention that because the Board of Review had accepted the cash in hand it must also accept the calculations on which the cash in hand were made and that these calculations must be correct; (2) there was clear evidence to support the Board's order relating to the amounts claimed for the maintenance of the children in India and the High Court was correct in holding that all the available evidence was overwhelmingly in favour of the Board's decision; (3) the giving of tax credits must be subject to the provisions of the Income Tax Act. On the facts it was clear that the Comptroller had credited the correct sum against the appellant's tax liability for the year of assessment 1966 and that the question of calculating any tax credits for profits tax did not arise at all; (4) in this case as the United Kingdom dividends had been declared and the dividend warrants issued to the appellant, the bank charges were not incurred in the production of the income but were incurred for the purpose of making available to him for his use income which he had already earned and therefore he was not entitled to claim deduction for the bank charges.

HLB v Comptroller of Income Tax, Singapore [1975] 2 MLJ 7 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Tan Ah Tah JJ).

The taxpayer was charged for failure to comply with a notice under s 61B(2) of the Income Tax Ordinance issued by the Comptroller requiring information to be furnished to the Comptroller. The learned magistrate acquitted the accused as he held that the notice was bad as it did not specify the purpose for which the information was required. On appeal by the Inland Revenue Department, Suffian J held that where the Comptroller acted under s 61B(2) of the ordinance, it was unnecessary for him to specify the purposes for which the information was required, provided it was clear, as it was in this case, that the information required was required for the purposes of the ordinance. The learned judge was of the opinion, however, that his view involved a point of law of some importance and reserved accordingly that point for the consideration of the Federal Court.

Held: the notice as framed was a good notice under s 61B(2) and there was before the magistrate a prima facie case that such a notice had been served on the taxpayer and that it had not been complied with. Observations on taxpayer's potential liability to tax.

Ong Lock Mui v Public Prosecutor [1966] 1 MLJ 282 Federal Court, Johore Bahru (Thomson LP, Barakbah CJ (Malaya).

The respondent was a member of a legal firm which had been retained by a taxpayer for the purposes of an appeal to the Board of Review. The Assistant Comptroller of Income Tax purported to act under s 61B of the Income Tax Ordinance 1947 and asked for the production of the account books of the taxpayer, which were then with the solicitors. The defendant refused to hand them over and he was charged for hindering an officer of the department of Income Tax in the discharge of his duty. The Assistant Comptroller in his evidence said that he required the books for the purpose of reviewing the evidence in connection with the appeal. It appeared that the books were required for the purpose of inspection by counsel and other experts appointed by the Comptroller to assist him at the hearing of the appeal. The learned magistrate acquitted the defendant on the ground that no notice had been served on the defendant and also on the ground that the exercise of power by the Comptroller under s 61B of the Income Tax Ordinance was repugnant to the provisions of the ordinance and not in accordance with the fundamental rules of judicial procedure. The Public Prosecutor appealed.

Held: (1) the service of a notice is not mandatory for the exercise of the power under s 61B of the Income Tax Ordinance and therefore the learned magistrate was wrong in holding that the service of a notice was a prerequisite for a prosecution under s 93A of the ordinance; (2) there is no specific provision in the Income Tax Ordinance which would entitle the Comptroller to take possession of the account books of a taxpayer to prepare his brief in connection with an appeal and to interpret the provisions of the ordinance as implying that a respondent in an appeal could exercise administrative control over the appellant in any form in regard to the conduct of the appeal would be repugnant to the rules of judicial procedure and the concept of equality before the law.

Public Prosecutor v Huntsman [1966] 1 MLJ 93 High Court, Ipoh (MacIntyre J).

The appellant the managing director of a limited company was served with a notice under s 59 of the Income Tax Ordinance 1947 requiring him to submit income tax returns together with a certified true copy of the audited accounts and balance sheet. The Notice of Assessment was duly completed and returned but the notice for submission of the audited accounts and balance sheet was not complied with. The appellant was consequently charged under s 59(3) and convicted under s 90(2) of the said ordinance and was fined RM500, in default, three months' imprisonment. On appeal it was contended on behalf of the appellant that the Comptroller had no power under s 59 to ask for audited accounts and balance sheet and that such accounts and balance sheet could only have been called for under s 61 of the ordinance.

Held: in the case of a company the Comptroller is given clear powers under s 59 to require the audited accounts and balance sheet to satisfy himself that the income is correctly stated in the income tax returns. Section 61 of the ordinance gives him the same power and the additional power of requiring the production of any books, documents, accounts and returns as well as personal attendance for the purpose of further vertification of the accounts. The notice of the Comptroller was therefore a good notice and the appeal must be dismissed.

Tee Teong Tong v Public Prosecutor [1964] MLJ 288 High Court, Kuala Lumpur (Gill J).

The defendant was asked to settle his income tax in the sum of RM522,935.22 for years of assessment 1970, 1982, 1983 and 1984, together with additional tax for years 1971, 1972 and 1973. A Puan Norlia bte Zainol, who issued a certificate on 10 August 1987 confirming the defendant's outstanding tax, signed as 'Pemangku Penolong Pengarah' (or Acting Assistant Director). The claim was filed on 30 March 1987. Since then, it had been brought up in court on 11 occasions. The government of Malaysia filed the summons-in-chambers on 25 April 1988 but the defendant only filed his affidavit-in-opposition on 14 September 1991. At the hearing of the O 14 application by the Inland Revenue on 11 November 1992, the defendant's counsel only admitted liability of RM14,059.18. Three defences were raised: (a) the certificate signed by the 'Acting' Assistant Director was 'null and void and of no evidential value' despite its issue under s 142(1) of the Income Tax Act 1967 (Act 53) ('the Act'); (b) the claim was premature as the defendant's appeal had been dealt with by the Special Commissioners, and therefore unconstitutional by virtue of Art 13(1) of the Federal Constitution; and (c) the additional assessment for 1971 was raised only on 4 August 1984 which was more than 12 years and therefore the claim was time-barred.

Held, allowing the plaintiff's application subject to a deduction of RM51,244.16: (1) the certificate was valid. Section 142(1) of the Act mentions 'certificate signed by the Director-General' and sub-s (2) mentions 'statement purporting to be signed by the Director-General or an authorised officer...'. By s 134, the 'care and management of the tax' is placed with the Director-General of Inland Revenue and his staff are set out therein including 'such other officers as may be necessary and expedient for the administration of the Act'. Those 'such other officers' are vested with the full powers to act, to issue certificates and to compound offences. Section 7 of the Interpretation Acts of 1948 and 1967 (Consolidated and Revised 1989) (Act 388) states that a reference to the holder of any public office is a reference to the person for the time-being lawfully holding, acting in or exercising the functions of that office; (2) but under s 106(3) of the Act, it is clearly stated that in any proceedings commenced by the government under s 106(1) of the Act for the recovery of tax by civil proceedings as a debt due to the government, the court shall not entertain any plea that the amount of tax sought to be recovered is excessive, incorrectly assessed, under appeal or incorrectly increased under s 103(4) or (5); (3) by virtue of the proviso to s 33(1) of the Limitation Act 1953 (Act 254), limitation does not apply to the commencement of any proceedings by the government for the recovery of any tax or interest thereon, although for the purposes of an assessment or additional assessment under s 91 of the Act not made in any year of assessment or within 12 years after its expiration, the Inland Revenue Authority ('the IRA') would still have to show that fraud or wilful default has been committed or that any person has been negligent in connection with or in relation to tax for that year of assessment (Chong Woo Yit v Government of Malaysia); (4) the IRA is not permitted, it seems, from the tenor of the Act, to make an assessment after 12 years. This makes perfect sense as otherwise the IRA can strike at any taxpayer at any time on a never-ending spree; (5) a distinction has to be made between 'commencement of any proceedings', 'assessment', 'notice of assessment' and 'recovery' and their implications. Proceedings (begun by writ, originating summons or motion, or petition) may take place at any time even after the 12-year period provided the lapse of time between assessment and legal action is reasonable and there are no laches or neglect by the IRA, and the IRA has not been dilatory in assessing and serving the notice of assessment. The additional assessment for 1971 of RM51,244.16 was statute-barred; (6) when proceedings are commenced under O 14, the normal rules for triable issues do not apply to cases of this nature because of the provisions of the Income Tax Act 1967 (Act 53). Normally, when the defence raises triable issues, unconditional leave to defend should be given;a stay of execution is granted until determination by the Special Commissioners of the defendant's appeal against the assessment raised against him in this action.

Government of the Federation of Malaysia v Datuk Haji Ghani Gilong [1993] 1 MLJ 359 High Court, Kota Kinabalu (Syed Ahmad Idid J).

In a suit instituted under s 90(1) of the Income Tax Ordinance (Cap 166, 1955 Ed), provided the action is brought in the official name of the comptroller, the writ and statement of claim may properly be signed either by the Comptroller of Income Tax himself or by a Deputy Comptroller or an Assistant Comptroller.

XY v Comptroller of Income Tax, Singapore [1961] MLJ 198 Court of Appeal, Singapore (Rose CJ, Tan Ah Tah and Chua JJ).

The appellant bank and one other, trustees of a piece of property, leased it to a tenant at an annual rent of S$144,000. On 30 November 1959, the tenant vacated the premises. The Comptroller, in assessing the appellant for the year 1960, brought in to tax the rents that had been received by the appellant in respect of the property up to 30 November 1959. On appeal to the Board of Review the question was whether the assessment should be in accordance with ss 35(1) or (7), that is, whether the taxpayer ceased to possess a source of income as from 30 November 1959.

Held: property becomes a source of income under s 10(1)(f) of the Income Tax Ordinance (Cap 166, 1955 Ed) only when a certain use is made of the property. It ceases to become a source of income when the use is discontinued. The provisions in s 35(7) applied to the case.

Re ABC Bank [1962] MLJ cxxxiii Income Tax Board of Review, Singapore(JB Jeyaretnam Chairman, CW Tresise and Ang Kheng Leng, Members)

In this case, the appellant had received the sum of RM4,906.32 being the total contribution paid into the Kuala Lumpur Municipal Provident Fund by his employers, the Kuala Lumpur Municipality, during the period of his employment with them. The Kuala Lumpur Municipal Provident Fund was an approved fund under the Income Tax Ordinance 1947 and continued to be so under the Income Tax Act 1967 (Act 53) until the approval was revoked by the Director General of the Inland Revenue on 24 June 1968 with effect from 1 January 1968. The provident fund moneys were paid to the appellant on 13 February 1970. The appellant was assessed to income tax on his income including the sum of RM44,906.32 and he appealed. On the appeal, the Special Commissioners decided that the appellant was liable to income tax on the sum of RM44,906.32 but they decided that the appellant was entitled to the benefit of proviso (a) to s 25(4) of the Income Tax Act 1967 and that the sum should be treated as accruing and receivable evenly over the period of the appellant's employment. The appellant appealed against this decision and there was a cross-appeal by the Director General of Inland Revenue.

Held: (1) as the amount of RM44,906.32 was received by the appellant after the revocation of the approval of the provident fund, it was income received from an unapproved fund and therefore liable to tax; (2) the Special Commissioners were right in holding that the word 'otherwise' in proviso (a) to s 25(4) of the Income Tax Act 1967 was wide enough to include the sum of RM44,906.32 and therefore it should be treated as accruing and receivable evenly during the period of the appellant's employment.

LYS v Director General of Inland Revenue [1974] 1 MLJ 96 High Court, Kuala Lumpur (Gill CJ).

The defendant was served with six notices of assessment relating to income and development taxes. He failed to pay and the assessed taxes were increased by 10% and subsequently, a further 5% under s 103(4) and (5) of the Income Tax Act 1967 (Act 53). The amount was still not paid and the plaintiff issued a writ and subsequently obtained a default judgment. The defendant applied to set aside the judgment, contending that he had a good defence on merits, on the grounds that some of the notices of assessment were incorrectly assessed and that the plaintiffs did not refer the matters to the special commissioners appointed under the Income Tax Act 1967 (Act 53).

Held, dismissing the defendant's application: (1) where applications are made to set aside default but regular judgments, the inflexible rule is that there ought to be an affidavit showing a defence on merits. If the application is not thus supported, it ought not to be granted except for some very sufficient reason. To show a defence on merits, a defendant need only disclose an arguable or triable issue; (2) however, s 106 of the Income Tax Act 1967 (Act 53) provides that taxes due and payable may be recovered by the government by civil proceedings as a debt due to the government, and in any such proceedings the court shall not entertain any plea that the amount of tax sought to be recovered is excessive or incorrectly assessed. This principle would apply equally to applications under O 14 and O 13 r 18 of the Rules of the High Court 1980; (3) the defendant's application therefore disclosed no triable or arguable issues and was dismissed with costs.

Government of Malaysia v Sim Soe Hoe [1990] 1 MLJ 379 High Court, Sibu (Chong Siew Fai J).

In an appeal to the Board of Review it was held that the Comptroller had received from the taxpayer an overpayment of S$5,573.47. The Comptroller refused to repay the excess unless the taxpayer gave an undertaking that his solicitors will retain the sum until the outcome of the appeal. In an application for an order of mandamus to compel the Comptroller to comply with s 93(3),

Held: (1) the Comptroller had no legal right or authority to require an undertaking by the taxpayer's solicitors to retain the refund in their client's account until the outcome of his appeal; (2) mandamus will lie against the Comptroller if he is under a statutory obligation to perform a duty towards the taxpayer. In the circumstances of this case, there was such a duty imposed upon the Comptroller and mandamus was the only effective and expeditious remedy open to the taxpayer therefore an order of mandamus should issue directed to the Comptroller compelling him to comply with the provisions ofs 93(3) of the ordinance by causing repayment to be made to the taxpayer of the sum of S$5,573.45 being income tax paid by the taxpayer in excess of the amount payable by him.

C v Comptroller of Income Tax [1967] 2 MLJ 137 Federal Court, Singapore (Wee Chong Jin CJ, Tan Ah Tah FJ and Buttrose J).

The question for decision in this appeal was whether a sum of money received in advance by the appellant in the year 1973 in accordance with the terms of a lease dated 21 February 1973 entered into between the appellant as lessor and Caltex Oil Malaysia Ltd as lessee constituted income in respect of rent within the meaning of s 4(d) of the Income Tax Act 1967 (Act 53) and was therefore assessable to income tax in the year of assessment 1974 under s 27(3) of the said Act.

Held: the sum in question came within the definition of 'rent' and was therefore income. It followed that under s 27 of the Income Tax Act 1967, it was assessable to income tax, in the year of assessment 1974.

EK Sdn Bhd v Director General of Inland Revenue [1977] 2 MLJ 263 High Court, Penang (Gunn Chit Tuan J).

In this case, the respondent entered into an agreement with Persatuan Peladang Negeri Johore whereby the Persatuan granted to the respondent the exclusive right to work out, fell, exploit and extract timber on a certain piece of land in consideration of the sum of RM1,400,000 to be paid by the respondent. The respondent claimed a deduction of RM1,400,000 from its income for the purpose of assessment of income tax but this was disallowed by the Director General of Inland Revenue on the following grounds that: (a) the sum was payable for the use of a licence or permit to extract timber from a forest in Malaysia and therefore under s 39(1)(g) of the Income Tax Act 1967 (Act 53) deduction is not allowed; (b) the sum was a capital expenditure and therefore deduction was also not allowed under s 39(1)(c) of the Act. The respondent appealed to the Special Commissioners who found that the payment was not made for the use of a licence or permit to extract timber but held that it was a capital expenditure and they therefore dismissed the appeal. The respondent thereupon appealed to the High Court. In the course of putting up the case stated for the opinion of the High Court the Special Commissioners changed their mind with regard to the question relating to s 39(1)(g) of the Act and stated their finding that the payment was made for the use of a licence to extract timber. Wan Yahya J in the High Court reversed the decision of the Special Commissioners and held that: (a) the sum of RM1,400,000 was not paid for the use of a licence or permit to extract timber under s 39(g) of the Income Tax Act; (b) the said sum paid for the exclusive right to work out, exploit and extract timber was not a capital expenditure but a revenue expenditure which is deductible under s 33(1) of the Act. The appellant appealed.

Held: (1) the sum of RM1,400,000 was not paid for the use of a licence or permit to extract timber. The licence to extract timber was issued to the respondent-taxpayer. There was nothing in the agreement to show that any part of the sum of RM1,400,000 was intended to be consideration for giving consent to the issue of a licence to extract timber in the name of the respondent-taxpayer; (2) the sum of RM1,400,000 incurred and paid by the respondent-taxpayer was revenue expenditure and therefore deductible under s 33(1) of the Income Tax Act.

Director General of Inland Revenue v Hup Cheong Timber (Labis) Sdn Bhd [1985] 2 MLJ 322 Supreme Court, Kuala Lumpur (Hashim Yeop A Sani, Syed Agil Barakbah and Wan Hamzah SCJJ).

The respondent, a timber merchant and timber hauling contractor, had submitted a tender for the extraction and sale of timber and as he and one Voo Khen & Sons Ltd were the highest tenderers, they were awarded the tender jointly. Subsequently the respondent and Voo Khen assigned their rights to extract timber to one Tio Chee Hing. The respondent was assessed to tax on the consideration he received for the transfer of his rights. The Special Commissioners held that the sums received constituted income in respect of gains or profits from a business and were assessable to tax under s 9(1) of the Sabah Income Tax Ordinance 1956. On appeal, the High Court held the transfer of the rights was an isolated transaction and the sums received were not assessable to tax. The Director General of Inland Revenue appealed to the Federal Court.

Held, allowing the appeal: the sums received were profits which fell within s 9(1)(a) of the Sabah Income Tax Ordinance and were assessable to tax.

Director General of Inland Revenue v NPK [1975] 1 MLJ 256 Federal Court, Kota Kinabalu (Suffian LP, Lee Hun Hoe CJ (Borneo).

In this case, the appellants were a company which had powers under their memorandum and articles of association to carry on, among other things, the business of rubber planters as well as that of timber merchants and dealers. They acquired land for the purpose of planting rubber but after planting a small portion of the land with rubber, in 1930 they ceased to be rubber planters and the estate was closed down, so that the planted areas reverted to jungle land. In 1971 the company entered into an agreement with another company whereby the trees on a specified area of the land were sold for RM420,000. The purchasers were given rights to fell and remove the timber from the said area and it was stated that the logging operations should be completed on or before 31 July 1974. The appellants were assessed to income tax on the sum of RM420,000 and on appeal the Special Commissioners confirmed the assessment, holding that the sale of the timber was an adventure in the nature of trade. The appellants appealed.

Held: (1) the principle is that in the case of a company incorporated for the purpose of making profits for its shareholders, any gainful use to which it puts any of its assets prima facie amounts to a carrying on of a business; (2) in this case, having regard to the appellant's memorandum and articles of association and to what they did from the moment they acquired the estate to the time when they sold the standing timber on their estate, their activities could be said to be leading to the maturing of the asset and the sale must be an adventure in the nature of trade and once the transaction has the badge of trade, the fact that it is an isolated transaction does not prevent the transaction from being in truth an adventure in the nature of trade; (3) since only the timber was sold and not the land, and as the sale was such that the timber had to be cut immediately, the finding of the Special Commissioners was therefore correct. The timber sold was not capital assets and the receipts were not capital receipts but revenue receipts subject to tax.

Sekong Rubber Co Ltd v Director General of Inland Revenue [1980] 2 MLJ 198 High Court, Kuala Lumpur (Salleh Abas FJ).

The appellants, a company incorporated under the laws of Hong Kong, commenced the busness of a charterer in Singapore in November 1964. It was not in dispute that there were six continuous sailings up to August 1965 and two further sailings on 4 February 1967 and 3 May 1968. In November 1967, the Comptroller of Income Tax came to know of the business activities of the appellants. On 14 August 1968, the Comptroller raised assessments for the years of assessment 1964, 1965 and 1966 on the freight income received by the appellants during the period extending from November 1964 to August 1965 for the years ending 31 December 1964, 31 December 1965 and 31 December 1966. The income of the appellants was ascertained in accordance with the provisions of s 27(c) of the Income Tax Ordinance (Cap 166, 1955 Ed) and the assessments were raised in accordance with the provisions of s 35(3) of the ordinance. It was argued on behalf of the appellants that the application of s 35(3) was erroneous; that the appellants were liable to summary taxation under s 27(c) on actual earnings in the three years in question; that the appellants' business having ceased in 1965, the provisions of s 35(5) should have been applied and that in any event the sailings in 1967 and 1968 were casual sailings and, therefore, no tax was payable in respect of them by virtue of the provisions of s 27(d) of the ordinance.

Held: (1) s 27 of the Income Tax Ordinance prescribes two methods of ascertaining income on which tax is payable in the case of a non-resident person who carries on the business of shipowner or charterer. It does not provide for levying summary taxation. There is no provision in the ordinance for summary collection of tax similar to that laid down in the Indian Income Tax Act. The provisions of s 35(3) of the ordinance were applicable and were correctly applied by the Comptroller; (2) there was no evidence that the charter business of the appellants had ceased at the end of 1965 and the appellants were therefore not entitled to invoke the provisions of s 35(5) of the ordinance; (3) as the appellants' business had not ceased in 1965, the sailings in 1967 and 1968 were not casual sailings within the meaning of s 27(d) of the ordinance; (4) the appellants having failed to give in due time the required notice under s 35(3)(d) of the ordinance, they lost their statutory right to request that their statutory income both for the second year and the third years shall be the income of the respective years of assessment. Neither the Comptroller nor the court had any discretionary power under the ordinance to allow the appellants to exercise their option under s 35(3)(d) notwithstanding that they had failed to give the required notice within time; (5) the provisons of s 27 and 35 were properly construed and applied by the Comptroller in this case and the appeal must therefore be dismissed.

X Shipping Enterprises Ltd of Hongkong v Comptroller of Income Tax, Singapore [1972] 1 MLJ 8 High Court, Singapore (Choor Singh J).

Chandos Pte Ltd, the appellants, was a company incorporated in Singapore. The objects for which Chandos was incorporated were, inter alia, to negotiate loans and procure capital for any company in any country and it derived its earnings from such transactions. Since its incorporation only one such transaction was made with a company called Delacom Investments Pty Ltd ('Delacom'). Delacom was a company incorporated in the State of New South Wales, Australia. It was not resident in Singapore but it established a branch in Singapore and was registered here as a foreign company under the provisions of the Companies Act. On 22 May 1976, Delacom purchased an interest in certain mineral rights in Australia. On 25 May 1976, Chandos opened a bank account with the Singapore branch of Bank Nationale de Paris ('BNP'). Previous to that, the bank had agreed to provide overdraft facilities to Chandos up to the limit of S$9 million. Delacom also had an account with the Singapore branch of BNP. It arranged to borrow from Chandos a sum of S$9 million to pay Nazly Pura Jaya Pte Ltd ('Nazly Pura') for the purchase of the mineral rights. On 26 May 1976, the persons representing the parties concerned made a short journey to Johore Bahru, Malaysia. There the loan agreement between Chandos and Delacom was executed. Immediately after the signing of the loan agreement, a cheque for S$9 million representing the loan was drawn on behalf of Chandos on BNP payable to Delacom and was handed to the representative of Delacom. Upon receipt of the cheque, the latter immediately drew a cheque for a similar amount on BNP to pay for the mineral rights. Both the cheques were payable at the Singapore branch of BNP. The cheques drawn respectively by Chandos and Delacom were credited to the respective bank accounts of the parties concerned with the Singapore branch of BNP on 26 May 1976. Interest on the loan was determined by Chandos and notified to Delacom in accordance with the terms of the loan agreement. Pursuant to cl 10 of the loan agreement, the interest payable by Delacom was capitalized from time to time and this was effected by Delacom crediting in its books of account in Australia the account of Chandos with the relevant amount of interest. At no time had any interest payable by Delacom to Chandos been paid. Also at no time had any interest ever been remitted to Chandos in Singapore. By a notice of assessment dated 4 September 1981, the Comptroller of Income Tax, the respondent, assessed Chandos for the year of assessment 1978 to tax on the interest derived from the loan in a sum of S$513,646.80. Chandos objected to the assessment and upon the Comptroller refusing to amend the assessment, Chandos appealed to the Board of Review but the appeal was dismissed. Chandos now appealed to the present court. The only question in this appeal was whether the interest on the loan to Delacom was derived from Singapore and this question turned on a finding of the source of the interest, as the word 'derived' connotes a source.

Held, dismissing the appeal: (1) source is not a legal concept but something which a practical man would regard as a real source of income, and the ascertaining of the actual source is a practical hard matter of fact (Nathan v Federal Commissioner of Taxation (1918) 25 CLR 183); (2) given all the facts of this case, it just could not possibly be argued that a practical man would regard the source of income in respect of the interest as not being in Singapore. Such a practical man would also regard as highly artificial the selection of Johore Bahru as a place for execution of the loan agreement and handing over of the cheque, and would find it difficult to accept that the source can be affected by the ceremonial acts performed there: the execution of the loan agreement and handing over of the cheque; (3) on these facts the court would not hesitate in coming to the conclusion that the interest on the loan was derived from Singapore; (4) Delacom by so paying S$9 million to Nazly Pura had employed in Singapore the funds provided by the loan in Singapore in discharging pro tanto its contractual obligation to Nazly Pura. On this basis the funds provided by the loan of S$9 million to Delacom were used in Singapore within the meaning of s 12(6)(b) of the Income Tax Act (Cap 141, 1970 Ed), and by virtue of that provision the interest on the loan was deemed to be derived from Singapore; (5) there is no definition of the word 'use' in the Income Tax Act. In its natural meaning it is a word of wide import and one of the meanings of the word is 'to employ to any purpose'.

Chandos Pte Ltd v Comptroller of Income Tax [1987] 2 MLJ 670 High Court, Singapore (Thean J).

The taxpayer was an advocate and solicitor in a legal firm, working under a contract of employment until 31 December 1953. On 1 January 1954 he became a partner and he received a share of the profits of the firm. The taxpayer objected to the assessment of his income. His income was assessed on the basis that his employment ceased on 31 December 1953 and he commenced a profession on 1 January 1954.

Held: the word 'employment' in ss 10, 35(3) and 35(5) of the Income Tax Ordinance 1947 denotes an employer-employee relationship. The question whether a taxpayer is exercising a profession or carrying on an employment does not depend on the nature of his work, but upon the source of his income. Before 31 December 1953 the taxpayer was receiving a salary. On and after 1 January 1954, as a partner, he received professional fees. Therefore ss 35(3) and 35(5) should apply.

Re A Taxpayer [1956] MLJ 253 Court of Appeal, Federation of Malaya (Mathew CJ, Whyatt CJ(S).

This was a case stated by the Special Commissioners and the only question was whether the appellants were holding their immovable properties as investments or were trading and/or carrying on a business of purchase and sale of lands. It appeared that there were certain essential facts on which the Special Commissioners had failed to give their findings.

Held: the case should be remitted to the Special Commissioners to make their findings on the essential facts.

NYF Realty Sdn Bhd v Comptroller of Inland Revenue [1974] 1 MLJ 182 High Court, Ipoh (Sharma J).

Director-General of Inland Revenue v Khoo Ewe Aik Realty Sdn Bhd [1990] 2 MLJ 415 Supreme Court, Malaysia (Lee Hun Hoe CJ (Borneo).

This was an appeal from the decision of the Board of Review. The respondent came to Malaya on 29 June 1947 for the purpose of taking up employment with the Pilots Association, Penang. He was employed on probation until 1 August 1947, when he was offered and accepted a partnership in the Pilots Association as from 1 August 1947 and carried on as a partner during the year of assessment 1948. Under s 31(4) of the Income Tax Ordinance 1947, the respondent was assessed for income tax upon his income from 1 August 1947 to 31 July 1948. The respondent appealed against this assessment and the Board of Review allowed his appeal holding that the probationary period from 29 June 1947 to 31 July 1947 was an essential condition of the ultimate partnership and that the employment must therefore be considered to have commenced on 29 June 1947 and the respondent assessed on his total income for 12 months from that date.

Held, allowing the appeal: the respondent had one kind of employment from 29 June 1947 to 31 July 1947 and on 1 August 1947, he commenced to carry on a different employment and he carried it on throughout the year of assessment and therefore he was correctly assessment for the year of assessment 1948 for the full year's income as from 1 August 1947.

Comptroller of Income Tax v Roche [1951] MLJ 87 High Court, Penang (Jobling J).

The respondent had originally bought a piece of land with the intention of constructing flats thereon for renting as an investment. Subsequently when he became short of ready cash he borrowed money to complete the building and made arrangements to sell the flats. The original purchase price of the land was RM20,000 but it was shown as fixed assets and valued at RM480,000 being the market value in 1963. The respondent was assessed to tax on the profits and on appeal to the Special Commissioners they held (a) that the profits constituted income in respect of gains or profits from a business and was assessable to tax under s 4(a) of the Income Tax Act 1967 (Act 53); (b) by a majority, that the value of the land as stock-in-trade should be the original purchase price of RM20,000. On appeal to the High Court, it was held that the Special Commissioners were wrong in their conclusions and should have held that the respondent was merely realizing this investment and not trading or carrying on an adventure in the nature of a trade. The Director General of Inland Revenue appealed to the Federal Court.

Held, allowing the appeal: (1) there was evidence in this case sufficient for the Special Commissioners to justify their conclusion that the respondent was carrying on a concern in the nature of trade and therefore gains or profits derived therefrom were liable to taxation under s 4(a) of the Income Tax Act 1967; (2) the cost price of the land in relation to the business in this case was the value of the land at the time of appropriation to the business in 1963 and not the original value in 1953. The land should therefore be valued as stock-in-trade at RM480,000.

Director General of Inland Revenue v LCW [1975] 1 MLJ 250 Federal Court, Kota Kinabalu (Suffian LP, Lee Hun Hoe CJ (Borneo).

Comptroller General of Inland Revenue, Malaysia v Weng Lok Mining Co Ltd [1969] 2 MLJ 98 High Court, Kuala Lumpur (Raja Azlan Shah J).

Civil Procedure

Government of Malaysia v Dato' Mahindar Singh [1996] 5 MLJ 626 High Court, Kuantan (Arifin Zakaria J).

See civil procedure, para.

Kerajaan Malaysia v Gan Chuan Lian Civil Suit No 21-13 of 1991 High Court, Melaka (Arifin Jaka JC).

This was an appeal by the defendant against the order of the Senior Assistant Registrar granting the plaintiff's application for summary judgment for the sum of RM240,918.27. The defendant was the widow of one Abdul Hamid bin Tun Azmi ('the deceased') and it was claimed by the plaintiff that the defendant was the person liable on the income tax assessed on the deceased's income. The plaintiff's claim against the defendant was that she was the legal representative of the deceased's estate for the purposes of income tax claims being made for the years 1984 and 1985.

Held, allowing the appeal: (1) this was not a case that could be easily disposed of without a trial. There were triable issues and there was a strong defence. The main question was whether the defendant was the legal representative of the deceased's estate for the purposes of income tax. The plaintiff had made a claim against the defendant in her capacity as legal representative as well as executor. The defendant was not an executor as there was no will appointing her in that capacity, nor was she an administratrix as she had never been appointed as such by the courts, and there was no law that provided that the wife of a deceased person automatically became an executor or an administrator. There was no definition of 'legal representative' in the Income Tax Act 1967; (2) the plaintiff's submission that as the defendant had not disputed the Notice of Assessment and therefore it could not be challenged as to its accuracy as provided in s 143 of the Income Tax Act 1967 was not in issue as the defendant in this case was not disputing the validity or accuracy of the assessment of the taxes that was made but rather the capacity in which action was taken against her. The issue of capacity was one which ought to be tried.

The judgment was delivered in Bahasa Malaysia.

Government of Malaysia v Yong Siew Choon & Ors Civil Suit No S2 21-34-91 High Court, Kuala Lumpur (Rahmah Hussain JC).

This was an appeal against the decision of a judge of the High Court ([1966] 1 MLJ 260) allowing an appeal by the respondent from a decision of the Board of Review. The respondents were a limited liability company and had acquired a rubber estate, which they let to a subsidiary company of theirs, at the rental of RM1,200 per annum. It was common ground that at the time of the lease the average net profit earned by the rubber estate was about RM16,000 per annum. The Comptroller held that the lease of the rubber estate to the subsidiary company at the rental of RM1,200 per annum was an artificial transaction within the meaning of s 29 of the Income Tax Ordinance 1947 and included the nett income of the rubber estate in the assessable income of the respondents. On appeal, the Board of Review upheld the decision of the comptroller but on appeal by the respondents to the High Court the appeal was allowed. The Comptroller appealed to the Federal Court. On behalf of the respondents it was argued, firstly that a taxpayer is entitled so to arrange his affairs so as to attract the least amount of tax possible; secondly that when such an arrangement is effected by a legally enforceable instrument, the court ought not to go behind the language of the instrument and look at the substance of the matter in order to interpret its meaning and effect; and thirdly that it is lawful for a 'tax loss' company to acquire a solvent company, strip it of its profits, then dispose of the shares of the company at the market price and use the profits thus obtained to absorb the tax loss.

Held: (1) while a taxpayer is entitled to seek avenues of escape from payment of tax by disposing of part of his income for a lawful purpose, the facts in this case showed that the amount of income forgone under the lease was to be held by the subsidiary company for the sole use and benefit of the taxpayers themselves; (2) the issue was whether the transaction was artificial within the meaning of s 29 of the Income Tax Ordinance; (3) there was no dispute as to the validity of the lease in this case or whether it was enforceable or not;the lease of the rubber estate in this case was not a transaction in the ordinary course of business and therefore the transaction was artificial within the meaning of s 29 of the Income Tax Ordinance.

Comptroller of Income Tax v AB Estates Ltd [1967] 1 MLJ 89 Federal Court, Ipoh (Barakbah LP, Ismail Khan and MacIntyre JJ).

This was an appeal against the decision of the Board of Review which upheld a tax assessment on the appellant company for the year 1963. The appellant company acquired a rubber estate and leased it to a subsidiary company at the annual rent of RM1,200. The Comptroller of Income Tax was of opinion that the rent was unreasonably low and he assessed the appellant company on the profits earned from the estate.

Held: the Comptroller had not disputed the fact that the lease was a genuine one and therefore the lease transaction could not be regarded as an artificial transaction within the meaning of s 29 of the Income Tax Ordinance 1947; accordingly the Comptroller was not entitled to disregard the transaction and the tax assessment must be annulled.

AB Estates Ltd v Comptroller of Income Tax [1966] 1 MLJ 260 High Court, Ipoh (Ali J).

[Annotation: The decision of the High Court was overruled by the Federal Court on appeal (see [1967] 1 MLJ 89).]

This was an appeal in respect of income tax in the sum of S$1,282,878.85 allegedly due from the appellant as additional assessment for the years 1958, 1960 and 1961, raised against him in 1965. The appellant taxpayer came to Singapore sometime in 1951 with S$1.78 million. In December 1951, he bought land at Oxley Rise consisting of 211,313 sq ft for S$470,000 and immediately thereafter applied for planning approval of the said land. Earlier, in October 1951, he entered into a contract to purchase the land HKP consisting of over 30 acres for S$300,000. On the day of completion of the contract, the appellant changed his mind, and most of the land was then conveyed to his son CBH, who was not a resident of Singapore. In 1957, the appellant entered into a contract on behalf of CCM, another of his sons, to purchase the land KLP consisting of 1,122,770 sq ft for S$853,305.20. He did not have a power of attorney to act on behalf of CCM. However, all the negotiations for the purchase of the land and the subsequent applications for planning approvals were dealt with by the appellant. The land itself was conveyed to CCM who was also not a resident of Singapore. Between May and July 1957, part of the land at Oxley Rise and the land HKP were sold to the 'construction company', the latter at a profit of S$1.4 million. The land KLP was sold in June 1959 to the construction company at a profit of S$2,555,709.30. During the said period the appellant was the chairman of the board of directors of the construction company. There were five directors of the construction company, all of whom were immediate members of the family of the appellant. Two of them CBH and CCM, never attended any meetings of the board though they were shown in the minutes of the meetings as having been present. The construction company subsequently built houses on the three pieces of land and sold them to the public. During that period and for many years, there had been much movement of moneys of the appellant and other members of his family between Hong Kong and Singapore, and between the construction company and other companies in which the appellant was a director. There was a whole series of complicated transfers and re-transfers of moneys and other complex transactions that had not been explained and probably could not have been explained except, perhaps, by the appellant, who elected not to give evidence. At the hearing before the board of review it was alleged by the Comptroller that the three pieces of land were owned by the appellant, sold by him as part of his trade or business in dealing with land, and accordingly the profits of the sale of them were profits which were liable to tax under the ordinance. The Comptroller contended that the transactions or dispositions between the appellant and his two sons as regards the said lands were artificial and/or fictitious. He accordingly disregarded them under s 33 of the Income Tax Ordinance (RS(A) No 16 of 1966). On the facts, the board was satisfied that the appellant had not discharged the burden placed on him under s 80(3) of the ordinance; and that the appellant was the person who was aware of all the facts and the nature of the numerous and varied transactions that he had undertaken during the relevant period. It was he who could explain them. He was a vital witness. But as he had elected not to give the evidence the board therefore inferred that if he had given evidence, his evidence 'would have been' unfavourable to him. The board also held that the arrangements made by the appellant whereby land HKP was conveyed to CBH and the land KLP to CCM were not artificial transactions within the meaning of s 33 of the ordinance; however, the Comptroller was right in holding that the sale of the said two pieces of land by the appellant were fictitious and that the purpose or effect of the dispositions was to avoid tax. Therefore, he had rightly disregarded them and had sought to tax the appellant in respect of the three pieces of land. The appellant taxpayer appealed to the High Court. It was contended on his behalf that once he had shown that the properties as evidenced by the title deeds were in the names of the two sons, he had discharged the onus on him of proving that the tax was excessive and of showing that the tax should have been nil. It therefore remained for the Comptroller to rebut it by showing that the two transactions were sham, either at common law or as falling within the provisions of s 33 of the Income Tax Ordinance. Therefore the main issue on appeal was whether the transactions were sham.

Held, allowing the appeal in respect of the land HKP and KLP: (1) where the Comptroller has particularized the sources he is not at liberty to treat the case as an investigation case, and thereby to require the appellant to establish exactly what his income was from all sources. The onus of proving sham is on the Comptroller when he tries to rebut the appellant's contention that the tax was excessive; (2) s 33 of the Income Tax Ordinance has no relevance to this case because if the Comptroller disregards what he considers to be transactions or dispositions which reduce tax there would be nothing left on which tax can be assessed. The disregarding of transactions does not itself create a liability to tax. Further, in order to make the appellant liable, the Comptroller must show that the moneys have come into his hands which the Comptroller is entitled to treat as monies derived by him, that is, as profits from the transactions; (3) the taxpayer discharges the onus on him of showing that the tax levied is excessive by making out a prima facie case that such tax is excessive. If the Comptroller succeeds in rebutting this prima facie case then he need not go further than rebutting the taxpayer's case. The taxpayer would then not have discharged the burden on him as a whole. However, the burden of proof throughout until the end of the Comptroller's case rests on the taxpayer to show that the tax is excessive; (4) if it was the Comptroller's contention that the properties were not in fact owned by the two sons he should have led some evidence as to this so as to create a conflict of evidence or to rebut the applicant's case. The clear documentary evidence coupled with the evidence of the solicitors concerned matters which the board never mentioned once in the course of its lengthy judgment made it clear that the properties were owned by the two sons. The appellant never owned the properties at all. There was no evidence at all that the appellant ever was or remained the owner of these properties, or that he ever received the gains or profits from the sale of these properties to the family concern. In the circumstances it could not be said that he was liable to tax on any income in relation to the two properties under reference; (5) the board was wrong in using the expression 'would' instead of 'might' in so far as the court might draw an unfavourable inference on a failure to give evidence and accordingly that was the highest at which the matter could be put to the appellant's disadvantage. The appellant's case could have been made stronger than it already was if he had himself given evidence. There was no duty on him then to deny anything. The reference to evidence in another appeal behind the backs of both counsel and its utilizations by the board in an effort to discredit the version given on behalf of the appellant was completely unjust, unjustified and should never 'have been done'; (6)

Held, therefore, all the grounds, some relating to issues of law and some involving considerations of mixed law and fact, were clearly within the province of the court to consider on appeal. If they were sound, it followed that the decision must be set aside and that, where necessary, the court can reach its own independent conclusion on the facts by reviewing the evidence afresh. Thus, the appellant had discharged the onus upon him to show that the comptroller's assessment was wrong. in respect of the Oxley Rise property: there was evidence before the board to enable it to reach the conclusion which it did having regard to the circumstances as a whole coupled with the withholding of evidence in this regard by the appellant himself who was the only person who could have enlightened the board as to his state of mind at the relevant time. The assessment in respect of that portion of Oxley Rise which the appellant sold to the family concern must be upheld.

CEC v Comptroller of Income Tax [1971] 2 MLJ 43 High Court, Singapore (Winslow J).

In this case, land belonging to the appellant company had been acquired by the government. Compensation in the sum of RM1,407,139.69 was paid to the appellant company and tax was assessed on the difference between this and the purchase price of the land. The question for determination was whether the difference between the compensation awarded and the purchase price was assessable to income tax under s 4(a) of the Income Tax Act 1967 (Act 53).

Held: on the facts of the present case, the isolated transaction, although it concerned compulsory acquisition, should lawfully be regarded as a trading transaction and therefore the difference between the acquisition award and the purchase price and cost of the land was income in respect of gains or profits from a business within the meaning of s 4(a) of the Income Tax Act 1967 and liable to tax.

F Housing Sdn Bhd v Director General of Inland Revenue [1976] 2 MLJ 183 High Court, Kuala Lumpur (Mohamed Azmi J).

An isolated transaction of purchase and resale of a rubber estate does not amount to a trade within the meaning of s 10(1) of the Income Tax Ordinance (Cap 166, 1955 Ed). Isolated transactions have been held in English cases to be adventures in the nature of a trade. 'Trade' is defined in the English Income Tax Act 1952 as including 'an adventure in the nature of a trade'. The English cases are not applicable under the Singapore Ordinance for it does not have such a wide definition of 'trade'.

DEF v Comptroller of Income Tax [1961] MLJ 55 Court of Appeal, Singapore (Rose CJ, Buttrose and Ambrose JJ).

The taxpayers owned a rubber estate. Due to high replanting costs, they converted it into a cemetery. The land was open to the public for use as burial plots on payment of a fee. An assessment was made on the profits on the ground that the activities amounted to 'trade' within the meaning of s 10(1)(a) of the Income Tax Ordinance (Cap 166, 1955 Ed). The Board of Review held the profits to be a realization of capital assets. The High Court on appeal gave judgment to the Comptroller of Income Tax. On appeal from this decision,

Held: a person engages in trade if he habitually does and contracts to do a thing capable of producing profit. If the use is habitual and capable of producing profit there is no ground for holding it any less a trade because capital assets are lost in the process. The profits are taxable as income accruing from a trade.

Re AB Ltd [1957] MLJ 143 Court of Appeal, Singapore (Whitton J, Buhagiar and Tan Ah Tah JJ).

CK Ltd and WM Ltd agreed to set up a joint venture company, A Ltd, to develop certain pieces of property. The scheme involved the acquisition of property from subsidiaries of CK Ltd and WM Ltd by A Ltd. It also involved the acquisition of shares in some of these subsidiaries. In pursuance of the scheme, A Ltd bought 30% of the share capital of R Ltd, a subsidiary of CK Ltd. R Ltd owned land in Hong Kong. Shortly after A Ltd bought the shares in R Ltd, CK Ltd received an offer from a third party to acquire R Ltd. This offer was accepted and CK Ltd, together with A Ltd, transferred to the third party some 85% of the share capital of R Ltd. A Ltd made a profit of about HK$40m. They were assessed to tax on this profit. The Board of Review upheld the assessment. On appeal to the High Court, the appeal was allowed. The Court of Appeal reversed the High Court decision. A Ltd appealed to the Privy Council.

Held, allowing the appeal: (1) there was nothing in the agreement amongst A Ltd, CK Ltd and WM Ltd which contemplated that A Ltd would trade in the shares of subsidiary or associated companies. The actual activities of A Ltd after acquiring the agreed assets did not present any characteristics of a general trade in shares. The trading transaction in R Ltd's shares was unique; (2) the broad purpose of the joint venture agreement between CK Ltd and WM Ltd was to bring about the profitable development of land. A Ltd was to become owner of a number of parcels of land as stock in trade and it was also to become the holding company for a number of other companies whose stock in trade was land. The shares in these companies held by A Ltd constituted its capital structure and not as stock in trade; (3) the fact that A Ltd obtained a fortuitous offer to acquire the shares of R Ltd did not mean that those shares were held as trading stock. The transaction was therefore not an adventure in the nature of trade.

Beautiland Co Ltd v Commissioner of Inland Revenue Privy Council Appeal No 51 of 1990 Privy Council Appeal from Hong Kong (Lords Keith, Templeman, Oliver, Jauncey and Sir Robert Megarry).

This was an appeal from the decision of Ong Hock Sim J (reported in [1973] 2 MLJ 10). The appellant company one of whose objects was to traffic and otherwise deal in or turn into account immovable property, had acquired certain lands and had begun building operations on the lands. Subsequently it agreed to sell the lands and the uncompleted building on it to another company in exchange for shares in the company. These shares were subsequently transferred by the company. The company was assessed to tax on the profits obtained by it. On appeal, the Special Commissioners upheld the assessment and a further appeal to the High Court was dismissed. The appellant company appealed to the Federal Court.

Held, dismissing the appeal: there was evidence in this case on which the Special Commissioners could conclude that the appellant company was carrying on a business in immovable property, so that the profits were made assessable to income tax.

I Investment Ltd v Comptroller-General of Inland Revenue [1975] 2 MLJ 208 Federal Court, Kuala Lumpur (Gill CJ (Malaya).

This was an appeal from the decision of the Federal Court ([1975] 2 MLJ 208). The appellant company, one of whose objects was to traffic and otherwise deal in or turn into account immovable property, had acquired certain lands and had begun building operations on the lands. Subsequently, it agreed to sell the lands and the uncompleted building on it to another company in exchange for shares in the company. These shares were subsequently transferred by the company. The company was assessed to tax on the profits obtained by it. On appeal the Special Commissioners upheld the assessment and a further appeal to the High Court by way of case stated was dismissed ([1973] 2 MLJ 10). An appeal from the judgment of the High Court was dismissed by the Federal Court and the appellant company appealed. It was argued on behalf of the appellant that the profit was not and could be taxable as income under s 10(1)(a) of the Income Tax Ordinance 1947 because the transaction from which it was received was an isolated transaction which did not constitute the carrying on of a trade or business. It might have been an adventure in the nature of trade but it could not have been trading because trading necessarily involved some repetition or continuity of operation and that element was lacking in the case. It was also argued that in any event the facts showed that when the appellant company acquired and developed the property, it was not trafficking or dealing in land but was investing in land, and any profit on the realization of its investment was not of an income nature and was not assessable to income tax.

Held, dismissing the appeal: (1) a company whose business is or includes trading prima facie begins to trade as soon as it embarks upon the first transaction of a trading nature. The transaction in this case could therefore constitute trading even if it was isolated; (2) there was evidence in this case on which the Special Commissioners could conclude that the appellant company was carrying on a trade in immovable property and there was no justification for reversing the determination of the Special Commissioners as it had not been shown that they had misdirected themselves in law or proceeded without sufficient evidence in law to justify their conclusion.

International Investment Ltd v Comptroller General of Inland Revenue [1979] 1 MLJ 4 Privy Council Appeal from Malaysia (Lord Diplock, Viscount Dilhorne, Lord Fraser of Tullybelton, Lord Keith of Kinkel and Sir Robin Cooke).

CBH v Comptroller of Income Tax [1982] 1 MLJ 112 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Chua JJ).

The appellant company, one of whose objects was to traffic and otherwise deal in or turn into account immovable property, had acquired certain lands and constructed a building on them. Subsequently it agreed to sell the lands and building to another company in exchange for shares in the company. The value of the shares exceeded the cost of the property and the Comptroller of Income Tax assessed the company for tax on the profits so obtained. It was urged on behalf of the appellant that the company was not carrying on the business of buying and selling property but investment business. It was contended further that this was an isolated transaction and not even an adventure or concern in the nature of trade. The Special Commissioners held that the profits were assessable to tax, as the company was carrying on the business of trafficking in land.

Held: the facts of this case supported the decision of the Special Commissioners that although there was only one transaction, it was carried on with the intention of dealing with property. The appeal therefore must be dismissed.

I Investment Ltd v Comptroller of Inland Revenue [1973] 2 MLJ 10 High Court, Penang (Ong Hock Sim FJ).

Comptroller of Income Tax v Singapore AB Association [1956] MLJ 205 High Court, Singapore (Knight J).

Comptroller of Income Tax v Singapore AB Association [1956] MLJ 205 High Court, Singapore (Knight J).

The company, S Park Ltd, was incorporated in 1961 and in pursuance of its main objects it purchased over 52 acres of land in Dunearn Road and developed it as a building estate. On 15 August 1963, T and C Properties Ltd acquired the whole of the issued capital of the company. The company went into voluntary liquidation in December 1963 and the appellants were appointed liquidators. On 29 August 1964, the land belonging to the company was conveyed by the liquidators as vendors to T and C Properties Ltd as purchasers in satisfaction of all the purchasers' share and interest amounting to the sum of S$1,757,900. Before the liquidation, the company had incurred certain development expenditure and finance charges. The Comptroller of Income Tax assessed the land as trading stock in the sum of S$2,291,991 as representing its market value at that date. It was argued on behalf of the appellants that the transaction relating to the land was a mere transfer back by the company (a wholly owned subsidiary of T and C Properties Ltd) to T and C Properties Ltd (the parent company) and that the company in law and in fact made no profit on the land. The act of the liquidators was one of capital realization and not a commercial transaction. Alternatively, it was argued that the alleged trading stock should have been valued under s 32(1)(a) of the Income Tax Ordinance (Cap 166, 1955 Ed) in the sum of S$1,757,900 and not under para (b) of the section. It was argued that the development expenditure and the finance charges relating to the land should in any event have been taken into account in the computation of the assessment to tax.

Held, dismissing the appeal: (1) the trading stock of the company was rightly valued under s 32(1)(b) of the Income Tax Ordinance as the land was not sold or transferred for valuable consideration; (2) as the amount of the expenditure and finance charges had been left out of account in valuing the land in this case, the appellants were not entitled to a deduction for such amount.

HC & Anor v Comptroller of Income Tax [1970] 2 MLJ 259 High Court, Singapore (Winslow J).

The appellants were concert artistes from London on a Far East tour. Sponsored by their agents in Singapore, they gave performances at the National Theatre for which they were paid a lump sum calculated in American dollars which amounted to the sum of Singapore S$11,438. The Comptroller of Income Tax assessed the appellants to tax in the sum of S$1,592.80. This sum was arrived at by giving to the appellants a deduction of S$7,280, being one-third of the costs of air travel that had been incurred by them for flying from London to Singapore, from their income of S$11,438. The appellants, through their agents, appealed to the board and contended that they were entitled to the deduction of the full fares of S$21,840 and not a mere one-third which was arbitrary and without any basis, legal or otherwise.

Held, dismissing the appeal: (1) as the appellants had not 'wholly and exclusively incurred' the costs of air travel for the purpose of the 'production of the income' in Singapore, they were not entitled, under s 14(1) of the Income Tax Ordinance (Cap 166, 1955 Ed) to any deduction in respect of their costs of air travel from London to Singapore; (2) in the alternative, as under s 10 of the ordinance the charging section income tax is payable 'upon the income of any person accruing in or derived from Singapore or received in Singapore from outside Singapore', it is implicit in the ordinance that any deductions that may be allowed of income under the ordinance must also be that which had been incurred in Singapore. As there was no evidence that the appellants had incurred the costs of air travel in Singapore, they were not entitled to deduct out of their income earned in Singapore the costs of air travel; (3) as there was no basis for the Comptroller to allow one-third of the costs of air travel incurred by the appellants, the board under s 80(10) of the ordinance may increase the assessment made by the Comptroller.

Re D & Ors, Taxpayers [1969] 2 MLJ xvi Income Tax Board of Review, Singapore (TS Sinnathuray, Chairman, Joey Yin Chu Wai and Chan Kim Lim, Members).

Re A Taxpayer (No 3) [1956] MLJ 216 High Court, Singapore (Murray-Aynsley CJ).

The plaintiff was a company incorporated in Singapore carrying on the business of a shipbroker and shipping agent. It applied for summary judgment against the defendant for S$27,362.50 as commission payable by the defendant in respect of a charterparty relating to a vessel owned by the defendant. The defendant sought to plead in its defence that only S$17,844.17 was owing to the plaintiff as S$9,518.33 was paid to the Inland Revenue Department as withholding tax pursuant to s 109B of the Income Tax Act 1967 (Act 53) ('the Act'). The central issue before the court, therefore, is whether the commission earned by the plaintiff is subject to Malaysian withholding tax under s 109B(1) of the Act such that the defendant, as the payer thereof, is legally obliged or entitled to deduct the tax thereon upon paying the commission to the plaintiff.

Held, allowing the application: (1) it is obvious that the commission payable is not for technical advice rendered, under the terms of s 109B(1)(b) of the Act. Even if sub-s (1)(b) extends to 'assistance or services' of a non-technical nature, there is no evidence that the amount claimed is 'in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme'. There is nothing to indicate or suggest that the plaintiff had been involved in any technical management or administration or that the commission earned was in respect of any specialized or technical services rendered; (2) it has also not been indicated that the commission claimed was deemed to be derived from Malaysia under s 15A of the Act because there is no evidence suggesting that at the material times the management and control of the business or businesses or affairs of the defendant were exercised in Malaysia, nor has evidence been adduced or reliance placed suggesting that condition (iii) of s 15A of the Act is applicable; (3) the defendant has failed to satisfy the court on a balance of probabilities that there exists any arguable or triable issue or that for some reason there ought to be a trial respecting the balance of the plaintiff's claim.

Erria Shipping Pte Ltd v Cara Timur Transport Sdn Bhd [1989] 1 MLJ 133 High Court, Sibu (Chong Siew Fai J).

The plaintiffs are a non-resident contractor within s 107A(5) of the Income Tax Act 1967 (Act 53) ('the Act'). They contracted with the first defendant to complete the Besut Agricultural Development Project. The dispute between them was resolved by arbitration with the first defendant paying an agreed sum in full and final settlement of the plaintiffs' claim. The defendants later requested the plaintiffs to return 20% of the sum paid. The plaintiffs did not make payment and asked for a declaration that the amount paid is not liable for the deductions prescribed by s 107A of the Act. The defendants applied to strike out the originating summons.

Held, dismissing the defendant's application with costs: (1) it is only in the plain and obvious cases that resource should be made to the summary process invoked by the defendants; (2) the provision in the Act for advance assessments is s 92. Section 107A has no reference to s 92; (3) the relief sought by the plaintiffs is properly before the court.

Korea Development Corp v Government of Malaysia & Anor [1986] 2 MLJ 53 High Court, Kuala Lumpur (VC George J).

The assessment is the administrative act of the Comptroller in determining the quantum of tax. The noice of assessment imposes the liability, ie the exact sum to be paid. The Comptroller is entitled to state that a taxpayer's taxable income is $x and the liability is $y and nothing more. Under the English system of schedules, income from each source is treated as a separate entity whereas in Singapore, the assessment is made on the net results to the taxpayer from all sources of taxable income. Thus the English cases should be treated with considerable reserve. The Australian legislation bears a closer resemblance to the Singapore systems than the English Act. The only difference is that the Australian legislation gives a wider scope than Singapore.

ABC v Comptroller of Income Tax [1959] MLJ 162 High Court, Singapore (Buttrose J).

The taxpayer company ('TVBI') was incorporated in Hong Kong and was a subsidiary of another Hong Kong company, TVB. TVB made or acquired films in various Chinese dialects. TVB granted rights to TVBI to, inter alia, grant sub-licences to sub-licensees to copy, adapt, broadcast and exploit all other derivative rights in TVB films. TVBI granted various sub-licences to foreign parties and during the relevant years of assessments made profits amounting to some HK$57m. The issues in this appeal were whether these profits arose in or was derived from Hong Kong. If they did, they were assessable to Hong Kong profits tax under s 14 of the Hong Kong Inland Revenue Ordinance.

Held: (1) the proper guiding principle to be applied is that stated by Lord Bridge in CIR v Hang Seng Bank viz, that 'one looks to see what the taxpayer has done to earn the profit in question and where he has done it'. When he stated this guiding principle he had in mind the passage by Atkin LJ in Smidth v Greenwood who said, 'I think the question is, where do the operations take place from which the profits in substance arise'; (2) the proper approach therefore was to ascertain what were the operations which produced the relevant profits and where those operations took place. Adopting this approach, what emerges is that the taxpayer, having acquired films and rights of exhibition in Hong Kong, exploited those rights by granting sub-licences to overseas customers. The relevant business of TVBI was the exploitation of film rights exercisable overseas and it was a business carried on in Hong Kong. The profits accruing to the taxpayer on the grant of sub-licences during the relevant years of assessment were subject to tax under s 14.

Commissioner of Inland Revenue v HK-TVB International Ltd Privy Council Appeal No 28 of 1991 Privy Council Appeal from Hong Kong (Lord Templeman, Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Lowry and Sir Christopher Slade).

The appellant company had a shoe factory No 66 Telok Blangah Road, situated on the front portion of Lot 126-57 of Mukim 1 which had an area of 81,669 sq ft. The rear portion of the lot containing an area of 18,500 sq ft has been demarcated off and is not a subject matter of appeal as it is proposed by the Chief Assessor to asses it separately. By a notice No 07947 dated 14 February 1967, the Chief Assessor, under s 18(2) of the Property Tax Ordinance (RS(A) No 13 of 1966) proposed an annual value of S$92,400 in respect of the said factory, with a proposal, as the factory was a new one, to recover tax, under s 19 of the ordinance, with effect from 4 November 1963. The principal issue in the appeal was: What principles of valuation must be adopted or followed in determining the annual value of a factory or annual values of factories in Singapore? For the appellant company it was contended that as there was no rental evidence of factories in the neighbourhood of the factory under appeal, and, rental evidence of factories in other parts of Singapore cannot be used for comparisons, the primary definition of 'annual value' in s 2 of the ordinance cannot apply. It was said that the Chief Assessor must exercise the option given to him in proviso (b)(i) of the definition of 'annual value' in s 2 of the ordinance, and the annual value of the factory must be 5% of the value of the land and buildings erected thereon. There were two other subsidiary issues: First, it was said that notice No 07947 was bad and ineffective as the land on which the factory was situated had not been precisely or sufficiently identified in the notice for the appellant company to know in respect of what property the Chief Assessor proposed to levy the tax. Secondly, it was contended that as the sanction of the Minister had not been obtained under proviso (d) to the definition of annual value in s 2 of the ordinance, the Chief Assessor had no authority to apportion the land of the company and, therefore, notice No 07947 was issued without authority and was null and void.

Held: (1) in an island state which is less than 230 sq miles, consideration of distance in the principles of valuation adopted in large countries do not necessarily apply to Singapore. As a study of rental values of factories in Singapore revealed that irrespective of location, design, construction or use, the rental values of factories of the general industrial class are almost uniform in their rental pattern, their rental evidence can be used as comparisons with that of the factory of the appellant company which is of the same class; (2) opinion evidence of rents and assessments for comparisons may be given by an expert before the board to establish a principle or practice of valuation, or to determine value; (3) the contractor's test a method of calculation of annual value may be adopted for the ascertainment of annual value where there is a lack of rental evidence. The test 'rests on the ascertainment of what it would cost the hypothetical tenant to build the hereditament, or a substitute, for himself rather than lease it'; (4) proviso (b) of the definition of 'annual value' in s 2 of the ordinance is one of local origin which gives an option to the Chief Assessor to ascertain the annual value of a property which has no rental or where the landlord has assigned a rent which the Chief Assessor cannot accept. It is not the contractor's test statutorily defined; (5) as notice No 07947 had identified the property by reference to a number No 66 Telok Blangah Road it was clear that the Chief Assessor was proposing an annual value of the factory on the land which bears that number and, therefore, the notice had given sufficient particulars to the appellant company; (6) it is not the Chief Assessor but the Comptroller of Property Tax who must obtain the sanction of the Minister under proviso (d) to the definition of annual value in s 2 of the ordinance. The board created under Part IV of the ordinance has not the power to question the decision of the Comptroller but only that of the Chief Assessor. In any event, the board must presume, until the contrary is shown, that the Comptroller had obtained the sanction of the Minister to apportion the land of the appellant company, for the Chief Assessor to propose an annual value for the factory and to assess the excess land separately.

Bata Shoe Co Ltd v Chief Assessor [1971] 1 MLJ xli Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Tan Beng Seng, Members).

This was an appeal against the chief assessor in respect of the revision of annual value of a shipyard owned by the respondent owner s and a decision by the Comptroller of Property Tax to recover property tax on the basis of the annual value imposed by the chief assessor. Under s 20 of the Property Tax Act (Cap 254) ('the Act'), the chief assessor on 31 October 1983 revised the annual value of the respondent's shipyard from $5,658,300 to $11,852,000 with effect from 1 January 1983. Under s 22, on the basis that improvements were made to the shipyard, the Comptroller of Property Tax issued a notice proposing to recover property tax for the period 16 February 1982 to 31 December 1982. On appeal, the Valuation Review Board ('the Board') allowed the appeal and fixed the annual value at $9.5m and allowed the recovery of tax on the basis of this annual value. The appellants appealed to the High Court. It was common ground between the parties that the contractor's basis be used in the valuation of the annual value. Held, dismissing the appeal: (1) in applying the contractor's test, the ultimate object is to arrive at the annual rent which the hypothetical tenant would reasonably be prepared to pay on a yearly tenancy in accordance with the definition of annual value in s 2 of the Act; (2) in principle it is right for a valuer, when using the contractor's test for the assessment of the annual value, to have regard for such market conditions - in this case the health of the shipping industry - as have a bearing on the hypothetical rental value of a property; (3) the issue as to whether the 20% allowance accepted by the Board was fair and reasonable is not a question of law but a quest ion of fact. Section 35(2) of the Act allows an appeal by the chief assessor or the Comptroller from a decision of the Board only up on a question of law or a question of mixed law and fact. It is not the task of this court to substitute another figure for that accepted by the Board; (4) s 35(5) of the Act gives the court the power, on the hearing of an appeal, to confirm, vary or rescind any order made by the Board. Therefore, inspite of the fact that the Board did not deal with the question of interest, and the owners did not appeal against the Board's decision in this respect, the court could order the Comptroller to refund any excess tax paid by the respondents together with interest at 6% pa.

Chief Assessor and Comptroller of Property Tax v Keppel Corp Ltd [1994] 2 SLR 100 High Court, Singapore (Warren LH Khoo J).

By a valuation notice dated 17 September 1973, the Chief Assessor proposed to raise the annual value of the appellants' properties at No 720 Dunearn Road from S$412,274 to S$3,675,000 with effect from 1 January 1973. The then existing value which was determined in 1963, had become inaccurate with the completion of additions, alterations, new buildings and other improvements costing S$5,989,792 carried out between 1964 and 1973. Hence the need to reassess the properties. The said premises was 327 acres in area and was used for the purpose of a horse race course. The appellant agreed to the reassessment but contended that the annual value should be S$1,566,000. The contractor's test was adopted for the assessment of the said properties.

Held: the appellants failed to satisfy that a return rate of 6% was unreasonable and excessive. The value of property tax payable should be S$3,378,000.

Singapore Turf Club v Chief Assessor [1983] 2 MLJ cxxxiii Valuation Review Board, Singapore (Michael Khoo Kah Lip (Chairman).

Howe Yoon Chong v Chief Assessor, Property Tax, Singapore [1978] 2 MLJ 87 High Court, Singapore (Rajah J).

This case started when the appellant, the Chief Assessor, served a notice dated 1 October 1973 under s 18(2) of the Property Tax Act (Cap 144, 1970 Ed) on the respondent, Howe Yoon Chong ('the owner'), proposing to amend the 1973 Valuation List by increasing the annual value of the property Lot 61-134 of TS XXVII situate at Peck Hay Road, Singapore ('the property'), from S$1,340 to S$26,000 effective 4 April 1973. The owner objected to the increase but the Chief Assessor disallowed the objection, whereupon the owner appealed to the Valuation Review Board. The board confirmed the annual value proposed by the Chief Assessor and rejected the contentions of the owner, viz (i) the 1973 Valuation List was invalid, (ii) the proposed increase would be contrary to art 12 of the Constitution, and (iii) the proposed annual value was manifestly excessive. The owner appealed against the board's decision to the High Court, which allowed his appeal on the ground that the notice for the proposed increase under s 18(2) of the Act was invalid. The Chief Assessor then appealed to the Court of Appeal, which allowed the appeal and restored the decision of the board, holding, inter alia, that the notice of proposed increase and the 1973 Valuation List were valid, and that there was no violation of art 12 of the Constitution (see [1979] 1 MLJ 297). Against that decision the owner appealed to the Privy Council. The owner's arguments that the 1973 Valuation List was invalid and that his rights under art 12 of the Constitution had been infringed failed before the Privy Council. But, as the Court of Appeal did not consider the evidence on value and neither party addressed the Court of Appeal on the question of value, the Privy Council allowed the appeal and directed the High Court to determine the question of value of the property (see [1981] 1 MLJ 51). Pursuant to that direction, Rajah J heard evidence and submissions in the High Court. The question there was essentially one of valuation of the property as at 4 April 1973. The property had an area of 1,381.9 sq m (14,875 sq ft), with a 20 ft by 120 ft finger-like projection and some steep slopes. Both parties agreed that the sale of the front lot (Lot 61 126) on 4 April 1973 at S$41 per sq ft was the best guide and that the property could not but be valued at lower than S$41 per sq ft. The annual value of S$26,000 was computed in accordance with para (b) of the proviso to the definition of annual value under s 2 of the Act and represented 5% of S$520,625, the value of the property as at 4 April 1973 calculated at the rate of S$35 per sq ft. The Chief Assessor adopted the price of S$41 per sq ft for the property but allowed a discount of 5% for the finger-like projection and a further discount of 10% in view of the steep slopes. The learned judge in his judgment dated 7 January 1982 considered three factors: (a) the rear lot, (b) no planning permission, and (c) the steep slopes and contours of the property. He made adjustments of S$98,400 for factor (a), S$30,494 for factor (b) and S$91,481 for factor (c), totalling S$220,375 to be deducted from the sum of S$609,875, the value of the property calculated at S$41 per sq ft. He accordingly fixed the annual value of the property at S$19,475 being 5% of S$389,500. The Chief Assessor appealed against the decision of Rajah J and thus the case came before the Court of Appeal the second time.

Held, confirming the valuation of the Deputy Chief Valuer: (1) the learned judge erred in making the adjustments to the valuation of the property. On factor (a) it is plainly wrong to extract the property from its present location and place it side by side with the front lot. It is a fundamental principle in valuation that a property must be valued as it in fact stands, ie rebus sic stantibus. The finger-like projection serves a real purpose in determining the density of the property for development purposes. It also serves as an obvious access to Peak Hay Road; (2) therefore the discount of 5% of the price of S$41 per sq ft is not warranted; (3) on factor (c) there is no basis for increasing the discount of 10% of the value of the property as allowed by the Chief Assessor; (4) on factor (b) it is common ground that at the relevant time, the front lot and the property had no planning permission;having regard to all the evidence adduced, there is no justification for disturbing the valuation of the property made by the Deputy Chief Valuer.

Chief Assessor, Property Tax, Singapore v Howe Yoon Chong [1985] 1 MLJ 106 Court of Appeal, Singapore (Wee Chong Jin CJ, Thean and Chua JJ).

The appellant appealed against the decision of the Valuation Review Board which ordered that the annual value of the subject property No 23 Tanjong Kling Road for the years 1971 to 1973 be fixed at S$69,360. The said property is a shipbreaking yard belonging to the respondents. It is an industrial property situated at Jurong Industrial Estate and stands on 337,370 sq ft of land leased from the Jurong Town Corporation. Annual ground rent for the land was calculated at 6% of the land value of S$2.50 per sq ft. The board was of the view that the annual value of the subject property for the years 1971, 1972 and 1973, ascertained under the contractor's basis was S$69,360 this amount being 6% return on a capital value of S$1,156,000 and directed that the Valuation List for these years and for the ensuing ones be accordingly amended. Two main issues were raised in the appeal: (1) how the contractor's basis should be applied; (2) whether s 2(b)(i) of the Property Tax Act (Cap 144, 1970 Ed) is the contractor's basis.

Held, allowing the appeal: (1) the contractor's basis falls within the primary definition no matter what rate of interest is applied; (2) There are four differences between the contractor's basis and s 2(b)(i); (3) s 2(b)(i) is a last resort formula to be applied when any of the methods based on the primary definition is not appropriate. When it is to apply and to what cases it is appropriate, the sole discretion belongs to the Chief Assessor; (4) once the Chief Assessor has decided that the contractor's basis is the most suitable method to apply he must apply the proper rate according to the proper rules. He cannot then further exercise another option as to the rates; (5) in the present case, the board had erred in interpreting s 2(b)(i) as the contractor's basis; (6) since the board was satisfied that the 6% applied by the Chief Assessor was a figure 'well below commercial borrowing rates', and since the board did not reject the evidence of the Chief Assessor's valuer but rather agreed with and accepted what he had said, the board should, to be consistent, also conclude that the result of applying the 6% net market or commercial rate to the effective capital value would give a net value. The application of a net rate to a capital sum cannot give a gross amount. The board had erred by so concluding and had therefore erred in ordering that the expenses of repairs, insurance, maintenance and property tax should not be added at all; (7) s 2(b)(i) cannot be the contractor's basis; the contractor's basis is a well-established method of valuation which falls squarely within the primary definition of annual value;the proper rate to apply is 36% of the annual value for property tax.

Chief Assessor, Singapore v National Shipbreakers Pte Ltd [1982] 1 MLJ 4 High Court, Singapore (Chua J).

Howe Yoon Chong v Chief Assessor, Property Tax, Singapore [1978] 2 MLJ 87 High Court, Singapore (Rajah J).

Chief Assessor, Property Tax, Singapore v Howe Yoon Chong [1985] 1 MLJ 106 Court of Appeal, Singapore (Wee Chong Jin CJ, Thean and Chua JJ).

In this case, the Chief Assessor appealed against the decision of the Valuation Review Board which was to the effect that certain properties could not be assessed to property tax under the provisions of s 17(2) of the Property Tax Ordinance 1960. Most of the properties were owned by subsidiary companies in which the respondents held all the shares. It was argued, inter alia, that the notices of amendments should have been sent to the subsidiary companies as the respondents were not the owners of the properties. It was also contended that (a) there was no provision in the ordinance for the assessment of buildings in the course of construction; (b) that where property is rent-controlled and vacant the annual value must be tied to the standard rent of the premises.

Held: (1) the respondents were not the owners of the properties owned by the subsidiary companies and, therefore, the notices of amendments should have been sent to the subsidiary companies; (2) the Property Tax Ordinance 1960 did not contain any specific provision relating to land on which buildings were in the course of erection, but the ordinance has since been amended by the Property Tax (Amendment) Act 1965 which came into force on 1 January 1966 and which has removed the doubt that existed prior to it; (3) where property is rent-controlled and vacant and no material change has been made to it the annual value must be tied to the standard rent of the premises; (4) where property was bought at a price which coincides with the valuation set out in the prospectus of the company, its annual value should be 5% of the capital value.

Chief Assessor, Property Tax v Town and City Properties Ltd [1967] 1 MLJ 188 High Court, Singapore (Winslow J).

Chief Assessor, Property Tax v Town and City Properties Ltd [1967] 1 MLJ 188 High Court, Singapore (Winslow J).

Intercontinental Properties (Pte) Ltd & Ors v Chief Assessor/The Comptroller of Property Tax [1982] 1 MLJ 119 High Court, Singapore (Chua J).

The appellant in this case appealed against the Chief Assessor's Notice issued on 29 September 1975 pursuant to s 18(2) of the Property Tax Act (Cap 144, 1970 Ed), which sought to amend the 1975 Valuation List by including therein the subject property together with its annual value of S$5,960. The appellants accepted this annual value but they contended that the Chief Assessor was not entitled to include the subject property in the 1975 Valuation List and that such inclusion was wrong in law. The subject property in this case was a vacant office unit on the tenth floor of International Plaza, a 51-storey multi-purpose building comprising shops, offices and residential units. The unit in question was completed on 3 April 1974. On 15 April 1974 it was granted a temporary occupation licence. The whole of the International Plaza was completed on 17 June 1976. There was permanent structural division between all units in the building and there was no access from one unit to another except by a common corridor. Each unit was thus shut off from the others.

Held, dismissing the appeal: (1) the subject unit was at the material date, both part of an uncompleted building as well as a tenement within the meaning of the Property Tax Act and although it could not be included in the Valuation List by virtue of the provisions of ss 9(3) and 9(4), it was liable to be included in the Valuation List as a tenement because the Act enjoins that every tenement must be included in the Valuation List; (2) the Notice of 29 September 1975 was valid because on that date there was a relevant inaccuracy in the Valuation List and the Chief Assessor had a duty to remove it. By issuing the Notice he was merely exercising his powers under s 18 of the Property Tax Act to carry out his statutory duty under s 9(1) of the Act of maintaining an accurate Valuation List.

International Associated Co (Pte) Ltd v Chief Assessor, Singapore [1980] 2 MLJ 110 High Court, Singapore (Choor Singh J).

The owners of units in 'Highpoint', a 21-storey block of flats, appealed against the judgment of the Valuation Review Board. The appellants did not dispute the annual values of their properties, but challenged the extent of their liability for back taxes. The board held that property tax was payable from 8 June 1974 in respect of the 57 units of flats and from 8 December 1974, in respect of the two penthouses. TOLs were granted for the 57 units on 8 June 1974, and for the two penthouses on 8 December 1974. The board held that the Chief Assessor was at liberty to amend the Valuation List to include all the flats and penthouses of 'Highpoint' from 1 January 1975. The following questions were posed before the court: (a) what was the effective date the Valuation List could be amended by the Chief Assessor under s 18 to include the 57 flat and two penthouses; (b) what was the date from which the Comptroller could recover taxes in respect of the 57 flats and the two penthouses before their inclusion in the Valuation List under s 19? The appellants contended that the effective date the Valuation List could be amended by the Chief Assessor under s 18 was 7 July 1976, and the date from which the Comptroller could recover property tax was the date when the flat was in fact actually first used for human habitation. The issue posed before the court was, 'When does a new flat become a building for purpose of the Act for inclusion in the Valuation List?'

Held, dismissing the appeal: (1) the said Act is concerned with the beneficial ownership and not with the legal ownership; (2) the test of what is a building under s 9(3) is whether a building is divided physically in such a manner that each part is capable of separate and independent ownership then each part of the building shall be deemed a building under s 9(3). A flat which is capable of separate and independent ownership is a 'building' within the meaning of s 19(1); (3) a completed flat is a 'building' by virtue of s 9(3), and may virtue of s 18(7)(c) be included in the Valuation List as and when they are completed; (4) the Property Tax Act is not concerned with whether a building has been built in accordance with approved plans. An unauthorized building can be entered in the Valuation List and be liable to property tax so long as the work of erecting that unauthorized building is completed; (5) the term 'owner' under the Property Tax Act (Cap 144, 1970 Ed) does not mean legal owner;each unit of flat in 'Highpoint' is deemed to be a 'building' by virtue of s 9(3) and each unit must therefore be considered separately to determine its date of completion;the board was therefore correct in holding that the flats and penthouses were 'completed' within the meaning of s 19 when TOLs were issued on 8 June 1974 for the flats and on 5 December 1974 for the penthouses. The inclusion of the 57 flats and the two penthouses in the Valuation List was valid. Property tax would therefore be payable from 8 June 1974 in respect of the 57 units of flats and from 8 December 1974 in respect of the two penthouses.

Intercontinental Properties (Pte) Ltd & Ors v Chief Assessor/The Comptroller of Property Tax [1982] 1 MLJ 119 High Court, Singapore (Chua J).

The question in dispute in this case related to the annual value of an office unit on the tenth floor of the International Plaza, a 51-storey new building at Anson Road. The appellants contended that they were liable to property tax only from the date when the whole complex was completed. The respondent argued that the office unit was property within the meaning of s 18 of the Property Tax Act (Cap 144, 1970 Ed) and, therefore, an annual value for the property could be proposed after the floor on which the office unit was situated was completed and after the issue of the temporary occupation licence.

Held: the office unit was property within the meaning of the Act and in the circumstances it was the duty of the Chief Assessor to put the office unit on the 1975 Valuation List.

International Associated Co Pte Ltd v Chief Assessor [1979] 2 MLJ cxxv Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Chua Swee Choo, Members).

The two appeals were heard on the main issues after the preliminary point had been dealt with that an appellant was not as of right entitled to the report supplied to the board under s 28 of the Property Tax Ordinance 1960 (RS(A) No 13 of 1966) ([1968] 2 MLJ xxxii). The subject matter of the appeals were two flats, Nos 34B and 34C, Lorong 20, Geylang. The Chief Assessor issued two notices proposing separate annual values, under s 18(2) of the ordinance, in respect of the two flats. One of the flats No 34B, Lorong 20 had been owned by one Cho Khai Lam whose name was on the valuation list. Of the two notices, Notice No 46819 was addressed to him. He had not notified the Chief Assessor, under s 17 of the ordinance, that he was no longer the owner and that Cho Chih Yee, his brother, the appellant, was the owner. The grounds of appeal set out in the notice of appeal filed under s 26 of the ordinance were not raised at the hearing. Instead, two new grounds were put forward by the appellant. First, it was contended that the notice addressed to Cho Khai Lam was invalid as against the appellant. It was said that the notice should have been addressed and served on Cho Chih Yee, the owner of the flat. Secondly, it was contended that property tax, in Singapore, attaches to the owner of property and not the property itself, and, as the appellant was the owner of both the flats, they must be considered as a single unit and assessed as one entity.

Held: (1) property tax is a levy of tax on immovable property and not on the owner. The payment of the tax, however, is by the owner. In the context of the ordinance, a 'flat' is a 'tenement' and it is incumbent on the Chief Assessor, under s 9(1) of the ordinance, to put on the Valuation List each flat as a separate 'tenement', notwithstanding that the flats are owned by one person, and assign an annual value to each of them as a separate 'tenement'; (2) as Cho Khai Lam was on the Valuation List as the owner of No 34B, Lorong 20, and he had failed to notify the Chief Assessor of the change of ownership, the notice addressed to him was a valid notice. In any event, the appellant did receive the notice sent to his brother; (3) where an appellant desires to raise new grounds not stated in the notice of appeal lodged by him under s 26 of the ordinance, he should give prior notice to the clerk to the board and, at the hearing of the appeal, apply to the board to amend the notice of appeal.

Cho Chih Yee v Chief Assessor [1969] 2 MLJ iii Valuation Review Board, Singapore (TS Sinnathuray, Lye Yuen Weng and Chan Yang Fong, Members).

The property which is the subject of this appeal consisted of three pieces of land situated at Peck Hay Road, Singapore. A block of 22-storeyed high-class apartments was under construction on the said lands and this was expected to be completed in June 1976. The annual value of the property was last determining about ten years earlier at S$12,216. Acting under s 18(2) of the Property Tax Act (Cap 144, 1970 Ed), the Chief Assessor by notice dated 27 August 1973 proposed an annual value of S$97,760 with effect from 1 January 1973. The appellant objected to the proposed annual value. On appeal to the board, it was contended for the appellant first that the words 'vacant land' under s 2(b) of the Property Tax Act must be given a different meaning from the word 'property' and as the application of s 2(b) produced the annual value of 'property' rather than the annual value of 'vacant land', s 2(b) could not apply. Secondly, it was contended that as s 19(1) of the Act was inserted to protect developers from being penalized for property tax apart from the land itself, s 2(b) could not apply in this case. Thirdly, it was contended that the Chief Assessor should not have exercised the option given to him by s 2(b) of the Act in this case but should have used the primary definition of annual value, that is, the lettable formulae in assessing the annual value of the property.

Held: (1) vacant land is property under the Property Tax Act and s 2(b) can be read by substituting the word 'land' for the word 'property' as appearing therein. The word 'property' is the genus and the word 'land' is the species. Further the use of the expression 'vacant land' is for a method of assessment only and no more; (2) the Chief Assessor has exercised his option to increase the annual value of the land as vacant land per se. He has fictionally treated the land as vacant land and although there is a 22-storeyed building in the course of construction on it. He has not sought to put a value on the uncompleted building; (3) as the property is in good class, high-rise residential area and as the last valuation was more than ten years ago and as there was no comparison of lettable values of land like that of the appellant, the Chief Assessor had exercised the option that was given to him properly.

Ean Lian (Pte) Ltd v Chief Assessor [1975] 1 MLJ xlvi Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Cheng Yang Fong, Members).

In 1960, the trustees of the estate of H Somapah, deceased, were minded to apply to the Rent Conciliation Board for an increase in rent equal to the amount of the Education Rate levied under the Education Ordinance 1957. Their solicitors wrote to the then City Assessor on 14 September 1960, asking what the policy of the City Council was where landlords obtained increases in rent consequent on the levying of the Education Rate. The City Assessor by letter of 15 October 1960, replied in terms to say that the annual value of rent-controlled properties would not be increased where increases in rent had been obtained to cover the Education Rate. Relying upon this reply, the trustees proceeded to apply to the Rent Conciliation Board and in the event obtained increases in the rents of their properties for which permission of the board was necessary. In the meantime, the Property Tax Ordinance 1960 came into operation on 1 January 1961, and in that year the Acting Chief Assessor who replaced the City Assessor gave notice to the trustees of an increase in the annual value. The notice was given under s 17 of the Property Tax Ordinance which empowers the Chief Assessor to amend the Valuation List if it had become inaccurate in any material particular. The trustees lodged an objection before the Valuation Review Board against the proposed increase in the annual value to the extent of the increase in rents granted by the Rent Conciliation Board. It was contended on their behalf that the Chief Assessor was estopped by the letter of the City Assessor.

Held: (1) the letter of the City Assessor did not contain any representation of a fact. He was asked for the policy of the City Council and merely replied what the policy was at that time; (2) no estoppel arose from this letter but even if it did it could not be raised to hinder the exercise of the discretion conferred on the Chief Assessor by s 17 of the Property Tax Ordinance. Principle laid down by Lord Maugham in Maritime Electrical Ltd v General Dairies Ltd [1937] 1 All ER 748 followed.

Re Objection No 1186 of 1962 & Ors [1962] MLJ cxxxviii Valuation Review Board, Singapore (JB Jeyaretnam, Chairman, Mohamed bin Ali and Tan Beng Seng, Members).

Chief Assessor, Property Tax v Town and City Properties Ltd [1967] 1 MLJ 188 High Court, Singapore (Winslow J).

The premises in question were vested in the Port of Singapore Authority, by virtue of s 14(1) of the Port of Singapore Authority Act (Cap 173, 1970 Ed) under which 'all lands buildings and other property É of the Singapore Harbour Board É shall be transferred to and vest in the (PSA) without further assurance'. By s 14(2) the 'liabilities and obligations' of the Singapore Harbour Board 'shall also be transferred to and be deemed to have been incurred by the (PSA)'. The issue before the court was whether on the proper construction of s 28(1) of the Port of Singapore Authority Act, 'houses, buildings, lands and tenements' of the Port of Singapore Authority were exempted from property tax.

Held, allowing the appeal: (1) the Property Tax Ordinance 1960 comes within the meaning of the words 'any written law repealing and re-enacting the provisions (of the Local Government Ordinance 1957) in s 28(1) of the Port of Singapore Authority Act. Hence, by virtue of the Port of Singapore Authority Act 'houses, buildings, land and tenements' of the Port of Singapore Authority are exempted from property tax; (2) the Minister may, however, under s 28(2) after consultation with the Port of Singapore Authority apply the provisions of the Property Tax Ordinance 1960. In the present case, no declaration has been made as aforesaid.

E & MW (Latex) Ltd v Chief Assessor, Property Tax Division [1977] 1 MLJ 4 Court of Appeal, Singapore (Wee Chong Jin CJ).

The plaintiff in this case had purchased three premises from the defendants. There were three written agreements relating to the sale and it was an express term of the said agreements that the plaintiff would bear and pay all property taxes for the account of the three premises from the date of possession by the plaintiff of the said premises. The plaintiff paid S$7,500 to the defendants as property tax deposit for the three premises and took possession of the said premises. Subsequently, on receipt of three notices from the Comptroller of Property Tax addressed to the plaintiff, the plaintiff paid the property tax for the three premises amounting to S$51,993.30. Thereafter the plaintiff made a written demand to the defendants for the refund of the deposit of S$7,500. Despite reminders, the defendants had failed to refund the said deposit.

Held: the plaintiff as owner of the premises was entitled to the refund of the deposits against the property tax which were payable by the plaintiff and not the defendants.

MM Smith v Goldhill Properties (Pte) Ltd [1979] 1 MLJ 12 High Court, Singapore (Chua J).

Comptroller of Property Tax v Sheefa Alkaff [1981] 1 MLJ 272 High Court, Singapore (Sinnathuray J).

Intercontinental Properties (Pte) Ltd & Ors v Chief Assessor /The Comptroller of Property Tax [1982] 1 MLJ 119 High Court, Singapore (Chua J).

Chief Assessor, Property Tax v Town and City Properties Ltd [1967] 1MLJ 188 High Court, Singapore (Winslow J).

Comptroller of Property Tax v Sheefa Alkaff [1981] 1 MLJ 272 High Court, Singapore (Sinnathuray J).

By four separate agreements, all dated 8 September 1979, the appellants agreed to lease to the respondents respectively four floors of a newly-erected building called Tong Building for a term of ten years, commencing from 15 May 1979. Each of the agreements by cl 2(3) thereof contained an undertaking by the respondents in the following terms '2(3) To pay on demand any increase in the property tax over and above the amount of property tax payable by the landlord on the first assessment of the demised premises whether such increase is due to an increase in the annual value of the demised premises and/or an increase in the rate of property tax payable.' On or about 10 August 1982, the Property Tax Division of the Inland Revenue Department served on the appellants who are the owners of Tong Building two notices, namely: (a) a notice dated 10 August 1982 under s 18(2) of the Property Tax Act (Cap 144, 1970 Ed) ('the Act') stating that it was proposed to amend the Valuation List 1982 by increasing the annual value of Tong Building to S$4,962,000 with effect from 1 January 1982; (b) a notice also dated 10 August 1982 under s 19(a)(1) of the Act stating that upon the authentication of the annual value as proposed in the notice under s 18(2) of the Act, the property tax of Tong Building for the period from 21 April 1979 to 31 December 1981 would be in the sum of S$2,096,666.25. Arising from the two notices, the appellants claimed that there was an increase of property tax over and above the amount of property tax payable by the appellants 'on the first assessment of the demised premises,' and by their letter of 29 June 1983, they computed a sum of S$444,354 as representing such increase of property tax of the demised premises payable by the respondents. This was disputed by the respondents whereupon the appellants took out an originating summons seeking a declaration in the following terms: 'a declaration that there are or have been increases in property tax over and above the amount of property tax payable by the landlord on the first assessment of the demised premises.' The application was heard by Abdul Wahab Ghows J who dismissed it on the ground that the first assessment of the demised premises was the assessment of annual value set out in the Chief Assessor's notice dated 10 August 1982 under s 18(2) of the Act and in consequence there was no increase in property tax payable by the respondents. The appellants appealed. The appeal turned on (i) the construction of cl 2(3) of the agreements for leases and, in particular, the words, 'first assessment of the demised premises', and (ii) the question whether on the material before the court there had been an increase in the property tax over and above the property tax payable by the appellants on the first assessment of the demised premises.

Held: (1) in so far as cl 2(3) was concerned, it was clear that read in the context of that clause and in particular, having regard to the immediately preceding words, 'property tax payable by the landlord', the word 'assessment' means an assessment of property tax payable; (2) in construing the clause 'first assessment of the demised premises', the court must 'place itself in thought in the same factual matrix as that in which the parties were' at the time the agreements for leases were made; (3) the assessment made in this case was an assessment of Tong Building of which the demised premises form a part and such assessment of Tong Building includes an assessment of the demised premises and therefore falls within the purview of this clause; (4) a meaningful construction for the expression 'assessment of the demised premises' ought to be adopted and in such a situation, the principle of interpretation ut res magis valeat quam pereat is applicable. Adopting this approach, the assessment of property tax made by the Comptroller of Property Tax for the period 21 April to 31 December 1979 falls within the provisions of cl 2(3) of the agreements for leases. The assessment is an assessment of property tax of Tong Building of which the demised premises form a part. That assessment includes an assessment of the demised premises; (5) the question whether there has been an increase in property tax over and above the first assessment of property tax payable on the demised premises is one of fact and a matter of computation which clearly must be based on relevant data of Tong Building; (6) as for the question as to whether there had been an increase in property tax over and above the first assessment of property tax payable on the demised premises, the matter should be remitted to the lower court to determine the issue.

Tiger Properties Pte Ltd v Haw Par Properties (Singapore) Pte Ltd [1987] 2 MLJ 540 Court of Appeal, Singapore (Wee Chong Jin CJ, Thean and P Coomaraswamy JJ).

The respondent was the registered owner of No 27 Third Avenue, Singapore. She purchased the said property from Great Wall Development Pte Ltd under a contract dated 4 December 1975. Great Wall Development Pte Ltd were at the material time housing developers within the meaning of the Housing Developers (Licensing and Control) Act. Her purchase was completed on 31 March 1976. Before completion, her solicitors sent the usual requisition to the Property Tax Department. The reply to this requisition dated 12 November 1975 had the following endorsement on it: 'No 27 Third Avenue, Singapore, has not been included in the Valuation List yet. Upon inclusion Notice under s 18(2) will be issued and tax will be recovered under s 19 of the Property Tax Act (Cap 144, 1970 Ed).' The temporary occupation licence of the said property was issued on 7 February 1975 and certificate of fitness for occupation was issued by the Chief Building Surveyor on 27 November 1975. Under the contract, the developers were required to pay all outgoings including property tax right up to the date of completion, ie up to 31 March 1976. The Comptroller sought to recover tax under s 19 of the Property Tax Act for the property as from 7 February 1975. The respondent did not dispute the fact that she was liable for all property tax as from the date of completion, ie as from 31 March 1976. She, however, maintained that she was not liable for any property tax payable prior to 31 March 1976.

Held: (1) for tax to be a charge on property and for the owner to be liable for it, the property and the owner must be included in the Valuation List; (2) the phrase 'for the time being' applies only to limb (a) of the definition of 'owner' in s 2 of the Property Tax Act where in each of the five cases a person is deemed to be 'owner' of the premises when his name is in the Valuation List; (3) the respondent's name was properly included in the 1976 Valuation List and therefore the respondent was liable to pay tax on the premises with effect from 7 February 1975. Ong Poh Tan v Comptroller of Property Tax [1977] 1 MLJ xliii distinguished.

Comptroller of Property Tax v Sheefa Alkaff [1981] 1 MLJ 272 High Court, Singapore (Sinnathuray J).

Goodyear Investments Pte Ltd v BA Lalwani & Anor (Third Party) [1980] 1 MLJ 268 High Court, Singapore (Rajah J).

The present appeal involved the issue 'whether, on a sale by a mortgagee, a prior charge on the mortgaged property falls to be discharged by the purchaser from the mortgagee, or is a burden on the net proceeds of sale payable to the mortgagor'. The charge was a statutory one for arrears of property tax relating to a period covering the completion of the sale. As it is common ground that the post-completion apportionment of the tax falls on the purchaser, the dispute in this case was whether the purchaser or the mortgagor must bear the pre-completion tax. In 1976, the mortgagor/appellant purchased the said property and mortgaged it to Far Eastern Bank Ltd (the bank) to secure part of the purchase price. On 10 March 1980, the bank, in exercise of its power of sale offered the property for sale by tender. The amount due to the bank was S$5,000,000. On 20 March, the tender of the purchaser/respondent was accepted. On 31 March, the Comptroller of Property Tax notified the bank of his claim to arrears of property tax amounting to S$521,242.53. The bank replied to the Comptroller that in its view the tax was the responsibility of the purchaser. The purchaser instead applied for a declaration that the property was contracted to be sold free from the charge for arrears of property tax; alternatively, that if under the contract of sale the purchaser was liable as between itself and the bank to discharge the arrears of tax, it could claim the amount so paid from the mortgagor on the principle of being subrogated to the rights of the Comptroller. The summons came before the learned Chief Justice who decided in favour of the purchaser, and held that upon payment of the arrears of property tax to the Comptroller at the date of completion, 'the plaintiffs (the purchaser) are subrogated to the rights of the Comptroller of Property Tax or the second defendants (the appellant/mortgagor) to the extent the amount paid in any surplus arising from the proceeds of sale held in trust for the second defendants. This was affirmed by the Court of Appeal (see [1982] 1 MLJ 168). The mortgagor appealed, relying on Condition 16 of the tender under which the property was sold subject to 'notices, charges, Orders of the Court, charging orders, caveats and court or other claims affecting the property made or served whether before on or after the date of sale'.

Held, dismissing the appeal: Condition 16 could not sensibly be read at its face value. It would be absurd to suppose, for example, that the contracting parties intended that the vendor should be exonerated from a charge for money borrowed by him prior to the contract, or should be at liberty to borrow money after the date of the contract and charge the debt on the property being sold.

Kaolim Pte Ltd v United Overseas Land Ltd [1983] 2 MLJ 1 Privy Council Appeal from Singapore (Lord Diplock, Lord Keith of Kinkel, Lord Roskill, Lord Brightman and Sir John Megaw).

The appellants were the owners and the respondents were the purchasers of the property known as Kaolim Building. The owners bought the property in June 1976. To complete the purchase, they mortgaged the property twice. On 10 March 1980, the mortgagee bank offered the property for sale by tender. On 20 March, the purchasers' tender was accepted by the bank. The property was subsequently conveyed to the purchasers. On 2 April 1980, the bank received a letter from the Property Tax Division requesting payment of S$521,242.53 in settlement of the three years' arrears in property tax. Copies of the said letter were sent to the solicitors for the owners, purchasers and the bank. The bank claimed that as the property was sold subject to the condition that the purchaser 'shall be deemed to have purchased with full knowledge and notice of all É charges', the claim for property tax should be made to the purchasers. The purchasers joined issue with the bank on the interpretation of the said condition in the Conditions of Sale in the tender document. They took out a vendor and purchaser summons in which the bank were the first defendants and the owners, the second defendants. The learned Chief Justice granted a declaration in favour of the purchasers that upon payment of the arrears of the property tax to the Comptroller at the date of completion in respect of the property, the purchasers were subrogated to the rights of the Comptroller or the owners to the extent of the amount paid in any surplus arising from the proceeds of sale held in trust for the owners. The owners appealed. They relied on cl 16(c) of the Conditions of Sale.

Held, dismissing the appeal: (1) the appellants were not a party to the contract of sale between the bank and the respondents. The appellants were a stranger to the contract and, therefore, could not rely on the said cl 16(c) nor any other provisions in the said contract; (2) cl 16(c) is one of the general standard clauses found in a tender document. It has no application to sale of property by a mortgagee; (3) there is no reason why in principle subrogation should be limited to the so far recognized categories of cases, ie suretyship, bills of exchange, insurance and administration of trusts and estates; (4) the learned Chief Justice directed the purchasers to pay the arrears of property tax so that the property was freed of charge. He must have concluded that reason and justice demanded that the purchasers be subrogated either to the rights of the Comptroller or the owners who would be entitled to the surplus of the proceeds of sale of the property held in trust for them by the bank. In practical terms, the purchasers having paid the Comptroller, they would deduct that amount in making payment of the purchase price to the bank. There was, therefore, no reason to interfere with the order of the Chief Justice.

Kaolim Pte Ltd v United Overseas Land Ltd [1982] 1 MLJ 168 Court of Appeal, Singapore (Kulasekaram, Sinnathuray and D'Cotta JJ).

Bata Shoe Co Ltd v Chief Assessor [1971] 1 MLJ xli Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Tan Beng Seng, Members).

A preliminary point was taken in this appeal that the notice issued by the Chief Assessor, under s 18(2) of the Property Tax Ordinance 1960, was irregular and invalid against the appellant company, the owner of a vacant piece of land of 125,106 sq ft. It was submitted that as under s 2 of the ordinance, the Chief Assessor may adopt one of several methods in assessing the annual value of property, an owner of a property was entitled to know at the time of the proposed amendment to the annual value of his property, which one of the several methods the Chief Assessor had adopted.

Held: (1) as a representative of the appellant company was told soon after the company lodged the objection under s 18(3) of the ordinance to the proposed amendment under s 18(2) of the ordinance that the Chief Assessor had exercised the option under provisio (b) to the definition of 'annual value' in s 2 of the ordinance, the appellant company knew the basis of the assessment; (2) as the Chief Assessor had valued the land, of less than three acres, of the appellant company as a whole and not in portions, the principles enunciated in Kim Seng Land Co Ltd v The Rural Board, Singapore [1935] MLJ 153, where land of over 2,454 acres was apportioned and different values put to the different portions, do not apply.

Hotel Malaysia Ltd v Chief Assessor [1969] 2 MLJ xxxiv Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Chan Yang Fong, Members).

The present appeal pertained to five adjoining lots of land at Nos 103 to 115 Anson Road. These five lots with a total area of 1613.2 sq m were part of a larger site measuring 4,673.6 sq m approved for hotel development. The said premises were sites of pre-war shophouses. They were apparently demolished on 15 June 1981 with the exception of No 105 whose tenant was holding out for greater compensation. By five notices dated 18 November 1981, issued under s 18(2) of the Property Tax Act (Cap 144, 1970 Ed), the Chief Assessor proposed annual values of S$151,800, S$77,700, S$82,300, S$150,200 and S$155,000 for the five lots respectively, based on a value of S$7,650 per sq m. This valuation was on the basis that there was 'no previous annual value' on the subject lots and that they were 'new properties being assessed for the first time'. The appellants appealed against the Chief Assessor's proposal.

Held, allowing the appeal: the capital value of each lot should be S$1,215 per plot ratio or S$6,200 per sq m. The annual value of the five plots should therefore be S$123,000 (Lot 147), S$63,000 (Lot 148-2), S$66,700 (Lot 148-3), S$121,700 (Lot 148.4), and S$125,650 (Lot 148.5).

Harbour View Hotel Pte Ltd v Chief Assessor [1983] 2 MLJ cxxxi Valuation Review Board, Singapore (Michael Khoo Kah Lip, Chairman, Hiew Siew Nam and Chua Swee Choo, Members).

The appellant is the owner of Nos 87 and 89 Victoria Street, Singapore. No 87 Victoria Street is a five-storey hotel with 40 standard size and ten economy size rooms. No 89 Victoria Street is a ground floor tailor shop. The appellant purchased both these properties (erected on Lot 97-2 Town Subdivision XI) for S$700,000 on 8 April 1970. In respect of the hotel, rent was increased from S$6,800 per month to S$7,200 per month on 1 April 1969 and from S$7,200 per month to S$8,200 per month on 1 March 1972. The increase in rentals came to the notice of the Chief Assessor on 15 January 1972. As regards the tailor shop, on a tenant's return, it was found that the gross rental was S$250 per month from 1960 to 1966; S$285 per month for part of 1967 and S$350 per month for the rest of 1967 and 1968. In 1973, the properties were reassessed. The hotel was assigned an annual value of S$96,240 and the tailor shop was assigned an annual value of S$4,200 with effect from 1 January 1973. At the time of the reassessment, the owner was the appellant the previous owner being Messrs Yeow Kim Pong Realty Ltd. The Comptroller of Property Tax issued a notice under s 19A(1) of the Property Tax Act (Cap 144, 1970 Ed) on the appellant proposing to recover tax from 1 April 1969 to 31 December 1972 in respect of the hotel and from 1 January 1967 to 31 December 1972 in respect of the tailor shop. The issue was whether the appellant was liable for property tax prior to the date on which she was owner of the hotel and tailor shop.

Held: (1) the appellant does not fall within any of the categories of 'owner' as set out in the definition of the Act prior to 8 April 1970. She had no interest whatsoever in the two properties prior to that date; (2) as far as s 19(5) of the Act is concerned the Comptroller may recover tax for any period of time if he is satisfied that one of the two circumstances referred to in it had occurred; (3) where the owner on the current Valuation List had no knowledge of the circumstances referred to in s 19(5) of the Act, the Comptroller may proceed against the owner who had been on the Valuation List at the relevant time.

Ong Poh Tan v Comptroller of Property Tax [1977] 1 MLJ xliii Valuation Review Board, Singapore (Sinnathuray (Chairman).

The subject matter of the appeal was a residential house owned by the appellant company and occupied by one of its employees. It was submitted for the company that as the house was occupied by an employee of the company, it should be considered as owner-occupied and there should be no change in the Valuation List of the annual value ascribed to it.

Diethelm & Co Ltd v Chief Assessor [1969] 2 MLJ xxii Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Chan Yong Fong, Members).

In an appeal to the Valuation Review Board against the decision of the Chief Assessor on the proposed annual value of certain premises, an important preliminary point was taken by the appellant that is, whether a copy of the report submitted to the board by the Chief Assessor pursuant to s 28 of the Property Tax Ordinance 1960 should be made available to the appellant before the hearing of the appeal by the board. The argument for the disclosure of the report to the appellant was that it would be contrary to the rules of natural justice for the board to take into consideration any evidence to which the appellant had no access.

Held: it was not one of the rules of natural justice that the appellant should as of right be entitled to the report of the Chief Assessor supplied to the board under s 28 of the Property Tax Ordinance 1960. The rules of natural justice would be satisfied if the board informed the appellant and gave him a fair opportunity to correct or contradict any relevant statement in the report prejudicial to him.

Cho Chih Yee v Chief Assessor [1968] 2 MLJ xxxii Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Chan Yang Fong, Members).

The appellants were the owners of the Lot 127-20 Mukim III containing an area of 6,807 sq ft. They bought the property sometime in 1970. There were two wooden houses on this property known as Nos 40 and 42 Alexandra Terrace. These two houses were demolished sometime on or about 5 September 1973. These wooden houses were demolished because a godown/warehouse was to be erected on the land. The plans for the godown/warehouse were approved on 27 February 1973. The Chief Assessor by a Notice dated 28 October 1974 proposed to increase the annual value to S$10,200 with effect from 1 January 1974 on the basis that the property was now vacant land. It would appear that the Controller of Property Tax followed this up with a Notice under s 19A of the Property Tax Act (Cap 144, 1970 Ed) backdating the collection of tax with effect from the date of demolition of the two wooden houses. For the taxpayer it was contended that: (1) the tax paid on the increased annual value for the period of 5 September 1973 to 31 December 1973 should be refunded. This was because the proposed increase of tax was with effect from 1 January 1974 only; (2) the Chief Assessor had not taken into consideration that about 708 sq ft of the property was to be surrendered to the government. The Chief Assessor had arrived at the annual value of S$10,200 using the area of 6,807 sq ft instead of the lesser area of 6,099 sq ft; (3) s 2(b) of the Property Tax Act could not be applied in this case. Section 2(b) could only apply to residential land and not 'industrial land'.

Held: (1) there was no notice of appeal in respect of the first ground. In view of s 17(7)(b) of the Act, the Controller had the right to recover tax from the date of demolition of the houses based on the revised annual value of the property as and when it was done; (2) it was agreed by the parties that 708 sq ft of land was to be surrendered to the government. The appellants have had in fact less land. The area of 6,099 sq ft was the correct area that should be taken into consideration in determining the annual value in this particular case; (3) it was not a valid point to argue that because a word in a definition section had been defined in a particular way, that another word defined in the same definition section could affect the other word. This could be illustrated by using the definition of 'industrial premises' as appearing in the Act.

Singapore Woodcraft Manufacturing Co Pte Ltd v Chief Assessor [1976] 2 MLJ lxxv Valuation Review Board, Singapore (Sinnathuray, Chairman, Lye Yuen Weng and Hiew Siew Nam, Members).

Chief Assessor, Property Tax v Town and City Properties Ltd [1967] 1 MLJ 188 High Court, Singapore (Winslow J).

A owned a house which was built in 1966. In 1970, there was a general revaluation of properties in the vicinity and the annual value was fixed at S$8,400. In 1975, A carried out extensive renovations to the house which substantially increased the floor area. In November 1976, the Chief Assessor increased the annual value to S$28,000. This was based on current rentals obtained for comparable houses in the vicinity. No similar increase in annual value was assessed for other houses in the vicinity which had not been renovated or let out. A challenged the increased assessment, inter alia, on the ground that he had been denied equal protection of the law contrary to art 12(1) of the Constitution. The High Court accepted A's argument, but on appeal, the decision of the judge was reversed. A appealed to the Privy Council.

Held, dismissing the appeal: (1) absolute equality in the field of valuation for property tax purposes is not attainable. Inequalities which result from the application of a reasonable administrative policy do not amount to deliberate or arbitrary discrimination that would justify judicial intervention; (2) it was impracticable for the Chief Assessor to make up a new valuation list by revaluing all properties every year. The most that the Chief Assessor could do was to carry out a general valuation as and when resources permitted. In the meantime, he revalued in each year properties which had undergone a specific change of circumstances; (3) the Property Tax Act (Cap 144, 1970 Rev Ed) aims at practical equality of valuations on an up-to-date basis. The extent to which practical equality was capable of being achieved, in an inflationary environment, depended on the resources available to the Chief Assessor's ability to revalue all properties simultaneously. It was these factors and not any intentional violation of the essential principle of practical uniformity that led to the disparities between the annual value of A's property and the other properties in the vicinity; (4) accordingly, there had been no violation of the principle of equal treatment by the law and the appeal was dismissed.

Howe Yoon Chong v Chief Assessor and Comptroller of Property Tax [1990] 1 MLJ 321 Privy Council Appeal from Singapore (Lord Keith, Lord Templeman, Lord Griffiths, Lord Ackner and Lord Lowry).

The principle to be applied in assessing the annual value of a shophouse is the zoning principle which takes into account the fact that the front portion of a shop is more valuable than the rear portion.

Neo Toon Tee & Ors v Chief Assessor [1968] 2 MLJ liii Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Tan Beng Seng and CA Perera, Members).

Since 1 January 1977, a piece of vacant land at Binjai Hill, known as Lot 267, Mk 16 was assessed with an annual value of S$23,000. It was assessed separately from another lot, Lot 268, Mk 16. Both lots were owned by the appellant. In September 1982, under a general reassessment exercise of lands, Lot 267 was reassessed as a vacant piece of land at an annual value of S$53,300 with effect from 15 September 1982. On 30 September 1982, the appellant lodged an objection to the proposal to amend the annual value of Lot 267 wherein for the first time it was brought to the knowledge of the Chief Assessor, that the said lot had been amalgamated with Lot 268 (since 18 August 1980) into Lot 1236 and that Lot 267 as such no longer existed. On 20 May 1983, ministerial sanction was obtained when the Comptroller declared the portion of land formerly identified as Lot 267 and since the aforesaid amalgamation on 18 August 1980 had become appurtenant to No 3, Binjai Hill, as 'excess land' by which it was deemed 'vacant land' under s 2(d) of the Act. On 11 February 1985, the Chief Assessor issued a s 12(3) notice under the Property Tax Act (Cap 144, 1970 Ed) (hereinafter referred to as the Act). In this notice, the Chief Assessor informed the appellant of his decision to make an amendment to the valuation proposed in his earlier notice under s 18(2) of the Act dated 15 September 1982. The effective date of the proposed amendment was to be 20 May 1983 and not 15 September 1982 as was stipulated in the earlier notice. The question before the court was whether the Chief Assessor had, in the first instance, proceeded correctly in accordance with the Act in assessing the property at the annual value that he proposed.

Held, allowing the appeal: (1) any proposal to assess or to amend the annual value of that portion as on 15 September 1982 without first delineating that parcel as 'excess land' under s 2(d) of the Act would therefore not be in accordance with the provisions of the Act and be unauthorized and accordingly, any notice issued as a consequence of that initial unauthorized notice cannot be valid; (2) once the Chief Assessor became possessed with the knowledge that the portion of land in question was now occupied as appurtenant to No 3, Binjai Hill, he should have treated his s 18(2) notice dated 15 September 1982 as cancelled and proceeded afresh under the provisions of s 2(d) of the Act.

Njoo Tjing Khoen v Chief Assessor [1987] 2 MLJ iv Valuation Review Board, Singapore (EC Foenander, Chairman, Chan Sik Kwan and Chua Swee Choo, Members).

The subject matters of the appeals consist of flats in a block of flats. The appellant company had built the flats not for letting but for sale to the public. The unsold flats were unoccupied. On 4 October 1966, the architects responsible for the building of the flats issued a certificate that the flats were completed and ready for occupation. Up to the date of hearing, certificates of fitness had not been issued by the Chief Building Surveyor for any of the flats. The principal argument for the appellant company was that though property tax had been levied in respect of immovable property in Singapore based on the concept of 'ownership', the introduction of s 6A to the Property Tax Ordinance 1960 (s 7 of RS(A) No 13 of 1966) had substituted 'occupation' for 'ownership'. Therefore, it was contended that as the flats were unoccupied, the Chief Assessor was wrong in law in proposing an annual value for the flats. The subsidiary argument was that as the Chief Building Surveyor had not issued certificates of fitness, the flats were not fit for occupation and were, therefore, not competed for the purpose of s 19 of the ordinance.

Held: (1) upon the consideration of the ordinance as a whole, property tax in Singapore is levied on the 'owner' of a property and not on an 'occupier' of the property. The fact that the appellant company built the flats for selling and not letting does not make them any less the owners of the flats, for the purpose of property tax; (2) the enactment of s 6A of the ordinance (s 7 in RS(A) No 13 of 1966) has not altered the concept of the levy of property tax. It has merely put the law back to what it was prior to the enactment of the principal ordinance. It provides for a refund of property tax that had been paid under s 6 of the ordinance in respect of any building during which the building is unoccupied; (3) s 19(1) of the ordinance which requires an owner of a new building to pay property tax from 'the date of completion' does not mean from the date of the issue of a certificate of fitness by the Chief Building Surveyor but the date of completion as determined by the Chief Assessor. The architect's certificate having been issued on 4 October 1966, the appellant company was liable to pay property tax with effect from that date.

Malaysia Investments Ltd v Chief Assessor [1969] 1 MLJ xlix Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Mohamed bin Haji Ali and Kwee Thiam Sioe, Members).

The subject property was a large timber processing factory situated at 34 Penjuru Road in Jurong Industrial Estate. It stands on land leased from the Jurong Town Corporation ('JTC') for 30 years with effect from 16 July 1971. The subject property had a built-up area of 36,157.88 sq m and was owner-occupied. It was previously valued at an annual value of S$1,774,700 with effect from 29 July 1982. This same annual value was ascribed to it (with effect from 1 January 1985) when it was included in the 1985 Valuation List to which the appellant (owners) lodged an objection in writing with the Chief Assessor, This objection was disallowed by the Chief Assessor. The appellant appealed.

Held, dismissing the appeal: (1) an owner of property who is dissatisfied with the assessment of its value by the Chief Assessor and who brings the matter on appeal before the board, under the Act, will have the burden of satisfying the board that the Chief Assessor had come to a wrong decision in his assessment of the value of the property and it is not for the Chief Assessor to justify his decision; (2) the assumptions and bases relied on by the appellant to arrive at the rates proposed were arbitrary and unconvincing; (3) the board was not satisfied that the appellant, who had been unable to submit any relevant evidence to properly rebut the assessment of the subject property by the Chief Assessor, has any foundation in alleging that the Chief Assessor was wrong in acting as he did.

Southern Wood Products (Pte) Ltd v Chief Assessor [1978] 2 MLJ ix Valuation Review Board, Singapore (EC Foenander (Chairman).

The subject property was a shop unit with a floor area of 21.84 sq m situated in a 15-storey shopping/residential development known as Katong Plaza, off East Coast Road. A temporary occupation licence ('TOL') had been issued on 17 August 1981 in respect of the subject property. On 9 October 1981, the subject property was transferred to the appellant subsequent to which on 1 September 1982 it was let out at a rent of S$1,180 per month. On 25 April 1983, the Chief Assessor and the Comptroller of Property Tax issued their respective notices under ss 18(2) and 19A(1) of the Property Tax Act (Cap 144, 1970 Ed) (hereafter referred to as the Act) to the appellant as a result of which taxes were recovered in respect of the subject property with effect from 17 August 1981 (the date when the TOL was issued), based on an annual value of S$14,160. Notices of objection were sent by the appellant to the Chief Assessor and Comptroller on 2 June 1983 who replied thereto on 9 July 1984 with their respective notices under ss 12(3) and 19A(3) of the Act, making no amendments to the annual value of the subject property and the recovery of tax on the same. The appellant did not thereafter appeal to the board. On 1 July 1985, following the letting by the appellant of the subject property at a rent of S$850 per month with effect from 1 January 1985, the Chief Assessor issued a notice under s 18(2) of the Act amending the annual value of the subject property to S$7,730 with effect from 1 January 1985. The appellant objected to this proposed annual value but this was turned down by the Chief Assessor. The appellant appealed. The appellant argued that as only a TOL has, on 1 January 1985, been issued for the subject property, the Chief Assessor was thereby not authorized as yet to assess the property for property tax purposes and to levy any tax thereon from the owner.

Held, dismissing the appeal: the Chief Assessor was quite properly acting within the relevant provision of the Act when he decided to ascribe an annual value of S$7,730 on the subject property with effect from 1 January 1985.

Yap Swee Hoo v Chief Assessor [1987] 2 MLJ vii Valuation Review Board, Singapore (EC Foenander (Chairman).

This case concerned the valuation under s 20 of the Property Tax Act (Cap 254) ('the Act'), by the Chief Assessor of Property Tax, of a property, lot 111-33. The Chief Assessor had, on 19 February 1990, issued a valuation notice under s 20(2) proposing an annual value of S$2,222,000 in respect of this property and an adjacent property lot 111-32. The appellants, who were owners of both properties, objected to this assessment. This led to another revaluation by the Chief Assessor and further objection by the appellants. Eventually, the Chief Assessor decided to revalue the annual value of lot 111-33 to S$1,740,000 with effect from 1 January 1990, and S$1,838,000 with effect from 1 January 1991. These figures were based on 5% of the estimated value of the property, as prescribed by s 2 of the Act. The appellants argued that it was wrong for the Chief Assessor to assess annual value on this basis, and that s 2 prescribed that in the first instance, the annual value should be assessed on the expected reasonable rental and that it was only where it was not possible or practical should the Chief Assessor assess the annual value of the property at 5% of its estimated value. As a preliminary point, the appellants argued that as the service of the first notice by the Chief Assessor to revalue the property was not received by the appellants, all subsequent proceedings were void and of no effect. The Valuation Review Board upheld the Chief Assessor's dismissal of the appellants' objections. The appellants appealed to the High Court.

Held, dismissing the appeal: (1) on the preliminary point on the service of notice, there were facts to suggest that the Valuation Review Board drew the correct inferences. The officer in charge of mailing the valuation notices had testified that there was another valuation notice, to another property owner, sent on the same day in which the valuation notice to the appellants was sent. That property owner had acknowledged receipt of the notice. On a balance of probabilities the appellants' notice was posted. In any event the purpose of the notice of the proposed amendment of the annual value of the property was to enable the property owner to object and be heard. Here, the evidence was that the appellants were aware of the proposed amendments about a month after the notice was posted and extension of time was given for objection to be filed by the appellants and the objection was considered by the Chief Assessor. The Act was therefore complied with; (2) on the main issue whether in all the circumstances it was proper for the Chief Assessor to assess the annual value based on 5% of the annual value, the primary method for determining annual value was based on the expected reasonable rental of the property. However, as a method of construction simpliciter, the Chief Assessor had the sole discretion to decide the method of valuation taken. It was not possible to read into s 2 the restriction that validation based on 5% of the estimated value of the land could only be resorted to if it was impossible or impractical to adopt the hypothetical rental basis. In any case, this construction was consistent with the purpose and object of the Act, as disclosed by the speech of the Minister on the occasion of the second reading of the Bill containing the present s 2; (3) there were grounds for the Chief Assessor to take 5% of the estimated value of the property as a basis for arriving at the annual value. The property was capable of being rented out but it was clear that there was no intention of renting out the property. Provisional approvals were also given for the property to be redeveloped, the first of which was granted on 11 September 1980. In the circumstances the Chief Assessor could not be faulted for having decided that an assessment based on the property value was appropriate.

Lee Tat Development (Pte) Ltd v Chief Assessor [1995] 3 SLR 855 High Court, Singapore (Chao Hick Tin J).

The four appeals were heard together as they raised the same question for decision, namely, whether the appellants whose names were included by the Chief Assessor in the Valuation List were 'owners' within the meaning given to that word in s 2 of the Property Tax Ordinance 1960 (RS(A) No 13 of 1966) and, therefore, liable to property tax ascribed to them. In Appeal No 225 of 1968, the properties were Lot 252 and Lot 253, vacant land, at Battery Road, ear-marked for the erection of an 18-storey office building. The appellant company holds the land from the state on a 999-year lease with no prohibition against sublease or assignment. In Appeal Nos 105 and 106 of 1966, the properties were a wood-working factory and an engineering workshop respectively, at Jalan Lembah Kallang, designated as 'industrial premises'. The appellant companies are lessees of state land for 99 years. A clause in the respective leases is identical: 'Not to demise or assign the said land in parcels or otherwise than the entirety thereof except in the case of a lease not exceeding seven years'. The last appeal, Appeal No 64 of 1968, was a vacant land at Whitley Road, for use as a petrol station. By an agreement, the appellant company had 'licence and authority' to enter upon the said land, state land, to erect a petrol station. A clause in the agreement provided that the company 'will not during the said period of 18/24 months assign, sublet or part with the possession of the said land or any part thereof or the benefit of this agreement without the previous written consent of the landlord'. The main argument for the appellants was that the Property Tax (Amendment) Act 1968, in amending s 2 of the ordinance, by inserting provisio (f)(i) therein, has put right a material defect in the definition of 'owner' in the said section. It was said by providing in the said provisio that a grantee or lessee of state land for a period exceeding three years shall be deemed to be owner thereof meant that a lessee of state land is not an 'owner' of property under the principal ordinance. Further, in Appeal Nos 105 and 106 of 1966, it was contended that the clause of the lease did not empower the appellants to demise or assign the land. Therefore, it was said that as they could not receive rents, they were not owners within the definition of 'owner' in s 2 of the ordinance. Finally, for the appellant company in Appeal No 64 of 1968, it was further contended that as the company was not a lessee but a licensee under the agreement it cannot, by a sub-licence, receive 'rent' under the ordinance.

Held: (1) as the appellants in Appeal No 225 of 1968 and Appeal Nos 105 and 106 of 1966 were empowered under their respective agreements to demise or assign their lands, and as they were those who would receive 'rent' if their respective properties 'were let to a tenant', they were 'owners' within the meaning of that word in s 2 of the Property Tax Ordinance 1960; (2) as the appellant company in Appeal No 64 of 1968 was not a lessee but a licensee, if the company were to sub-license the land, it would not receive a 'rent' within the meaning of that word in the ordinance; (3) as the Property Tax (Amendment) Act 1968 was not in force, the board need not consider the amendment. In any event, proviso (f)(i) in s 2 of the ordinance does not amend the definition of 'owner' in the principal ordinance. It only seeks to add to the provisoes to the definition of 'annual value' in s 2 of the ordinance by providing an additional method of 'assessing the annual value of any property'.

McAlister Developments Ltd & Ors v Chief Assessor [1969] 1 MLJ xlv Valuation Review Board, Singapore (TS Sinnathuray, Chairman, Lye Yuen Weng and Chang Yang Fong, Members).

In this case, the appellant, Howe Yoon Chong ('the owner'), is the owner of a two-storey detached bungalow in a high class residential estate called Binjai Park. Following a general reassessment in 1970 of all properties in Binjai Park, the annual value of the property was assessed at S$8,400. Since the property was owner-occupied, the yearly property tax payable was S$552, and the owner enjoyed the concessions granted by the Comptroller of Property Tax to all owner-occupiers in Singapore. The Chief Assessor (the first respondent) ascribed to the building in the property the 'reduced' area of 2,340 sq ft thus producing a unit rate of annual value of S$3.59 per sq ft. In December 1975, the owner carried out substantial alterations and additions to the property. The bedrooms increased from two to five, and the floor area had increased to 5,554 sq. ft. For the purpose of calculating the annual value, the reduced area was put at 4,526 sq ft. The owner gave notice of the renovation works to the Chief Assessor under s 17(4) of the Property Tax Act (Cap 144, 1970 Ed). After receipt of this notice, the Chief Assessor by a letter dated 23 August 1976 gave the owner notice that he proposed amending the 1976 Valuation List by increasing the annual value of the property from S$8,400 to S$28,800 effective 1 January 1976. On the same day, the Comptroller gave notice under s 19(3) of the Act that property tax of S$1,224 per year was payable with effect from 1 December 1975. The Chief Assessor and the Comptroller both disallowed the owner's objections, whereupon the owner appealed to the Valuation Review Board. The board dismissed his appeals based on three main issues, holding that: (a) the Chief Assessor did not err in law and in fact in increasing the annual value of the property in comparison with other similar properties in Singapore; (b) the proposed annual value of S$28,800 was not manifestly excessive or wrong in law and should not remain at S$8,400; and (c) the proposed valuation or increased valuation of the property did not violate the Constitution or the Act. Against that decision of the board the owner appealed to the High Court. He complained that by reason of an aspect of the administrative practice of the Chief Assessor he had not been accorded the equal protection of the law under art 12(1) of the Constitution, the supreme law of Singapore. The owner contended that he had retained his owner-occupier status at all material times. The property should not have been assessed on rental values current in 1976, which took him out of the owner-occupier class. He said that he was unfairly treated if he were to be foisted with the increase of a notional rental value. On his contention, the unit rate of S$3.59 should have been multiplied by the new reduced area of 4,526 sq ft, which would have produced the annual value of only S$16,240, which should have been applied until the next general reassessment of annual values in 1979 or 1980 of all properties in Binjai Park.

Held, allowing the appeal: (1) the administrative practice carried out in this case was inconsistent with the provisions of art 12(1) of the Constitution. The owner should have been accorded the privilege of the owner-occupiers until the next 'general assessment' in 1979 or 1980. Any increase in the annual value of the property should have been limited to the unit rate per sq ft current in 1970 which should be applied to what is technically called the new 'reduced' area. The owner, as an owner-occupier, was similarly situated in all material respects with other owner-occupiers whose properties were fortuitously not renovated, and he should not be treated differently; (2) and (b) the obiter dicta in that case, which were inapplicable in that other case, fairly and squarely govern the facts in this case. The Valuation Review Board failed to appreciate these crucial distinctions and were accordingly wrong in law; (3) the Privy Council in stressing the supremacy of the provisions of the Singapore Constitution pointed out that, in its view, an intentional and systematic under-valuation of the type and nature considered by the US Supreme Court in Sioux City Bridge Co v Dakota County [1922] 260 US Reports 441 would be contrary to the equal protection clause; (4) the decision of the Privy Council in the other case of the owner would show that (a) the ratio decidendi of that case, limited to the facts which the owner was able to prove in that case, does not apply to the present case;in the circumstances, the appeal is allowed with costs and, applying the principle of uniformity enunciated in the dicta of Lord Fraser of Tullybelton, the annual value of the property for the year 1976 should be S$16,240.

Howe Yoon Chong v Chief Assessor, Singapore & Anor [1985] 1 MLJ 182 High Court, Singapore (Lai Kew Chai J).

This is an appeal against the decision of the High Court ([1985] 1 MLJ 182) allowing the appeal against the decision of the Valuation Review Board (see [1985] 1 MLJ 183). The respondent is the owner of a two-storey detached residential house (built in 1966) No 9 Binjai Walk, erected on a site containing an area of 18,902 sq ft ('the property'). At all material times, he was and still is in occupation of the property, which was first assessed at an annual value of S$2,400. As it was owner-occupied, the respondent paid property tax at a concessionary rate of 23% of the annual value amounting to S$552 per annum. Following a general assessment of annual value of properties in the Binjai Park area, the annual value of the property was increased from S$2,400 to S$8,400 as from 9 February 1970. In 1975, substantial alterations and additions were made to the house which were completed in December 1975 at a cost of S$48,000 resulting in an increase of the net floor area of the house from 3,547 sq ft to 5,554 sq ft and an increase in the number of bedrooms from two to five. The Chief Assessor, upon notification, proceeded to amend the Valuation List 1976 by increasing the annual value of the property to S$28,800 with effect from 1 January 1976 and notified the respondent accordingly. The Comptroller refused to amend his proposals. The respondent appealed to the Valuation Review Board. The board dismissed his appeal, upon which he appealed to the High Court. The High Court allowed his appeal. The High Court concluded that the administrative practice of the Chief Assessor was inconsistent with the provisions of art 12(1) of the Constitution. The learned judge, applying the principle of uniformity, held that the annual value of the property for the year 1976 should be S$16,240. The appellants now appeal against that decision. The sole issue before the Court of Appeal is whether the assessment of annual value was made in contravention of art 12(1) of the Constitution.

Held, allowing the appeal with costs: the action taken by the Chief Assessor in (i) proceeding under s 18(7) of the Property Tax Act (Cap 144, 1970 Ed) to amend the Valuation List as regards the property; (ii) revising the annual value of the property to S$28,800 in accordance with s 2 of the Act, thus updating the annual value of the property; and (iii) not revising the annual values of the other properties in the Binjai Park area in which there had been no change of circumstances of the kind laid down in s 18 had not in any way resulted in a situation which is 'inconsistent with the equal protection clause of the Constitution'.

Chief Assessor and The Comptroller of Property Tax, Singapore v Howe Yoon Chong [1988] 1 MLJ 139 Court of Appeal, Singapore (Wee Chong Jin CJ, Sinnathuray and Thean JJ).

This was an appeal from an order of the Valuation Review Board. The property in question was sold to one Howe Min Cheng and another who purchased it as tenants in common in equal shares for S$20,000. Subsequently, there was a transfer by Howe Min Cheng of the one undivided equal half-share standing in his name to the appellant. The Commissioner of Stamps was satisfied that no consideration had passed and the deed was duly stamped at S$10. A notice of the transfer was given to the Chief Assessor who thereupon served a notice to amend the Valuation List by increasing the annual value of the property from S$1,340 to S$26,000. The appellant objected to the amendment and gave notice of the objection to the Chief Assessor. The Chief Assessor turned down the objection and the appellant appealed to the Valuation Review Board. At the hearing before the board, the appellant's valuer gave sworn evidence on which he was cross-examined. The Chief Assessor himself gave no evidence nor did he call anyone to give evidence on his behalf. The Valuation Review Board did not accept the evidence of the appellant's valuer and in the circumtances relied on the report of the Chief Assessor and dismissed the appeal. The appellant appealed.

Held: (1) the procedure adopted by the Valuation Review Board in the appeal was wrong. The Chief Assessor or his representative should also have been called on to give sworn evidence on the valuation of the property on which he could then have been cross-examined by the appellant. The board should not have treated the report of the Assessor as evidence. Once the board had rejected the evidence of the appellant's valuer there was no other valuation before it, for the simple reason that the Chief Assessor had not called any evidence upon it; (2) the appellant was entitled to have free inspection of the valuation lists from 1960 to 1975 as requested by him; (3) in so far as the Property Tax (Fees) Regulations 1975 purported to levy fees, they are ultra vires the Property Tax Act and, therefore, void and of no effect; (4) the transfer of the undivided half-share to the appellant in this case was a transaction in respect of which no consideration passed and the transfer only operated to transfer the bare legal estate to the appellant, the beneficial interest having been with him since November 1960; (5) in this case, therefore, the Chief Assessor had acted outside the scope of s 8(7)(a)(iii) of the Property Tax Act (Cap 144, 1970 Ed) and, therefore, the notice issued by him was invalid and of no effect and any proceedings stemming from it were null and void.

Howe Yoon Chong v Chief Assessor, Property Tax, Singapore [1978] 2 MLJ 87 High Court, Singapore (Rajah J).

The present appeal arose out of the Chief Assessor's decision (see [1978] 2 MLJ 87) to revise upwards the annual value for the year 1973 of a vacant plot of land belonging to the respondent and another as tenants in common in equal shares. The annual value of this property had stood at S$1,340 since 1953 as then assessed under the Municipal Ordinance. In April 1973, the respondent's father declared that he held the equal half-share in the property in trust for the respondent after reciting that his share was purchased out of moneys provided by the respondent. On 29 June 1973, the respondent gave notice to the Chief Assessor of the transfer of his father's equal half-share in the property to him. Subsequently, the Chief Assessor, acting under the provisions of s 18 of the Property Tax Act (Cap 144, 1970 Ed) gave notice on 1 October 1973 to the respondent that he proposed to amend the 1973 Valuation List by increasing the annual value of the property from S$1,340 to S$26,000. The respondent's objection to the proposed increase was rejected by the Chief Assessor. The respondent's appeal to the Valuation Review Board was dismissed. The decision of the High Court (see [1978] 2 MLJ 87) that the Chief Assessor in deciding to revise upwards the annual value for the year 1973 of a vacant lot owned by the respondent had acted outside the scope of s 18(7)(a)(iii) and, therefore, the Notice of 1 October 1973 was invalid and of no effect and any proceedings stemming from it were null and void. The Chief Assessor appealed.

Held, allowing the appeal: (1) (2) the Chief Assessor was empowered by s 18 of the Property Tax Act to amend the Valuation List in respect of a property included in the Valuation List where he was of the opinion that its annual value did not correctly represent the annual value evidenced by, inter alia, the consideration paid on the sale of 'similar property'; (3) a property must be assessed independently and correctly, ie in accordance with its annual value under the Property Tax Act. Once this had been done, it was immaterial that, as a consequence, other comparable properties were in fact assessed incorrectly. The remedy then would be for the Chief Assessor to correct, in accordance with the provisions of the Property Tax Act, any incorrect assessments;s 18(7)(A)(iii) did not limit the discretion conferred on the Chief Assessor to amend the Valuation List in respect of a property included therein only to cases where there had been a sale or transfer for consideration or for value of that property.

Chief Assessor, Property Tax, Singapore v Howe Yoon Chong [1979] 1 MLJ 207 Court of Appeal, Singapore (Wee Chong Jin CJ, Choor Singh and D'Cotta JJ).

International Associated Co (Pte) Ltd v Chief Assessor, Singapore [1980] 2 MLJ 110 High Court, Singapore (Choor Singh J).

The property in question in this case was a piece of freehold land known as Nos 83 and 85 Cavenagh Road on which stood two buildings. The property tax for 83 and 85 Cavenagh Road was based on an annual value of S$2,148 and of S$4,800 respectively. On 30 May 1971, the then owner of the said land, a third party, demolished the two houses. No notice of the said demolition, however, was given to the Chief Assessor as required by s 17(6) of the Property Tax Act (Cap 144, 1970 Ed) (hereinafter referred to as 'the said Act'). On 5 October 1972, the said land was sold by public auction to the defendant, less a scaled area of approximately 11,550 sq ft which had previously been surrendered to the government for the sum of S$1,400,000. Completion of the purchase was to take place on 6 November 1972. On 28 May 1973, the defendant entered into an agreement in writing to sell the said land to the plaintiffs free from encumbrances for S$2,729,650. The sale was subject to 'The (Revised) Singapore Conditions of Sale', Condition 6 of which provided that outgoings would be discharged by the vendor down to the day fixed for completion. Completion of the auction sale took place on 2 July 1973. A Notice of Transfer under s 17(1) of the Act, dated 12 July 1973, was sent to the Chief Assessor. The Comptroller of Property Tax served on the plaintiffs a notice under s 17(7)(b) of the said Act dated 1 July 1974 together with a notice also dated 1 July 1974, from the the Chief Assessor under s 18(2) of the said Act. By his Notice, the Chief Assessor sought to amend the 1974 Valuation List by increasing the then current annual value of the said land from S$2,148 and S$4,800 to S$136,480 with retrospective effect from 1 January 1974. The Comptroller sought to charge property tax on the said land based on the Chief Assessor's proposed annual value (not on the revised annual value as required by s 17(7)(b)) of S$136,480 for the period 30 May 1971, the date of the demolition of 83 and 85 Cavenagh Road, to 1 December 1973. To arrive at the proposed annual value, the Chief Assessor had treated the said land as vacant, as indeed it had been since 30 May 1971, and its value at S$2,729,650 as shown in the said Notice of Transfer. By his notice, the Comptroller claimed the tax payable, based on the proposed annual value of S$136,480 for the period of 30 May 1971 to 31 December 1974, to be S$176,323.35. The plaintiffs/purchasers did not object under s 18(3) of the said Act to such amendment and paid the tax. The Chief Assessor acting under s 18(6)(a) of the Act amended the 1974 Valuation List to include the said land in accordance with the notice of proposed amendment with effect from 1 January 1974. On 31 October 1974, the plaintiffs through their solicitors, made demand on the defendant for payment of the sum of S$102,624.15 being the amount of the tax payable for the period 30 May 1971 to 2 July 1973 (the date of completion). The present action was brought against the defendant for breach of agreement in not conveying the said land free of encumbrances and/or discharged of all outgoings.

Held, dismissing the plaintiffs' claim: (1) it is clear from the Property Tax Act that the Chief Assessor has no powers to amend any previous Valuation List retrospectively. His powers to amend retrospectively only relate to the current Valuation List and do not go further; (2) in the circumstances of the case, the Comptroller's notice was premature and therefore of no effect in creating a liability to tax under s 17(7)(b) of the said Act; (3) under the Act, only taxes levied by the Chief Assessor become a first charge on the properties concerned, whereas retrospective taxes levied by the Comptroller under s 17(7)(b) are not taxes chargeable on the properties concerned and can only be recovered by actions in personam; (4) if, on the other hand, a tax under s 17(7)(b) of the said Act is a chargeable tax under the Act and, therefore, an encumbrance on the said land on the date the said land was conveyed to the plaintiffs, there was no encumbrance on the said land on 3 July 1973 as the facts of the instant case the liability to tax could not have arisen before 1 July 1974, the date of the Comptroller's purported notice; (5) for there to be an outgoing, either the vendor must have incurred a liability or expense or a local or other authority must have incurred an expense in respect of the property before the date fixed for completion of the sale. In the instant case, the sum of S$102,624.15 was neither a liability nor an expense which the defendant had incurred in respect of the said land up to the date fixed for completion, namely 17 June 1973. It follows therefore that the sum of S$102,624.15 was not an outgoing within the meaning of Condition 6.

Goodyear Investments Pte Ltd v BA Lalwani & Anor (Third Party) [1980] 1 MLJ 268 High Court, Singapore (Rajah J).

Intercontinental Properties (Pte) Ltd v Chief Assessor/The Comptroller of Property Tax [1982] 1 MLJ 119 High Court, Singapore (Chua J).

Chief Assessor, Property Tax, Singapore v Howe Yoon Chong [1979] 1 MLJ 207 Court of Appeal, Singapore (Wee Chong Jin CJ, Choor Singh and D'Cotta JJ).

The appellant did not appeal against the part of the judgment. The Court of Appeal also held that the Valuation List itself was valid and went to decide the question of value against the appellant. It was argued before the Privy Council that: (a) the Court of Appeal was wrong in holding that the Valuation List was valid; and (b) the Court of Appeal ought not to have dealt with the question of value because they had not heard submissions from the parties on it.

Held: (1) on the evidence, the Valuation List was not so fundamentally defective as to be invalid. Even if it were accepted that, owing to shortage of manpower or some other reason, the list contained more defects than might have been expected, there was no evidence of the massive errors that would be required to justify a conclusion that the list was invalid; (2) a breach of the equal protection clause, that is art 8 of the Constitution, could not be established by proving the existence of inequalities due to inadvertence or inefficiency unless they were on a very substantial scale. Where the defects are the result of inadvertence or inefficiency, such as is alleged in this case, the test of unconstitutionality would not be substantially different from the test of validity of the List. In the present case defects on the necessary scale had not been proved to exist; (3) the Court of Appeal were therefore correct in holding that the 1973 Valuation List was not invalid; (4) as neither party had addressed the Court of Appeal on the question of value it was apparently common ground that if the Court of Appeal held the list to be valid the question of valuation would be best determined by a lower court. The case should therefore be sent back to the Court of Appeal for them to remit it to the High Court to determine the question of value in the light of such evidence limited to value as the parties may put before it. Obiter dictum: in any appeal where either the Chief Assessor or an owner intends to rely on comparisons with other properties, a list of the subjects alleged to be comparable should be supplied to the other party in good time before the hearing.

Howe Yoon Chong v Chief Assessor, Property Tax, Singapore [1981] 1 MLJ 51 Privy Council Appeal from Singapore (Lord Wilberforce, Viscount Dilhorne, Lord Fraser of Tullybelton, Lord Russell of Killowen and Lord Roskill).

The respondent company owns a rubber estate in the Federal Territory of Kuala Lumpur. The appellant issued a notice of the Valuation List showing a total annual value of RM2,134 in respect of the lots comprising the estate. It was alleged that some of the lots were vacant, unoccupied and not built upon and, therefore, must be assessed on the basis of 10% of the open market value under proviso (c)(ii) to the definition of 'annual value' in the Local Government Act 1976 (Act 171), and another lot was only partially occupied and built upon and, therefore, subject to assessment on the basis of 10% of the open market value under proviso (c)(i) of the definition. On appeal to the High Court, the annual value was reduced to RM277,832 which is the estimated gross annual rent. The appellant appealed.

Held, dismissing the appeal: (1) and none of them is vacant because they are planted with rubber trees and one of the lots contains buildings on the portion where rubber is not planted; (2) since the respondent company has cultivated the lots and used them for rubber tapping with exclusive possession, the lots are fully occupied. None of the lots is unoccupied or partially occupied under proviso (c) in the definition of 'annual value';the words 'partially built upon' and 'not built upon' in proviso (c) in the definition of annual value apply to land alienated subject to building category. Since all the lots comprising the estate in this case are agricultural land completely occupied and not vacant, they do not come under proviso (c) irrespective of whether they are built upon, not built upon or partially built upon and in respect of them the annual value should be the estimated gross annual rent.

Datuk Bandar, Kuala Lumpur v Bukit Jalil Estates Sdn Bhd [1988] 2 MLJ 179 Supreme Court, Kuala Lumpur (Wan Suleiman, Hashim Yeop A Sani and Wan Hamzah SCJJ).

In this case, the respondent company is the owner of a rubber estate in the Federal Territory. The appellant took the view that the whole estate is partially built upon and partly occupied, as only part of the area has been used to construct buildings, consisting of staff bungalows, labour lines and factories. The appellant, therefore, valued the lots on the basis of 10% of the open market value thereof and fixed the annual value of RM2,980,000. The respondent appealed to the High Court which ordered the amount to be reduced to RM353,882, which is the estimated gross annual rent. The appellant appealed.

Held, dismissing the appeal: (1) every one of the lots comprising the estate in this case is fully occupied since it is agricultural land planted with rubber and used by the respondent company for rubber tapping with exclusive possession. As such, it is not vacant land; (2) since the whole estate is a fully occupied estate and not vacant, therefore the proviso (c)(i) in the definition of 'annual value' in s 2 of the Local Government Act 1976 (Act 171) does not apply and the rates should be fixed on the basis of the estimated annual value.

Datuk Bandar, Kuala Lumpur v Hawthornden Rubber Estate Bhd [1988] 2 MLJ 183 Supreme Court, Kuala Lumpur (Wan Suleiman, Hashim Yeop A Sani and Wan Hamzah SCJJ).

In this tax appeal by the Revenue by way of case stated against the decision of the Special Commissioners, two questions requiring decisions, viz the date of acquisition and whether para 28, Sch 2, of the Real Property Gains Tax Act 1976 (Act 169), applies in this case. The respondent is the administrator of his father's estate as well as its sole beneficiary. After the death of the deceased (who died in 1941), the subject properties were transferred to the respondent as administrator. The issues arose when the ownership of the properties was transferred by him as administrator to himself as the beneficiary. They were registered in his name as the new owner on 4 September 1975. On 18 December 1978, ie fourth year after acquisition on 4 September 1975, the respondent sold the properties to a purchaser for RM160,000. The properties were valued at RM128,000 as at 4 September 1975.

Held: (1) the acquisition value for the purpose of s 12 of the Real Property Gains Tax Act is on the date of acquisition by the respondent as the beneficiary, which is the date of the vesting order, ie 4 December 1975; (2) as the respondent was not a bare trustee, para 28, Sch 2 does not apply in this case; (3) the appeal is allowed and the assessment is amended accordingly. The tax payable is RM4,661.60. The Revenue shall refund to the respondent the sum of RM7,327.80, ie the difference between the original requisition of RM11,989.40 and the amended tax of RM4,661.60; (4) the respondent is not entitled to claim interest on the balance of RM7,327.80. No order as to costs was made.

Director General of Inland Revenue v Ooi Guan Hoe [1986] 2 MLJ 385 High Court, Penang (Mohamed Dzaiddin J).

Pursuant to a debenture, X and Y were appointed as receivers and managers of M Sdn Bhd. On the date of appointment, M Sdn Bhd was indebted to the Bank of Nova Scotia, the debenture holder, for a sum of money. X and Y sold the only asset of M Sdn Bhd, a landed property, to K Sdn Bhd. By a notice of assessment, the Director-General of Inland Revenue informed X and Y of the amount of tax payable on the disposal of the landed property. Subsequently, P took over from X and Y. P then applied to the learned judge of the High Court for directions under s 183(3) of the Companies Act 1965 (Act 125) as to the priority of payment of the tax since the balance of the proceeds of sale was insufficient to pay the debenture holder in full if tax was paid in priority to the debt due to the debenture holder. The learned judge held that by virtue of s 21B(1)(a) of the Real Property Gains Tax Act 1976 (Act 169), the tax had priority over the amount due to the debenture holder. P then appealed to the Supreme Court.

Held, dismissing the appeal: (1) where there is no winding up and a receiver and manager is appointed, as in the instant case, the federal tax (ie the real property gains tax) is to be paid in accordance with the taxing statute concerned. In the instant case, it was not a question of whether the federal tax is a preferential debt. It was only a question of how and when that tax becomes payable by M Sdn Bhd, being the chargeable person under the Act; (2) in the instant case, K Sdn Bhd (the acquirer) did not comply with what it was statutorily bound to do under s 21B(1) of the Act but had instead passed the whole amount of the purchase price to X and Y, the receivers. The receivers had therefore received a sum part of which they ought not to have received. The Director-General of Inland Revenue was, accordingly, entitled to the amount of tax payable on the disposal of the landed property. As far as the tax was concerned, the question of priority did not arise.

Raja Arshad bin Raja Tun Uda & Anor v Director-General of Inland Revenue [1990] 1 MLJ 106 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

The appellant company was incorporated on 29 November 1963. On 26 February 1964, the appellant acquired a piece of land. The said land was sold on 17 November 1978. The appellant was assessed to real property gains tax on the gain which assessment was paid to the respondent. The respondent subsequently on 5 July 1980, raised an assessment in the sum of RM179,925 in respect of the gains arising from the said property in respect of income tax. The question before the Special Commissioners and the present court was whether the transaction, viz the sale of the said land by the appellant constituted an adventure in the nature of trade the proceeds of which are subject to payment of income tax under the Income Tax Act 1967 (Act 53) or whether the transaction was the realization of a capital asset the proceeds of which are subject to payment of real property gains tax under the Real Property Gains Tax Act 1976. The Special Commissioners held that the transaction was an adventure in trade and confirmed the assessment. The appellant appealed.

Held, allowing the appeal: (1) the Special Commissioners were wrong in their finding in the present case; (2) the Deciding Order of the Special Commissioners should be set aside.

Bukit Yew Sdn Bhd v Director General of Inland Revenue [1987] 2 MLJ 379 High Court, Kuala Lumpur (Harun J).

Raja Arshad bin Raja Tun Uda & Anor v Director-General of Inland Revenue [1990] 1 MLJ 106 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

By a notice of originating motion, the applicant applied for the following orders: (i) an order of certiorari to quash the notice of payment for the sales tax that was imposed on the applicant by the Director General of Customs and Excise ('the respon-dent'); and (ii) a declaration that the goods that were sold by the applicant to its two distributors in East Malaysia under two agency agreements were sold to them as independent parties within the meaning of s 7(1)(a) of the Sales Tax Act 1972 ('the Act'), and accordingly, the notice of payment for the sales tax was wrong in law and invalid. The respondent contended that the distributors were not independent of the applicant by reason of the conditions and restrictions in the agency agreements, and therefore, the sales tax was correctly assessed based on the sale value of the goods as defined under s 7(1)(b) of the Act. The applicant submitted that the tax should have been assessed based on the sale value of the goods as defined under s 7(1)(a) of the Act, that is, the price for which the goods were actually sold. It was further submitted that the conditions and restrictions in the agency agreements in no way encroached upon the management and affairs of the distributors, but were merely ordinary marketing arrangements. The applicant also submitted that the difference in price between the goods it sold to its East Malaysian and West Malaysian distributors was no basis in law to impute the absence of the distributors' independence. The decision of the court turned on the interpretation of the word 'independent' as found in s 7(1) of the Act. Held, allowing the application and making an order in the terms prayed for: (1) it is clear that the intention of s 7(1) of the Act is to cure the evil which in commercial terms is known as 'arm's length transactions'; (2) in the above context, the agency agreements between the applicant and its distributors were between independent parties, in the sense that the agreements were not 'arm's length transactions'; (3) the agency agreements were entered into in accordance with the parties' intentions, and were commercial transactions relating to arrangements in respect of the sale of the applicant's products in a certain way not inconsistent with the prevailing trade practice; (4) the assessment of the sales tax which was based on the sale value of the goods under s 7(1)(b) of the Act was not only unreasonable, but an impractical consideration.

Johnson & Johnson Sdn Bhd v Director General of Customs and Excise Originating Motion No R8-25-69 of 1989 High Court, Kuala Lumpur (Abu Mansor J).

X Sdn Bhd created debentures as security for loan facilities granted to it. X Sdn Bhd was subsequently wound up voluntarily and A was appointed as its liquidator. X Sdn Bhd owed sales tax to D. D claimed that under s 69(1) of the Sales Tax Act 1972 (Act 64), the sales tax due from X Sdn Bhd should be paid first before the claims of its debenture holders. D further contended that since there was a conflict between s 69(1) of the 1972 Act and s 292 of the Companies Act 1965 (Act 125), the maxim 'lex posterior derogat priori' should apply whereby sales tax should be given priority over the claims of the debenture holders. A applied to the High Court for directions as to whether the sales tax due from X Sdn Bhd has priority over the claims of its debenture holders.

Held: (1) there is no conflict between s 69(1) of the 1972 Act and s 292 of the 1965 Act. Section 69(1) of the 1972 Act merely requires the liquidator to set aside a sum of money out of the assets of the company so as to provide for the sales tax. This is only an administrative function which does not confer priority. Section 292 of the 1965 Act, however, speaks in terms of priority of payment; (2) accordingly the maxim 'lex posterior derogat priori' does not apply in this case and s 69(1) of the 1972 Act does not confer priority on sales tax over the claims of the debenture holders.

Ler Cheng Chye, Liquidator of Castwell Sdn Bhd (in Liquidation) v Director of Customs, Federal Territory [1992] 2 CLJ 1019 High Court, Kuala Lumpur (Zakaria Yatim J).

When a corrective affidavit is filed under s 33 of the Stamp Enactment 1897, the rate of death duty payable is that in force at the date of filing the original affidavit.

Re Lau Wai Chuen, deceased [1923] 4 FMSLR 310 High Court, Federated Malay States (Watson JC).

Certain lands were registered in the name of Thong Foong Kee, deceased, at the time of his death. The administratrix alleged, in an action against the Collector of Stamps that these lands were held in trust for Dato Lee Kong Lam, and that the deceased held no beneficial interest in them. The Collector was not satisfied with the evidence of trust; and so decided on 9 December 1925. The administratrix did not appeal against this decision; but in order that the letters of administration might be issued, she paid the sum of RM685, being the estate duty in respect of the lands alleged to be held in trust. This sum was paid to her by Dato Lee Kong Lam. By an order of court dated 10 July 1926, in the course of administration proceedings to which the Collector was not a party, it was ordered ex parte that the lands held in trust be transferred to Dato Lee Kong Lam. Dato Lee Kong Lam applied on 13 April 1926 for repayment of the sum of RM685. The Collector refused the payment on the ground that Dato Lee Kong Lam was not a party aggrieved. Dato Lee Kong Lam appealed under s 37A on 7 October 1926.

Held: (1) the three months allowed for appeal ran from the time the Collector refused the repayment; (2) Dato Lee Kong Lam was not a party aggrieved.

Re Thong Foong Kee, deceased [1925] 6 FMSLR 31 High Court, Federated Malay States (Gompertz CJ).

This was an appeal against the assessment of the Commissioner of Stamp Duties ('the CSD') by way of case stated. The deceased, TCB, died intestate possessed of, among other assets, one house in Pasir Panjang which was the residence of his first wife and her seven children, and one house in St Martin's Drive which was the residence of his secondary wife and her three daughters. As the beneficiaries were desirous of retaining their respective residence, by a family arrangement entered into on 11 August 1981, it was agreed that the house at Pasir Panjang be conveyed by way of assent, to the deceased's seven children by his first wife (the appellants), as tenants in common, and the house at St Martin's Drive be conveyed by way of assent to the deceased's secondary wife (second party) solely, subject to her paying to the appellants the sum of S$137,133.32 by way of equality of distribution (equality payment). This equality payment was based on the valuation of the house at Pasir Panjang and St Martin's Drive at S$1.45m and S$1.056m respectively as on 11 February 1980. The appellants conceded that the effective date of the agreement to distribute the residuary estate of the deceased was 11 August 1981 and not 11 February 1980. The chief valuer valued the house at Pasir Panjang and the house at St Martin's Drive to be worth S$4,167,162 and S$1,357,025 respectively. The CSD acting under s 37 of the Stamp Duties Act (Cap 312, 1985 Ed) ('the Act') adjudicated and assessed the deed of assent to be stampable for S$10 under art 16(g) of the First Schedule to the Act, being a conveyance of any kind not falling within the preceding para of art 16 and S$19,787 on the difference between the value of the appellants' share entitlement and the value actually received amounting to S$672,900 under art 26 read with art 16(a), as a conveyance operating as a voluntary disposition under s 16 of the Act. The appellants were not satisfied with the said assessment and argued that the deed of assent is an instrument of partition chargeable only to duty of S$20 under art 35, and that the equality payment was just incidental to the main object of dividing the deceased's residuary estate which included the two houses, between the deceased's two families. CSD's main contention was that the deed of assent dealt with two distinct matters, viz the assent by the administrators to the appellants of firstly, their collective 133/210 shares in the house at Pasir Panjang, and secondly, the conveyance of the other family's share of 73/210 shares in the said house. The second matter has the effect of conferring on the appellants a substantial benefit of S$672,900 as at 11 February 1981. Alternatively, CSD argued that the deed of assent was stampable as an exchange under art 24 whereupon duty will be based on the value of the property of greater value. CSD contended that here, the appellants had, in consideration of the conveyance by the other family of their share in the house at Pasir Panjang, conveyed the appellants' share in the house at St Martin's Drive. As the value of the other family's share in the house at Pasir Panjang was greater, stamp duty amounting to S$45,437 was payable based on the sum of S$1,527,000 being the value of the said share.

Held, dismissing the appeal: (1) the deed of assent was an assent which effected a partition and as such attracted duty of S$10 as an asset and S$20 as an instrument of partition. The terms used in the definition of 'partition' in the Act should not be so restrictively interpreted. 'Co-owners' suggest concurrent ownership of all types of property. Whether the rights of the members of the two families be rights in property or choses in action, the members of the two families were still co-owners of the residuary estate which included the two houses. 'Divide' is not restricted to physical division of property but wide enough to cover a division by any means of interest or rights in property. 'Severalty' does not mean division to each individual sharer but includes the cessation of the original common ownership; (2) a partition is not a conveyance on sale even with equality payment; (3) the fact that the deed of assent effected a distribution by way of a partition and was accordingly stampable as a partition, does not exclude the operation of s 16 of the Act. Section 16 applies whenever there is a conveyance and a benefit arising as a result of inadequate consideration or other circumstances. Thus although in this case there was no valuable consideration for the partition as equality payment was not the consideration, the words 'other circumstances' are wide enough to cover the present situation where the properties were valued by the beneficiaries for the purpose of the partition and as a result of the undervaluation, the appellants obtained a substantial benefit amounting to S$672,900; (4) the deed of assent was not an exchange under art 24. Article 24 is intended to apply to an exchange of property which does not have elements of or involve a partition of property. It would be unfair to charge a partition as an exchange when the transferee of the property with the greater value has to pay duty not only on the benefit gained by him as a result of the exchange or partition but also on the property which originally belonged to him before the exchange or partition.

Tan Kay Thye & Ors v Commissioner of Stamp Duties [1991] 3 MLJ 150 High Court, Singapore (Chan Sek Keong J).

On 21 March 1991 the plaintiffs, pursuant to a writ of seizure and sale, seized a reconditioned dump truck ('the property') at the gate of the Kuching Port Authority after customs duty had been paid by the claimants. At the material time the property was in the possession of the claimant who protested that ownership of the property had been assigned to him by the defendants and was therefore no longer liable to seizure as it was no longer the property of the defendants. Notwithstanding his protests the property was seized. The claimants issued an interpleader summons. The issue that arose to be decided was whether the deed of assignment executed for a cash consideration of RM45,000 was valid and whether the deed was properly stamped.

Held: (1) the first defendant absolutely assigned all his rights and benefits under the licence to import 15 units of dump trucks to the claimant. It was specifically agreed that the claimant shall be fully responsible for all costs of importing the 15 units and for payment of customs duties. The ownership of the property was with the claimant at the time of the seizure and would therefore appear not available to the plaintiffs as judgment creditors for seizure thereof; (2) as the assignment was for valuable consideration, it was therefore a good assignment giving the claimants absolute ownership of the 15 units of dump trucks. All costs of importing and payment of the customs duties were paid by the claimant. In the circumstances the court was of the opinion that the assignment was an absolute assignment and not a sham as contended by the plaintiffs; (3) although the deed of assignment appeared to be duly stamped, the claimant had not complied with the procedure for cancellation of the stamp on the deed as provided by s 7(3) of the Stamp Act 1949 (Act 378). The provision under s 7(3) was mandatory and failure to comply therewith would by s 7(5) mean that the deed would be deemed to be unstamped and therefore inadmissible in evidence; (4) however as the deed was not a document which fell under the categories mentioned in s 47 of the Act it could be admitted in evidence in accordance with proviso (a) of s 52(1) on payment of a penalty of RM25 or four times the amount of the deficient duty; (5) it was therefore ordered that the deed be impounded, and the claimant pay RM25 to the registrar of the High Court. The property could then be released to the claimant.

Hup Cheong Motor Co v Jonathan Saong & Anor [1992] 2 MLJ 331 High Court, Kuching (Haidar J).

In an action on an agreement, it was contended that the agreement could not be admitted because it was not duly stamped. It was argued that an agreement the stamp of which is cancelled under Stamp Ordinance No 8 of 1873 with only the date, but not also with name or initials, is not 'duly stamped' within the meaning of that ordinance. However,

Held, by the Privy Council: the Collector had power under s 26 of the ordinance to rectify the omission.

Vernon Allen v Meera Pullay [1877] 1 Ky 394 Privy Council Appeal from Straits Settlements (Lord Blackburn, Lord Watson, Sir Barnes Peacock, Sir Robert P Collier, Sir Richard Couch and Sir Arthur Hobhouse).

A promissory note made and stamped under the Stamp Ordinance 8 of 1873, but having such stamp cancelled only with the maker's name is not admissible in evidence under s 9(3) of the Stamp Ordinance 1881; nor under the repealed Stamp Ordinance 8 of 1873, under which it was made. This defect cannot be rectified under both statutes.

Palaniapah Chetty v Lim Poh [1882] 1 Ky 548 Court of Appeal, Straits Settlements (Sidgreaves CJ, Ford and Wood JJ).

This was an election petition in which it was prayed that it be determined that the respondent was not duly elected as a member for the Parliamentary Constituency of Tanah Merah, Kelantan to the Dewan Rakyat. The main ground for the petition was that the statutory declaration submitted by the respondent with his nomination papers was invalid as the stamp on it had not been cancelled in the prescribed manner and, therefore, the returning officer was wrong in accepting the nomination papers of the respondent.

Held: (1) as the stamp on the statutory declaration had not been cancelled in the prescribed manner the statutory declaration must be deemed to be unstamped and, therefore, inadmissible in evidence and could not be acted on for any purpose; (2) as there was no valid statutory declaration, the returning officer should have rejected the respondent's nomination papers as as this was not done in this case there was a non-compliance with the provisions of the regulations relating to elections; (3) despite the transgression of the law by the returning officer, the election in this case had substantially been conducted in accordance with the principles of the law and, therefore, as the non-compliance of the law by the returning officer had not affected the result of the election, the respondent must be held to have been duly elected and the petition must be dismissed.

Isahak Hamid v Mustapha [1965] 2 MLJ 18 High Court, Kuala Lumpur (Ismail Khan J).

If at the time an adhesive stamp is fixed to any document chargeable with duty, such document has not been executed by any person, it is not necessary that the stamp should be cancelled in the manner provided by s 9 of Ordinance 11 of 1881.

Haji Hasmah v Haji Ashim [1893] 2 SSLR 27 High Court, Straits Settlements (Cox CJ).

The chargee's notice was in the form set out in Sch XXIX of the Land Code (Cap 138). It alleged default in payment, but did not state the amount due. It was alleged that the default had continued for eleven years whereas it had continued for over eleven years and two months. The charge itself was insufficiently stamped when registered on 1 November 1927. Subsequently, the deficient stamps were affixed and bore the stamp of the Stamp Office dated 5 November 1927. Notwithstanding these objections, the Collector of Land Revenue made an order for sale of the charged land, and the chargor appealed under s 237 of the Land Code.

Held: the form in Sch XXIX of the Land Code provides a general notice, with which the notice under review complied. A chargor can learn the exact amount payable by inquiry, and once the matter comes before the Collector of Land Revenue, under s 142 of the Land Code, it is for him to determine the amount due before he makes the order for sale. The period of default was incorrectly stated and possibly in future cases it might be wiser to state that the default had continued for over a certain period. (In this case, the objection was not sustained.) The charge was registered and later sufficiently stamped. Having been passed by the registering authority as fit for registration, it cannot at this late stage be impeached on the ground that it was not sufficiently stamped at the time of registration.

Lall Singh v Parmanand [1941] MLJ 176 High Court, Federated Malay States (Howes J).

The defendant had charged a piece of land to the plaintiff bank as security for a loan. The plaintiff applied for an order for sale of the lands under the provisions of the National Land Code 1965 ('the Code') following the defendant's failure to comply with a notice of demand in Form 16D of the Code. The defendant opposed the application. The defendant said that the plaintiff knew of the defendant's intention to erect a multi-storey building on the land and to sub-divide the building into parcels and to sell such parcels to end-buyers. The defendant also said that the plaintiff had agreed to provide end-financing to the end-buyers and that, relying upon such agreement, the defendant had engaged a contractor to construct the building. The defendant also said that the plaintiff had undertaken to pay the contractor the sum of RM33.88m from the proceeds of the sale of all the parcels. The contractor could not complete the construction of the building as a result of which an arbitration was pending between the defendant and the contractor. It was said that the plaintiff was aware of the situation and was a party to the negotiations between the defendant and the contractor. It was therefore contended that the plaintiff's application was premature and that the plaintiff was estopped from proceeding with the application. The stamp duty paid on the charge was for up to the loan sum of RM2m only and since the terms of the charge provided for capitalization of interest on the loan amount, it was contended for the defendant that the stamp duty paid was insufficient. Although it was agreed that the plaintiff may vary the rate of interest, the defendant said that there was a collateral term that the plaintiff should act reasonably and that, despite a protest by the defendant, the plaintiff had arbitrarily and unilaterally imposed unreasonable rates of interest which, in view of the provision regarding capitalization of interest, amounted to compound interest and/or contravened s 75 of the Contracts Act 1950 (Act 136) ('the Act').

Held, granting the plaintiff's application: (1) the application was not premature. On the evidence, the defendant had not relied on the plaintiff's end-financing agreement in carrying out the project. The defendant had moved the plaintiff to enter into the end-financing agreement in order that it could get the plaintiff to give security in respect of the costs of completing the project in the sum of RM33.88m to the contractor. The plaintiff had not by words or conduct led or induced the defendant to believe that it, the plaintiff, would not enforce its right under the charge. The existence of an arbitration of the disputes arising from the contract between the defendant and the contractor was of no concern to the plaintiff as it was not privy to the contract; (2) where interest is to be capitalized, the unpaid interest retains the character of interest and there need not be separate and further payment of stamp duty on the instrument concerned in respect of the interest; (3) the capitalization of interest was intended to be part of the contract creating the charge between the parties. Considering that the rate of the capitalization of interest was the same as the prescribed rate of interest, it could not be said to be unconscionable or unreasonable. Section 75 of the Act was not applicable.

Perwira Habib Bank Malaysia Bhd v Pengkalan Enterprise Sdn Bhd [1992] 2 MLJ 35 High Court, Kuala Lumpur (Lim Beng Choon J).

The appellant bank granted facilities to Cornwall Investments Pte Ltd ('Cornwall') which were secured by a guarantee given by two persons including the respondent ('the guarantee'). Upon Cornwall's default of its repayment obligations, the appellant caused a letter of demand to be addressed to the respondent. The appellant then filed a claim against the defendant, describing itself as the American Express International Banking Corp. The appellant subsequently obtained a court order amending its name in the title to the action to American Express Bank Ltd ('the order'). The appellant applied for summary judgment and this was allowed by the senior assistant registrar. The respondent's appeal to the High Court was allowed on the ground that there were three triable issues. The judge firstly held that there was no evidence that the letter of demand had been served on the respondent. Secondly it was decided that the guarantee was not stamped and was therefore not admissible. The judge lastly held that there was uncertainty as to the appellant's status. The appellant appealed to the Supreme Court. On appeal the respondent raised two preliminary objections. The respondent firstly alleged that the appellant's solicitors had no authority to act on the appellant's behalf and he had applied to the High Court to strike out the appellant's statement of claim on this ground ('the application'). The respondent's second preliminary objection was that the Malaysian courts had no jurisdiction because the loan and collateral agreement between the appellant and Cornwall stated, inter alia, that the agreement and the parties' rights were to be governed by Singapore law.

Held, allowing the appeal: (1) since the High Court had not heard the application, the first preliminary objection should be overruled; (2) after the service of the writ of summons and the statement of claim, the respondent took no steps to apply for leave to enter conditional appearance with a view to striking out the claim on the ground that the Malaysian courts had no jurisdiction. Instead the respondent, having entered appearance, filed his defence which was subsequently amended and re-amended. The respondent had therefore submitted to the jurisdiction of the Malaysian courts; (3) in any case there was no reason why a court in this country where the respondent resided was not the forum conveniens. The second preliminary objection was therefore also overruled; (4) the guarantee provided that any notice of demand shall be deemed to have been duly given to the guarantor by sending the same by post addressed to him at the address provided in the guarantee. The guarantee also provided that the respondent had waived any notice of any kind. There was no evidence of any denial of receipt of the letter of demand in the respondent's affidavit in reply. There was therefore no triable issue as to whether the letter of demand had been served on the respondent; (5) under s 52(1) of the Stamp Ordinance 1949 prohibition against admissibility of an instrument on account of it not being duly stamped, is not an absolute prohibition but conditional on payment of a duty or a penalty under ss 43 and 47 of the 1949 Ordinance. It is the court's responsibility under s 51 of the 1949 Ordinance to impound unstamped documents, if produced, and to admit them under proviso (a) to s 52(1) of the 1949 Ordinance on payment of stamp duty or penalty. The non-stamping of the guarantee did not therefore provide a triable issue; (6) the issue as to the appellant's name was only raised for the first time in the appeal to the High Court. The respondent had also not appealed against the order and time for appeal had lapsed. Accordingly the appellant's status was not a triable issue; (7) final judgment was to be signed against the respondent but the order of the Supreme Court was not to be extracted until the guarantee had been stamped.

American Express International Banking Corp v Tan Loon Swan [1992] 1 MLJ 727 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

United Malayan Banking Corp Bhd v Masagoes [1994] 1 SLR 766 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean JA and Goh Joon Seng J).

The debts which can be deducted under s 31 of the Stamp Enactment 1807 (see now Cap 136, s 17) are those due by or accruing from the deceased at the time of his death. 'Persons resident in the State' in sub-s (i) of the section means persons resident at the time of the death and include firms carrying on business in the state.

Estate of Veerappa Chitty [1917] 1 FMSLR 339 High Court, Federated Malay States (Earnshaw JC).

The plaintiff together with an uncle and a cousin were partners in equal shares in a firm known as KVALAA. Disputes arose between the partners and proceedings were instituted in the Supreme Court. Finally a deed of dissolution was entered into by the three partners and a copy was filed in court. A consent order was then made by the court whereby it was declared that one of the parnters held certain lands and securities in trust for the partners of the firm and it was further ordered that the lands should be transferred to the members of the firm. A transfer of land in accordance with the terms of the order was presented for adjudication of stamp duty. The Collector adjudicated on the basis that ad valorem duty was payable under art 37 or art 28(a) of Sch A to the Stamp Enactment (Cap 135). The plaintiff contended that the conveyance came within art 28(e) of the same Schedule.

Held: the nature of the transaction between the partners was one of conveyance on sale and came within art 28(a) and ad valorem duty was payable.

Re Alagappa Chettiar [1937] MLJ 200 High Court, Federated Malay States (Thomas CJ).

This was an action claiming an account of a partnership. The first and second respondents denied that they were partners of the firm. The crucial evidence against the first and second respondents was a partnership agreement in Chinese. The evidence showed that the original of this document was unstamped. Despite a notice to produce, the original document was not produced and the appellants produced a photostat copy of the document, which was admitted in evidence. In his judgment, however, the learned trial judge stated that he was wrong in admitting the document and he gave judgment for the first and second respondents. On appeal,

Held, dismissing the appeal: as the original document had not been stamped, no secondary evidence could be offered of its terms. If the copy of the agreement was excluded, there was no evidence to show the partnership of the first and second respondents as partners in the business.

Chiew Vui Kiet & Anor v Chong Fook Tien & Ors [1971] 2 MLJ 158 Federal Court, Kota Kinabalu (Azmi LP, Ismail Khan CJ (Borneo).

This was an appeal against the decision of the magistrate and one of the grounds of appeal was that the learned magistrate erred in law in admitting a promissory note in evidence as the document was not properly stamped in accordance with the Stamp Ordinance (Cap 32). No objection was taken to the admission of the document at the trial.

Held: (1) if the document was improperly stamped, the appellate court must hold that it was wrongly admitted, despite the fact that no objection to its admission was raised at the trial; (2) in this case, the document was not a promissory note but merely an agreement of memorandum and it was therefore properly stamped.

Lee King Hung v Loh Hun Yong [1966] 1 MLJ 126 High Court, Sibu (Lee Hun Hoe J).

In this case, the appellant sued the respondent based on a guarantee given by the respondents in consideration of the appellant giving overdraft facilities to the first respondent. The guarantee was dated on 17 April 1974 but it was argued that it was in fact executed on 16 November 1973. The learned President of the Sessions Court after hearing the evidence was in real doubt as to when the guarantee was signed and he held that the plaintiff had failed to prove that the guarantee was valid and he dismissed the claim. On appeal, it was held in the High Court that the guarantee was in fact executed on 16 November 1973. Hashim Yeop A Sani J held that as the penalty for late stamping had not been paid, the document was inadmissible. He therefore dismissed the appeal. The appellant appealed.

Held: (1) in this case, the guarantee is not a document which falls under any of the categories mentioned in sub-s (1) of s 47 of the Stamp Ordinance, in which case the prohibition is absolute and, therefore, the document could be admitted in evidence in accordance with proviso (a) to s 52(1) of the ordinance on payment of a penalty of RM25 under s 47 of the ordinance; (2) the guarantee document should therefore be impounded and the appellant should pay the penalty of RM25 to the registrar who will send the sum together with the document to the Collector of Stamp Duty for stamping; (3) as the decision in the case in the lower courts was solely based on the guarantee and on the admission of the guarantee in evidence, judgment in the sum prayed should be entered for the appellant; (4) the history of the case showed that both parties were at fault in not pointing out that the document could be admitted in evidence on payment of the proper stamp duty and, therefore, each party should bear its own costs.

Malayan Banking Bhd v Agencies Service Bureau Sdn Bhd & Ors [1982] 1 MLJ 198 Federal Court, Kuala Lumpur (Wan Suleiman Ag CJ, Salleh Abas FJ and Mohamed Azmi J).

The plaintiff/respondent contracted to build a house for the defendant/appellant. They had entered into several written agreements. In this case, it was common ground that one document (Ex P1) was chargeable with stamp duty, but it had not been stamped at all. In the court below, the learned President applying s 52 of the Stamp Ordinance 1949 (Ord 59/1949) considered that P1 was inadmissible and ignored its contents except by way of introductory background. He gave judgment for the plaintiff and dismissed the defendant/appellant's countercalim. On appeal, the defendant/appellant applied by notice of motion for the High Court to impound P1 so that after payment of duty and penalty it might be admitted and its contents taken into account.

Held: (1) P1 should normally have been stamped before or at the time of execution, but it could also be stamped after execution on payment of a penalty in addition to stamp duty; (2) in the circumstances of the case, the defendant/appellant should pay the whole amount of the duty and penalty.

Arbiah v Azinol [1972] 2 MLJ 257 High Court, Kuala Lumpur (Suffian FJ).

The applicant was the lessee of a piece of land under an instrument of lease. The respondent contended that the stamp duty payable on the instrument under the Stamp Ordinance 1949 was equal to the stamp duty for an instrument of conveyance on the ground that the instrument was a lease or an agreement for a lease in consideration of a fine or premium and without rent under Sch 1 item 49(1)(b) of the Ordinance. The applicant contended that the instrument came under Sch 1 item 49(1)(a) of the Ordinance as a lease or agreement for a lease without a fine or premium when the average rent was at a certain amount. The applicant, not agreeing with the stamp duty imposed, brought an appeal to the High Court by way of case stated. The lease was for a period of 30 years and it was a term of the lease that the lessee was to pay the lessor the sum of RM135,000 constituting 30% of the total rental upon execution of the lease agreement and the balance of the total rental in the sum of RM315,000 upon registration of the lease agreement. It was a term of the lease that the lease could be determined before the expiration of the 30-year period upon the happening of certain events. It was also a term of the lease that in the event of an earlier determination of the lease, there would be a proportionate refund of the amount paid by the lessee to the lessor commensurate with the unexpired portion of the term of the lease.

Held, allowing the applicant's appeal: since the lease agreement contained provision for earlier determination of the lease upon the happening of certain events and there was also provision for a proportionate refund of the lump sum paid, the lump sum was rent and not premium. Since the lump sum was rent, the instrument was therefore excluded by the terms of Sch 1 item 49(1)(b) of the Ordinance. For the lump sum to be under Sch 1 item 49(1)(b), it must be without rent. Since the lump sum was rent, it could not therefore be premium or fine. As the lump sum was not a premium or fine, the instrument was therefore an instrument of lease or agreement for lease of land or other immovable property granted or made under item 49(1)(a) without fine or premium.

Shell Malaysia Trading Sdn Bhd v Pemungut Duti Setem, Johore Bahru [1990] 1 MLJ 48 High Court, Johore Bahru (Abu Mansor J).

The respondent, a bank residing and operating in Singapore, granted credit facilities to the applicant company. The applicant company failed to regularize its accounts with the respondent. To refrain the respondent from suing the applicant company, Michael Ng ('Michael') and Ng Siew Kuan ('Ng') signed a letter to the respondent dated 25 June 1985 whereby they agreed to deposit title deeds in respect of the applicant company's land with the respondent ('the document'). Subsequently title deeds in respect of the applicant company's land was deposited with the respondent in Singapore. Michael was one of the authorized signatories of the applicant company and was also one of its accredited agents in Singapore while Ng was one of its directors. The respondent entered a lien-holder's caveat over the applicant company's land on 9 August 1986. The applicant company applied to court to remove the caveat firstly on the ground that s 281 of the National Land Code 1965 only allowed the creation of a lien where the title deed was deposited as security for a loan and not when the title deed was deposited in consideration of the respondent's forbearance to withhold legal proceedings against the applicant company. The applicant company therefore alleged that it had no intention to create a lien when the title deeds were deposited. The applicant company then argued that Michael and Ng had no authority from the applicant company to execute the document and the applicant company was accordingly not bound by it. The applicant company further contended that when the title deeds were deposited, there was a contravention of s 433B(1)(b) of the 1965 Code which imposed restrictions on non-citizens and foreign companies from acquiring an interest in land and consequently s 433C of the 1965 Code rendered the creation of the lien invalid. The applicant company thus claimed that the document was unenforceable under s 24(b) of the Contracts Act 1950 (Act 136). The applicant company also alleged that the document was an equitable mortgage which attracted stamp duty under item 27 of the First Schedule to the Stamp Ordinance 1949 and since the document was unstamped, it could not be received as evidence. The applicant company lastly argued that the lien being an equitable charge, was void under s 108 of the Companies Act 1965 (Act 125) because it was not registered as a charge.

Held, dismissing the application: (1) s 281 of the 1965 Code did not prevent the respondent from entering a lien-holder's caveat; (2) forbearance by the respondent from insisting on the applicant company's repayment of the overdue loan, afforded good consideration for the additional security granted by the applicant company; (3) the intention of the applicant company in depositing the title deeds with the respondent, was to create a lien in respect of the credit facilities at the time of the deposit; (4) the facts showed that Michael and Ng must have been the accredited agents of the applicant company; (5) the applicant company allowed the respondent to alter its position to its detriment in not seeking repayment of its outstanding loans on the basis of the further security it had obtained. The applicant company was therefore estopped from denying the validity of that security; (6) until the application for the entry of the lien-holder's caveat is made and such entry entered, no lien is created within the meaning of s 281 of the 1965 Code. Deposit per se of the title deed, does not create a lien; (7) accordingly at the time when the lien was created by the entry of the lien-holder's caveat, the restrictions imposed by s 433B of the 1965 Code had ceased to apply by virtue of s 3 of the National Land Code (Amendment) (No 2) Act 1985. Consequently the document was not void under s 24(b) of the 1950 Act; (8) the document merely related to the deposit of the title deeds outside Malaysia and was consequently exempted from stamp duty under General Exemption 4 of the First Schedule to the 1949 Ordinance read with s 35 of the 1949 Ordinance because the document related to a thing done outside Malaysia; (9) the distinction between a lien and a charge exists in the 1965 Code. A lien cannot therefore be regarded as a charge under s 108 of the 1965 Act.

Heap Huat Rubber Co Sdn Bhd v United Overseas Bank Ltd [1992] 3 CLJ 1589 High Court, Johore Bahru (LC Vohrah J).

The bringing of an action is not a 'presentation for payment' so as to require a foreign bill or note to be stamped under s 17 of Ordinance 8 of 1873 before it is received in evidence.

Lim Guan Teet v Shaik Ahamad Bashaib & Anor [1882] 1 Ky 536 High Court, Straits Settlements (Wood J).

[Annotation: The High Court judgment was unanimously upheld by the Court of Appeal on all points.]

The entry of a marriage in a Kathi's book in consideration of which marriage, a promise is made, which promise appears in the entry and is signed, and thereafter sought to be enforced, is a 'marriage settlement' within the Stamp Ordinance 1885, and must be stamped before it can be admitted in evidence.

Ahamed Meah v Nacodah Merican [1890] 4 Ky 583 High Court, Straits Settlements (Pellereau J).

By an agreement ('Agreement One'), BP agreed to sell, and the first appellant agreed to purchase, certain assets of BP and certain interests in a building agreement in which BP was one of the parties. Under Agreement One, the first appellant had the right to nominate another person to take over its rights and interests in Agreement One. By another agreement ('Agreement Two'), the first appellant nominated the second appellant and thereby the second appellant acquired the rights and interests of the first appellant under Agreement One. By a deed of assignment made between BP and the second appellant, the second appellant acquired BP's rights and interests in the building agreement. The respondent stated that stamp duty of S$108,800 was payable on Agreement One. He also assessed that an ad valorem duty of the same amount was payable for the assignment. However, no duty was payable for Agreement Two. The appellants were dissatisfied with the decisions of the respondent. They paid the duties but appealed. The respondent then stated a case for the decision of the High Court in accordance with s 40(2) of the Stamp Duties Act. The case stated by the respondent raised the following questions: (a) whether the respondent was correct in deciding that the assignment was chargeable to ad valorem duty, having charged ad valorem duty on Agreement One; (b) if not, how the two documents should be stamped; and (c) whether the first appellant was entitled to the return of S$108,800 being the amount of stamp duty paid to the respondent on Agreement One.

Held: (1) the respondent was not correct in deciding that the assignment was chargeable to ad valorem duty. The assignment was entitled to the benefit of s 22(3) of the Stamp Duties Act (Cap 312, 1985 Ed). Agreement One was correctly stamped. Agreement Two was not chargeable since it was not an agreement falling within s 22(2) of the Act; (2) the respondent should repay to the second appellant the sum of S$108,800 which was paid by the second appellant for the assignment.

Allied Signal Inc & Anor v Commissioner of Stamp Duties [1988] 1 MLJ 506 High Court, Singapore (Grimberg JC).

Where on a bill of exchange the date of payment is extended and a new one substituted therefor the alteration is not material and no new stamping is required. Where a person accepts a bill and signs his name as manager he is not exempted from liability.

Yokohama Specie Bank Ltd v Lee Kwock Jou [1933] MLJ 122 High Court, Straits Settlements (Murison CJ).

[Annotation: See the judgment of Wood J in Lim Guan Teet v Shaik Ahmad Bashaib (1882) 1 Ky 536.]

The plaintiffs claimed S$53,072.90 together with interest at the rate of 10.5% per annum from 25 April 1985, until the date of payment pursuant to the provisions of a Deed of Acknowledgment of Debt ('the Deed') made between the plaintiffs and the defendant. The defendant did not deny the amount claimed but denied its liability to pay the same on the ground that the Deed was a promissory note, that it was stamped after the execution thereof and was therefore not admissible in evidence by virtue of s 53 read with s 47 of the Stamp Duties Act (Cap 147, 1970 Ed). The deputy registrar gave the defendant leave to defend upon provision of a bank guarantee of the amount claimed within 21 days from the date of the order. The defendant appealed.

Held, dismissing the appeal: (1) (b) the intention of the parties as to whether a document containing a promise to pay is to be treated as a promissory note is relevant to determining its true character (Yeo v Dawe (1885) 53 LT 125 and Mortgage Insurance Corp Ltd v Commissioners of Inland Revenue); (2) the principles applicable to the determination of the meaning of 'promissory note' in stamp duty legislation are: (a) the statutory definition cannot be read literally as otherwise it would cover every document which contains a promise to pay, eg mortgages, debentures, bonds, agreements. The words 'containing a promise to pay' must be the substance of the document, the whole content, and cannot mean containing a promise to pay forming one of a number of stipulations (Mortgage Insurance Corp Ltd v Commissioners of Inland Revenue (1888) 21QBD 352); so if a document falls within the statutory definition, the court will still have to determine whether it is a promissory note as distinguished from something else (British India Steam Navigation Co v Commissioners of Inland Revenue (1881) 7 QBD 165);in this case, the Deed was acknowledgment of the defendant's liability for the balance of a mortgage debt amd how it was arrived at. It was given for the purposes of carrying out a prior agreement between the parties. It referred to other matters in addition to the promise to pay. It was executed by both parties and was not a unilateral promise by the defendant. It was not intended as a promissory note and it certainly did not look like a promissory note.

International Trust & Finance Limited v Chui Pui Cheng [1987] 2 MLJ 678 High Court, Singapore (Chan Sek Keong JC).

Two mortgages were executed in respect of land in Johore. These instruments constituted charges on the land and were substantially in the form prescribed under Johore Land Enactment 1910. The first of these charges contained no express convenant or agreement to pay. The second charge, however, provided for payment to be made and service of notices to be effected in Singapore. The question before the court was whether the instruments were chargeable with stamp duty in Singapore or whether they fell within the exemption specified in s 29(d) (now Cap 228, s 36(d)) of the Stamps Ordinance.

Held: the payment and the service of notices in Singapore were nothing more than accessory to the leading object which was to secure the repayment for the money and that inasmuch as an instrument exempt from duty as to its leading object is not rendered liable to duty by any thing accessory to that object, the deed in question came within the exemption under the section referred to.

Perichiappa Chetty v Commissioner of Stamps [1928] 1 MC 111 High Court, Straits Settlements (Prichard J).

An agreement, in writing guaranteeing 'payment of all moneys which are now or shall at any time be due to you from the said L or the Chop C, on the general balance of his or their accounts with you not exceeding S$100,000 on notice requiring payment of the amount hereby guaranteed being given as hereinafter provided', and containing a declaration that the guarantee should be a continuing one, with provisions for keeping it alive notwithstanding the commission of acts which would otherwise operate as a release, is not a 'bond', either as generally understood in law, or as defined by the Stamp Ordinance 1907. It is an 'agreement made under hand', which is obligatory on the parties, and is chargeable with a duty of 25 cents only.

Lim Mah Chye v Commissioner of Stamps [1908] 11 SSLR 90 High Court, Straits Settlements (Braddell J).

An instrument executed under s 148(5) of the Municipal Ordinance (Cap 133) by the Singapore Improvement Trust purporting to be a record of an acquisition of land made by the Municipal Commissioners in pursuance of an order passed by the Governor-in-Council is a 'conveyance' within the meaning of, and is liable to ad valorem duty under the Stamp Ordinance.

Singapore Improvement Trust v Commissioner of Stamps [1937] MLJ 107 High Court, Straits Settlements (Horne J).

A document described as a co-licence was presented to the Commissioner of Stamps for stamping and a stamp fee of S$5 was tendered. Being of the opinion that the document amounted to a lease and an agreement under seal, the Commissioner certified that the proper stamp duty was S$101 basing his assessment on the grounds that the lease was for a period exceeding three years at an annual rent of S$6,000 and that there was a covenant to pay certain charges dependent upon the quantity of oil pumped. The document was expressed to be supplemental to two 'licences' each of which carried a rental of S$6,000. The 'licence' provided, inter alia, that in consideration for the rent received the grantors granted full and exclusive licence and authority to use the storage tank numbered 5 for the purpose only of receiving and storing therein and delivery therefrom by pump only oil being the produce of the licensees' estates or purchased by them together with full but not exclusive right and authority to have the use and benefit of the grantors' boilers, pumps, railways, pipes, pipelines and other machinery and works for the time being erected or installed in the grantors' premises and adjoining premises and together with right and liberty for the licensees to enter upon the said premises and adjoining premises of the grantors. Clause 2 of the document provided for rent at S$6,000 a year and for certain charges for pumping oil.

Held: on the true construction of the document, it was a lease, the principle of assessment adopted by the Commissioner was correct and the proper stamp fee should be S$197.

Malayan Palm Oil Bulking Co Ltd v Commissioner of Stamps, Singapore [1940] MLJ 151 High Court, Straits Settlements (Cobbett Ag J).

A mortgage deed was expressed to be made for securing payment of 'the principal sum of $12,000' whereof $7,500 is the amount hereby advanced and $4,500 is for interest thereon calculated, for a period of 60 calendar months from the date hereof.

Held: the mortgage deed was liable to ad valorem duty upon $7,500 only.

Re Stamp Ordinance 1881 and 1885; Re Supramaniam Chitty's Mortgage [1902] 7 SSLR 92 High Court, Straits Settlements (Cox CJ).

A discharge presented for registration under r 14 of the Registration of Deeds Rules 1886 is not (1) a 'discharge' within the meaning of that term in sub-heading (d) of the heading 'Mortgage' or (2), a 'release' within the meaning of that term in the heading 'Release' in the Schedule to the Stamp Ordinance 1907. It is not therefore chargeable with ad valorem duty, but is merely a receipt, and chargeable with duty, under the heading 'Receipt' in the same schedule.

Tan Ah Eng v Commissioner of Stamps [1908] 10 SSLR 110 High Court, Straits Settlements (Secombe Smith J).

In this case, several persons trading in partnership under the firm name of Lim Teck Lee were registered proprietors of a trade mark. On the retirement of a partner, the remaining members of the firm applied for registration of the trade mark in their name. In support of their application, they produced an instrument reading: 'I, Siow Eng Hua acknowledge receipt of S$185,000 in full satisfaction of my share in the capital assets and goodwill of the partnership of Lim Teck Lee. I confirm that as a result of this payment I cease to be a partner in the firm with effect from 31 December 1951 and that the continuing partners are solely entitled to all the assets of the firm including the benefit of all trade marks, goodwill, furniture É I acknowledge that as at the date hereof I am indebted to the said partnership firm in S$118,000 and I undertake to pay the said sum forthwith'. The instrument was stamped as a receipt with six cents. The Commissioner of Stamps adjudged it to be chargeable with ad valorem duty and this was affirmed by the High Court. The firm appealed.

Held: (1) in this case as it was clear that the continuing partners retained the whole of the assets of the firm and paid the outgoing partner a sum of money upon the footing that he went out, the transaction was clearly a sale or an agreement for sale of a retiring partner's share to the continuing partners; (2) the instrument in this case was not a mere receipt but was in effect a transfer of the retiring partner's share in the partnership assets to the continuing partners for S$185,000 and, therefore, it was in equity a conveyance for sale and, therefore, chargeable with ad valorem duty.

Lim Teck Lee v Commissioner of Stamps [1956] MLJ 135 Court of Appeal, Singapore (Whyatt CJ, Taylor and Tan Ah Tah JJ).

In this case on the death of a deceased person, letters of administration had been granted to the deceased's principal wife and his son. Subsequently, a claim was made by one Tan Lian Cheow as one of the lawful widows of the deceased. The High Court found that she was the lawful widow and ordered letters of administration to be granted to her together with the other widow and the son. An appeal to the Federal Court was dismissed and conditional leave was given to appeal to the Privy Council. Subsequently, the parties entered into a deed of agreement whereby the said Tan Lian Chew was in effect to receive S$220,000 in consideration of renouncing all her rights and claim to the estate. The said deed was presented for assessment of stamp duty and the Commissioner of Stamps certified that it was chargeable with ad valorem duty of S$4,400. The appellants were dissatisfied with the said assessment and appealed to the court against the assessment.

Held: the deed of agreement was a conveyance on sale of property within the meaning of the Stamp Ordinance (Cap 170, 1955 Ed) in that it was intended to implement an agreement of sale of property and, therefore, attracted ad valorem duty.

Tay Geok Yap & Anor v Commissioner of Stamps, Singapore [1966] 2 MLJ 255 High Court, Singapore (Chua J).

By a loan agreement executed on 15 July 1974, the lender agreed to lend to the appellant a sum of RM10,000,000 upon certain terms and conditions. Clause 1 of the agreement specified the interest to be 9% on the principal loan. The whole sum was not to be immediately available but instead, it was to be given in nine instalments spread over a year. The mode of payment and penalty for late payment were also provided. Upon each advance, the lender was to execute a promissory note. The issue before the court was whether the proper stamp duty chargeable on the same loan agreement was as a security or as a mere agreement. The appellant contended that the agreement was not 'a security', that the security for the loan consisted of the several promissory notes and, therefore, the agreement was a mere agreement for the loan.

Held: (1) in construing provisions imposing the duty, strict attention must be paid to the actual words used by the Legislature, but the words themselves must be understood in a 'popular sense', that is the sense which persons conversant with the subject matter with which the statute is dealing would attribute to them; (2) the duty is imposed on the document and not on the transaction; (3) the promissory note is a mere undertaking to repay the instalment and the agreed interest. It provides no security that is not given in the agreement and in fact the full protection of the lender is provided for in the agreement; (4) the agreement is the principal or primary security and, therefore, chargeable under Item 22(1)(a) of the First Schedule to the Stamp Duty (Special Provisions) Malaysia Act 1967 (Act 5/1967) at the rate set out in Item 27.

Pernas Securities Sdn Bhd v Collector of Stamp Duties [1976] 2 MLJ 188 High Court, Kuala Lumpur (Chang Min Tat J).

In this case, the seven appellants were the co-proprietors of a piece of land. They entered into a partition agreement and effected cross-transfers of the land by means of three memoranda of transfer on sub-division of the land being granted. The solicitors for the appellants requested the collector to value separately the land described in the three memoranda of transfer and the collector valued the property at RM62,000, RM70,200 and RM55,600 respectively. After receiving the valuation, the solicitors proceeded to have the memorandum affecting the property valued at RM70,200 stamped with ad valorem duty and the other two memoranda with 50-cent stamps. They then presented the stamped memoranda for registration. The Collector accepted the memorandum of transfer stamped with the ad valorem duty but rejected the other two on the ground that they were not properly stamped. The appellants then appealed to the High Court, which dismissed the appeal. On appeal to the Federal Court, it was argued that this was a case of partition or exchange and in either case it would come within the scope of s 4(3) of the Stamp Ordinance 1949 read with Items 32 and 43 of the First Schedule thereto.

Held, allowing the appeal: this was a case of exchange attracting Item 43 of the First Schedule to the Stamp Ordinance and since ad valorem duty had been paid on the memorandum of greater value, the other two instruments stamped with the 50-cent stamp were properly stamped.

Cheah Choon Gan & Ors v Registrar of Titles, Kedah [1973] 1 MLJ 107 Federal Court, Alor Star (Azmi LP, Gill and Ali FJJ).

The fact that the stamps on a foreign bill of exchange were placed on the back of the bill does not mean it has not been duly stamped. An instrument written on stamped paper is duly stamped if the stamp is clearly shown on the document. The Stamp Ordinance 1929, s 8(1) although referring to the 'face of the document' does not require that the stamp must be shown, literally, on the first page of the document. The Stamp Ordinance 1929, s 8(1) construed.

Lim Keok v Yong Huat Kongsi [1930] SSLR 102 High Court, Straits Settlements (Murison CJ).

A promissory note in the ordinary form, duly stamped as such, had the following indorsement on the back: 'I, Asib bin Haji Mohamed Sukor, the owner of Port Dickson, EMR No 542 do hereby deposit the said extract as security for this loan this 14th June 1929.'

Held: such an indorsement did not create any charge such as to bring the transaction within the provisions of s 3(4) of the Stamp Enactment 1897, and accordingly the note was not liable to stamp duty under Item 22 of the Second Schedule of the Stamp Enactment 1897, as amended by the Stamp Amendment (No 2) Enactment 1921.

Re Chief Revenue Authority, Negri Sembilan [1930] 7 FMSLR 126 High Court, Federated Malay States (Whitley J).

The appellant lent RM5,000 to the respondent under a memorandum of agreement, which was signed by the borrowers/respondents and the surety, and also the appellant. The memorandum was signed and executed on 6 June 1975 but it was stamped one day after execution. The respondents defaulted in payment of the loan and the appellant filed a claim for the balance of RM1,666.72 against the respondents and the surety. At the trial, the learned counsel for the respondents successfully objected to the admissibility of the memorandum of agreement for a loan on the ground that it was a promissory note within the meaning of s 2 of the Stamp Ordinance 1949 and that it was not stamped in accordance with s 41 of the said ordinance. The sole issue before the appeal was whether the memorandum of agreement was a promissory note.

Held, dismissing the appeal: (1) to be a promissory note there must be an unconditional promise to pay a certain sum and it must be in one entire instrument. It must be a promise to pay absolute and must not depend on a contingency or a stipulation; (2) the memorandum in this case contained a promise to pay and is not coupled with any stipulation or any contingency. The fact that there was a clause where the surety would be liable if the borrower defaulted and that the lender could recall the balance of the loan at any time, were purely arrangements of the 'promise to pay' and did not in any way affect the character of the promissory note.

United National Finance Bhd v Tan Yam Sing & Ors [1982] 2 MLJ 351 High Court, Penang (Mustapha Hussain JC).

The respondent had charged his shares in certain land to the appellant as security for a loan. The appellant was a moneylender and a memorandum of agreement and a memorandum of charge were executed. On failure of the respondent to pay the appellant applied for order of sale. The main grounds of objection raised were: (1) that no authenticated copy of the memorandum of agreement was given to the respondent as required under s 16 of the Moneylenders Ordinance 1951; (2) that the claim was statute-barred by the Limitation Ordinance 1953; (3) that the memorandum of agreement was not duly stamped as required by s 41 of the Stamp Ordinance 1949. The learned trial judge rejected the first objection as he held that as the respondent had acknowleged receipt of a copy of the memorandum authenticated by the borrower the onus was on him to rebut the presumption and he had failed to do so. The learned trial judge also rejected the second contention as he held that the period of limitation to recover money on a charge was 12 years. He held, however, that the memorandum of agreement was a promissory note and as it was not duly stamped before execution it was not admissible in evidence. He also held that the charge did not appear to have been signed by the appellant at the time of execution and the memorandum of charge did not specifically provide for interest after the day appointed for repayment. He therefore dismissed the appellant's claim. The appellant appealed.

Held, allowing the appeal: (1) the memorandum of agreement was not a promissory note and, therefore, was not required to be stamped before execution to be admissible; (2) the memorandumof agreement and the memorandum of charge must be taken together and there was no omission to state the date of the loan; (3) the charge was in fact executed by the appellant at the time of the execution; (4) although the charge did not provide for interest after the date appointed for repayment, there was a clear provision to that effect in the memorandum of agreement.

Alagappa Chettiar v Freedam Shah bin Che Yeam [1977] 2 MLJ 147 Federal Court, Alor Star (Gill CJ (Malaya).

The provision in Sch 1 of the Stamp Ordinance 1881, as to promissory notes not being payable after 60 days, has no application to a promissory note made before that ordinance, though sued on after that ordinance became law. Palaniapah Chetty v Lim Poh 1 Ky 548 distinguished. A promissory note given by a husband to a wife is not enforceable by the wife, either against the husband in his lifetime, nor against his executors after his decease; and this, though the note be given in consideration of the husband having neglected to maintain the wife for many years.

Cheah Boon Ean v Cheah Chong Beng & Anor [1885] 4 Ky 6 High Court, Straits Settlements (Sidgreaves CJ).

Cold Storage Holdings PLC ('PLC') was a company incorporated in England and originally held 100% of Cold Storage (Malaysia) Bhd (the appellant) and Fima Supermarkets Malaysia Berhad ('FSMB'), both of which were incorporated in Malaysia. In response to the New Economic Policy of the government of Malaysia, PLC reduced its holding to: (a) 70% in the case of FSMB (30% being sold to Kumpulan Fima); (b) 65% in the appellant. Subsequently, PLC decided to go further and proposed a scheme whereby (a) the appellant would take over all the issued share capital of FSMB from PLC and Kumpulan Fima in exchange for shares in the appellant with no cash element; (b) the issue of shares of the appellant is to be followed immediately by the sale of the shares for cash by PLC of approximately 25% and by Kumpulan Fima of approximately 4.6% of the enlarged issued share capital of the appellant to Pradaz Sdn Bhd ('Pradaz'), a wholly-owned Bumiputra company. In implementing the reconstruction scheme, two documents (among others) were executed. By an agreement dated 28 January 1984, Kumpulan Fima Bhd and PLC agreed to sell their holdings comprising 100% of the issued share capital of FSMB in exchange for 24,000,000 shares of the appellant, subject to the approval of the Foreign Investment Committee ('FIC'). By an agreement dated 13 April 1984, PLC agreed to sell shares in the appellant to Pradaz for cash subject to the agreement dated 28 January 1984 being effected and the approval of FIC. The proposal was presented as a package for the approval of, and which was approved by, FIC as well as the Capital Issues Committee ('CIC'). Following upon the approval of FIC and CIC, the transfers relating to the 24,000,000 shares of FSMB were submitted to the respondent for adjudication. The respondent assessed stamp duty on the said transfers at RM201,960. On a case stated to the High Court, the decision of the respondent was upheld. The appellant appealed.

Held, dismissing the appeal: (1) the learned judge was perfectly right to hold that all the conditions of s 15 of the Stamp Duty Ordinance 1949 must be complied with if a company were to be entitled to relief under the section. The learned judge held that because the sale of the shares of the appellant to Pradaz was for cash, the condition was not satisfied to entitle the appellant for exemption of duty; (2) the agreement between PLC and Fima on the one part and the appellant on the other was clearly a scheme for amalgamation notwithstanding that PLC's holding in the appellant was reduced and the sale of PLC's shares to Pradaz. The claim for relief failed because the consideration was not simply the issue of shares but the issues of shares subject to an obligation imposed as part of the general arrangement to transfer shares to another company for cash.

Cold Storage (Malaysia) Bhd v Pemungut Duti Setem [1988] 2 MLJ 93 Supreme Court, Malaysia (Lee Hun Hoe CJ (Borneo).

When a company is reconstructed with the same members and assets, the only change being in the arrangement or division of the capital, a transfer from the old company to the new is not a sale in substance, although there may be the essentials of a technical sale in law, and ad valorem stamp duty is not chargeable. The practice of the English revenue authorities is not to charge duty in certain cases of reconstruction. An appeal lies to the Court of Appeal from a judge's decision on reference under s 56 of the Stamp Enactment 1897.

Re Seafield Rubber Co Ltd [1920] 2 FMSLR 234 Court of Appeal, Federated Malay States (Farrer-Manby JC, Watson JC and Crabb Watt Ag JC).

Foreign bills of exchange, stamped after acceptance, are expressly excluded from the general provisions of ss 39 and 40 of the Stamp Ordinance 1929 under which instruments executed out of the Colony may be stamped within 30 days after receipt in the Colony or at any time prior to acceptance. Where such bills are late-stamped, they are deemed to be not 'duly stamped' within the meaning of s 49 of the ordinance and are therefore inadmissible in evidence.

Chop Tiong Kok Hang v Hock Cheong & Co [1934] MLJ 74 High Court, Straits Settlements (Huggard CJ).

In this case, the respondent had brought an action on three promissory notes. It appeared that these promissory notes had been stamped after they were signed by the debtor. On objection being taken, the President of the Sessions Court held that the promissory notes were not admissible in evidence as they were not 'duly stamped' and he dismissed the matter. The respondent thereupon appealed to the High Court and Sharma J allowed the appeal holding that the promissory notes could be stamped 'before or at the time of execution', so as to cover a reasonable period of time after execution ([1972] 2 MLJ 60). The appellant appealed to the Federal Court.

Held, (per Ong CJ and Ong Hock Sim FJ, Gill FJ dissenting): the provisions of s 41 of the Stamp Ordinance 1949 must be strictly construed and as the promissory notes in this case were only stamped after they were executed, they were not duly stamped and were inadmissible in evidence.

Navaradnam v Suppiah Chettiar [1973] 1 MLJ 173 Federal Court, Ipoh (Ong CJ, Gill and Ong Hock Sim FJJ).

The appellant/plaintiff brought an action in the sessions court claiming a sum of RM2,492.20 on three promissory notes executed by the respondent/defendant on various dates. An objection was taken by the defendant's counsel, under s 52 read with s 41 of the Stamp Ordinance 1949, to the admissibility of the three promissory notes on the ground that they were not stamped 'before or at the time of' their execution by the defendant. The plaintiff admitted that the three promissory notes were stamped not before but after their execution and on the very same day of their execution. The learned President held the promissory notes inadmissible and dismissed the plaintiff's claim with costs. The plaintiff appealed. The question in this case was whether the act of stamping by the appellant was substantially one transaction with the act of execution by the respondent.

Held, allowing the appeal: (1) there was sufficient compliance by the appellant with s 41 of the Stamp Ordinance. The execution and the stamping cannot but be regarded as one transaction; (2) therefore, the order of the learned President must be set aside and judgment entered for the appellant in the sum of RM2,492.20 with interest at 6% from the date of the filing of the action to the date of realization and costs.

V SP Suppiah Chettiar v KS Navaradnam [1972] 2 MLJ 60 High Court, Ipoh (Sharma J).

This was an appeal from the decision of Abdul Hamid J reported at [1978] 1 MLJ 46. The question raised was in relation to the assessment of the stamp duty on the transfer of property. The property in question was agreed to be sold in October 1971 for the agreed consideration of RM49,000 but the transfer was executed in 1973. The Collector of Stamp Duties in an adjudication exercise set a figure of RM65,000 as being in his view the market value of the property at the date of the execution of the transfer. It was argued on behalf of the appellant that the duty payable on the instrument of transfer of the property should be based either on the money value mentioned in the instrument or the market value on the date of the sale and purchase agreement and not on the date of the execution of the instrument of transfer. Abdul Hamid J held that in the light of s 12A of the Stamp Ordinance 1949 the market value of the property was that on the date of the execution of the transfer and not the date of the sale and purchase agreement and that therefore the Collector of Stamp Duty had made a proper assessment of duty in this case. The appellants appealed.

Held, dismissing the appeal: there is no ambiguity whatsoever in the words and meaning of s 12A of the Stamp Ordinance and the Collector of Stamp Duty was therefore justified, where he has reason to believe that the consideration mentioned in the transfer did not reflect the proper market value at the date of the execution of the transfer, in imposing the duty on what he properly and reasonably considered to be the market value of the property at the date of the execution of transfer.

Chin Choy & Ors v Collector of Stamp Duties [1979] 1 MLJ 69 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

This was an appeal from the decision of the Federal Court reported at [1979] 1 MLJ 69. The question raised was in relation to the ad valorem stamp duty on the transfer of property. The property in question was agreed to be sold by a sale and purchase agreement on 30 October 1971 for the purchase price of RM49,000. The memorandum of transfer was executed on 26 June 1973. The Collector of Stamp Duties assessed the market value of the property as at 26 June 1973 at RM65,000 and assessed the stamp duty accordingly. The appellant appealed to the High Court and, subsequently, to the Federal Court against the assessment but the appeals were dismissed. The appellant appealed with leave from the decision of the Federal Court. It was argued that in the context of s 12A of the Stamp Ordinance 1949 the words in para (b) 'the market value as on the date of execution of the property transferred or settled' must be construed as referring to the execution of the sale and purchase agreement dated 30 October 1971 and not to the memorandum of transfer dated 26 June 1973 by which time the value of the property in question had substantially appreciated. Reference was made to the existence of the Torrens System in Malaysia, to the explanatory statement to the amending Bill which led to the introduction of s 12A and to the Stamp Duty (Remission) Order 1979.

Held, dismissing the appeal: there was no ambiguity in the use of the word 'execution' and the context in which the language of para (b) of s 12A of the Stamp Ordinance was used was one expressly related to instruments of transfer by means of which the legal title to the property would be transferred to the purchaser.

Chin Choy & Ors v Collector of Stamp Duties [1981] 2 MLJ 47 Privy Council Appeal from Malaysia (Lord Wilberforce, Lord Fraser of Tulleybelton, Lord Roskill and Sir Ninian Stephen).

The question in this case related to the assessment of the ad valorem duty on the transfer of property. The property in question was agreed to be sold in October 1971 but the transfer was executed in June 1973. The valuation officer valued the property as at the date of the execution of the transfer. It was argued that the ad valorem duty payable on the instrument of transfer should be based either on the money value mentioned in the instrument of transfer or the market value on the date of the sale and purchase agreement and not on the date of the execution of the instrument of transfer.

Held: in the light of s 12A of the Stamp Ordinance 1949, the market value of the property is that on the date of the execution of the transfer, not the date of the sale and purchase agreement and, therefore, the Collector in this case had made a proper assessment of the duty.

Chin Choy & Ors v Collector of Stamp Duties [1978] 1 MLJ 46 High Court, Kuala Lumpur (Abdul Hamid J).

This was a reference from the Chief Revenue Authority under s 56 of the Stamp Enactment 1897 as to what duty was payable on the transfer of certain land from the receiver of the estate of Yap Ah Loy, deceased, to the two beneficiaries.

Held: the transfer was not liable to pay duty under s 21(d). In India these transfers are exempt under art 62(e) of the Stamp Act 1899 from paying an ad valorem fee. This was a new provision, but in a case reported in 7 Mad 350, decided before this provision was inserted, it was held that a transfer from a trustee to a cestui que trust need not be made for pecuniary consideration and if the nominal consideration were omitted the transfer would not be chargeable. The Stamp Act is a revenue act imposing pecuniary burdens and in case of doubt the construction most beneficial to the subject must be adopted. There is no provision in the Second Schedule which imposes either an ad valorem or fixed fee upon a transfer of this nature and no duty is payable.

Re Yap Ah Loye's Estate [1904] Innes 125 Magistrate's Court, Federated Malay States (Voules, Ag Senior Magistrate).

When a solicitor takes a transfer of land as trustee on behalf of a company which is not yet formed and transfers to the company after its incorporation the full ad valorem stamp duty must be paid. A transfer from a set of individuals to a corporation is a conveyance chargeable with stamp duty notwithstanding that the corporation is constituted exclusively of all those individuals. Secus if it is a transfer from a receiver of the estate of a deceased to the beneficiaries. The Stamp Act is a revenue act imposing pecuniary burdens and in case of doubt the construction most beneficial to the subject must be adopted.

Re Eng Joo Estate [1910] Innes 121 High Court, Federated Malay States (Ebden JC).

The first appellant, being desirous of making an inter vivos gift of an undivided half interest in certain land belonging to him executed a memorandum of transfer of the whole of his interest in the land to himself and his wife in undivided equal shares. The Collector of Stamp Duty assessed the stamp duty on the whole of the market value of the land. The appellants did not dispute the Collector's assessment of the market value of the land or that stamp duty was payable on the value of the half-share of the land transferred to the wife but they contended that stamp duty was not payable on the value of the other half-share.

Held: as no beneficial interest passed in the half-share under the transfer from the first appellant to himself, stamp duty was only payable on the transfer of a half-share in the land, that being the value of the only beneficial interest which passed under the transfer.

Peter Lai Khee-Chin & Anor v Collector of Stamp Duties [1973] 2 MLJ 33 High Court, Kuala Lumpur (Gill FJ).

In this case, the appellants, the co-administratrix and co-administrator of the estate of Gurdial Singh, deceased, claimed a declaration that the estate of the deceased was the beneficial owner of a piece of land. Their main allegation was fraud on the part of the respondents. The learned trial judge dismissed the claim. The appellants appealed, but on appeal all the grounds of appeal including the allegation of fraud were abandoned, except for two grounds: (a) that the learned judge misdirected himself when he made wrong inferences by accepting as true the consideration of the land which was stated to be RM10,000 on the transfer form and the said sum must have been meant for the cash payment of RM10,000 paid on the date of transfer; (b) that the learned judge erred in law and in fact in concluding that there was no breach of the provisions of the Moneylenders Ordinance.

Held: (1) the learned trial judge was right in concluding that the transfer of the land was executed legally for the total consideration of the sum total of the unpaid loans together with unpaid interest thereon up to the date of transfer plus a further cash payment of RM10,000; (2) the learned judge was right in accepting the first respondent's explanation that he was not aware that the loans advanced earlier had to be included in the transfer form together with the RM10,000 cash paid on the day of transfer as consideration; (3) the memorandum of transfer was duly stamped under the Stamp Ordinance and the memorandum of transfer was therefore admissible in evidence and could be acted upon, registered or authenticated by any public officer by virtue of s 52(1) of the Stamp Ordinance 1949; (4) there was no breach of the Moneylenders Ordinance in this case, as contended by the appellants.

Joginder Kaur & Anor v Sohan Singh & Anor [1984] 2 MLJ 54 Federal Court, Kuala Lumpur (Salleh Abas CJ, Abdul Hamid and Syed Agil Barakbah FJJ).

Pursuant to an agreement dated 9 October 1975, the applicants agreed to allow the respondents to extract rock materials from their quarry for an initial term of six months from the date of the agreement. Certain provisions were made for payment, one of which stated that the contractor was to pay a deposit of RM1,500 to the applicants, which deposit was refundable at the end of the term. The agreement also provided for cancellation by the applicants if 'the contractor (had) failed to pay the amount of any monies which it (was) by the terms of the agreement bound to pay É'. On the execution of the agreement, the respondents paid the deposit of RM1,500 by RM300 cash and a cheque for RM1,200. The cheque was dishonoured, and despite several demands by the applicants, the respondents did not make good the payment. On 1 March 1976, the applicants terminated the agreement. The respondents subsequently lodged a caveat against the land. This caveat lapsed on 18 June 1977 but before that, while it was so registered, the respondents lodged a second caveat. The applicants sught to remove the caveat and to preclude the respondents from registering further caveats. The respondents sought to admit in evidence an unstamped document purporting to be an agreement by the applicants to grant them a lease.

Held, allowing the caveat to be removed: (1) the unstamped document was not admissible in evidence under s 52 of the Stamp Ordinance 1949; (2) the right of the respondents sprang from the agreement of 9 October 1975 which had not been extended. The respondents could have no title or registrable interest to the land under such an expired agreement and, therefore, could not be protected by any caveat.

Paramount Limestone Sdn Bhd v Nader Minerals Development Sdn Bhd [1979] 1 MLJ 90 High Court, Ipoh (Chang Min Tat FJ).

These two appeals, ie Civil Appeal No 9 of 1987 ('the first appeal') and Civil Appeal No 86 of 1985 ('the second appeal') were both heard together as they raised common questions of construction of s 33(5)(d) of the Land Acquisition Act (Cap 152, 1985 Ed) ('the Act'). In the first appeal, the government acquired three lots of land under the Act. On 17 March 1979, the appellants in the first appeal ('the first appellants') were granted an option by Firestone to purchase three lots of land for S$3.5 million. They later entered into a contract with the vendors dated 15 March 1982 and on 2 August 1982, the sale and purchase of the said lands was completed and the first appellants took a transfer, a conveyance and an assignment all dated 12 August 1982. These instruments of transfer, the total consideration of which was agreed to be S$3.5 million (rounded up), were presented to the Commissioner of Stamp Duties. The consideration stated in them was accepted by the Commissioner for the purpose of assessing the stamp duties payable thereon. By government gazette notification dated 26 February 1983, a declaration was made under s 5 of the Act that the lands of the first appellants were needed for a public purpose. The Collector of Land Revenue made an award dated 27 October 1983 in the sum of S$3.5 million. The Collector acted under s 33(5)(d) of the Act. It was agreed that the value of the lands of the first appellants as at 30 November 1983 was S$4.2 million. As the market value of the said lands as at the date of the said gazette notification, 26 February 1983, was far in excess of the market value as at 30 November 1973 of S$4.2 million, it was accepted by all concerned that that market value was irrelevant for the purposes of this appeal. Not satisfied with the award of the Collector of Land Revenue, the first appellants appealed to the Land Acquisition (Appeals Board). The appeal was dismissed on the ground that the amount of compensation could not under s 33(5)(d) of the Act exceed the value which had been stated in the said conveyances and other instruments of transfer. In the second appeal, the second appellant on 22 October 1980 took a conveyance of that date of the subject land at the price of S$320,000 (or at S$10.93 per sq ft) pursuant to a purchase from the Official Assignee at the auction. The conveyance was duly stamped under the Stamp Duties Act (Cap 312, 1985 Ed). On 12 May 1982, the land was declared in a government gazette notification to be needed for a public purpose under s 5 of the Act. It was common ground that the market value of the acquired land as in November 1973 was S$1.75 per sq ft (or S$601,269.49). As the agreed market value of the said land at the date of the publication of the declaration under s 5 of the Act was S$2 per sq ft and was therefore higher, it was agreed that this higher market value was irrelevant for the purposes of this second appeal. Claiming that s 33(5)(d) of the Act was applicable, the Collector of Land Revenue awarded the second appellant the sum of S$320,000 as compensation. This award was affirmed by the Land Acquisition (Appeals Board) in an appeal by the second appellant. Both appellants contended that s 33(5)(d) of the Act was not applicable to them because that section in clear and unambiguous terms provided that 'the market value of the acquired land at the date of the statement shall be deemed not to exceed the value' contained in the respective conveyances or other instruments of transfer which they took for their lands, ie 2 August 1982 in the case of the first appellants and 22 October 1980 in the case of the second appellant.

Held, allowing both appeals: (1) the intention of the Legislature is clearly reflected in ss 33(1)(a) and 33(5). Section 33(1)(a) prescribes three market values of the land acquired, namely: (i) the market value as at 30 November 1973, (ii) the market value as at the date of the publication of the notification under s 3(1) if the notification is within six months from the date hereof followed by a notification under s 5 in respect of the same land or part thereof, and (iii) the market value as at the date of the publication of the notification made under s 5, and provides that in determining the amount of compensation to be awarded for the land acquired under the Act, the lowest of the three market values is to be adopted and taken into consideration; (2) the Collector of Land Revenue and the Land Acquisition (Appeals Board) were in error in holding that the awards payable to both appellants were limited to the values stated in their respective conveyances or other instruments of transfer; (3) s 33(5)(d) was not in terms limited to only cases of any underdeclaration of value. Whether or not there was any underdeclaration, the value stated was intended to be an aid in determining the compensation payable. The ejusdem generis canon of construction is not applicable; (4) the court was not satisfied on a balance of probabilities that by stating the consideration in the relevant conveyances or other instruments of transfer, which were significantly lower than the 30 November 1973 market value as agreed by the respondents, the appellants had stated or had with their knowledge or consent allowed to be stated the 'value' of their lands within the meaning of s 33(5)(d); (5) the first appellants were awarded the sum of S$4.2 million; (6) the second appellant was awarded the sum of S$601,269.49.

Teng Fuh Holdings Pte Ltd v Collector of Land Revenue, Singapore [1988] 3 MLJ 305 Court of Appeal Singapore (Lai Kew Chai, Thean and Chua JJ).

In this case, the first respondent sold certain land in Temerloh, Pahang to the other respondents for RM20,000 (RM1,958.38 per acre) and the memorandum of transfer was sent to the Collector of Stamp Duty, Temerloh, for stamping. The Collector refused to accept the consideration stated in the transfer as the value of the land and he sent it to the Valuation Officer in Termeloh for an inquiry and report. The Valuation Officer gave the value of the land as RM12,000 per acre or S$122,600 in all. Following this report, the Collector of Stamp Duty decided that the ad valorem duty payable should be based on S$122,600 and that the stamp duty payable was S$1,452. The respondents asked the Collector to state a case for the opinion of the High Court. The learned judge of the High Court after taking evidence and considering the submissions of counsel, held that the value of the land was only S$3,000 per acre and that the duty due was accordingly to be reduced and the excess to be refunded. The Collector of Stamp Duties appealed.

Held: the learned judge had not acted on any wrong principle of law nor misapprehended the facts nor made a wholly erroneous estimate of the value of the land and, therefore, the Federal Court could not interfere with his valuation.

Collector of Stamp Duties v Ng Fah In & Ors [1981] 1 MLJ 288 Federal Court, Kuala Lumpur (Suffian LP, Chang Min Tat and Abdul Hamid FJJ).

By an agreement ('the first agreement') dated 18 May 1988, Great Pacific Finance Ltd ('Great Pacific'), the legal mortgagee of the properties, agreed to sell the properties to Tang Liang Hong ('Tang') for S$400,000. By an agreement ('the second agreement') made on the same day, and before obtaining a conveyance or transfer of the properties, Tang agreed to sell the properties to the respondents for S$600,000. Subsequently, by an agreement ('the third agreement') dated 20 June 1988, the respondents, also without obtaining the conveyance or transfer of the properties, agreed to sell the properties to Flair Investments Pte Ltd for S$780,000. Completion finally took place on 30 July 1988. The documents relating to the sale and purchase were submitted to the appellant for adjudication and assessment under s 37(1) of the Stamp Duties Act (Cap 312). The appellant ruled that the first agreement was not liable to stamp duty but that the second one was liable to an ad valorem stamp duty of S$23,000 in accordance with s 22(1) of the Act. The duty of S$23,000 was based on the appellant's valuation of the property at S$780,000 as at May 1988, instead of the agreed price of S$600,000. The question stated for the determination of the High Court was, simply, whether the second agreement was 'an agreement for the sale of any equitable estate or interest in any property' within the meaning of s 22(1) of the Act. The High Court decided in the negative. The appellants therefore appealed.

Held, dismissing the appeal: (1) in determining whether an instrument is a contract or agreement for the sale of an equitable or legal interest, one should look, not at what interest the vendor has, but what interest he contracts to sell. Where the vendor is under an obligation to give and the purchaser is under an obligation to take a legal interest upon completion, the contract is for the sale of a legal, not an equitable, interest; (2) the agreement before the court was simply a contract for the outright sale of the properties, not just an equitable interest in them, from Tang to the respondents; (3) the fact that by the operation of a rule of law, Tang had as of the date of the second agreement only an equitable interest in the properties, does not retract from the position that what he contracted to sell was the totality of the rights title and interest in and to the properties, not just an equitable interest in them.

Commissioner of Stamp Duties v Sinpex Investments Pte Ltd [1993] 2 SLR 240 Court of Appeal, Singapore (Lai Kew Chai, Goh Joon Seng and Warren LH Khoo JJ).

In an instrument, the appellant company (hereinafter called 'the purchaser company') with a capital of £61,700 and registered in the Federated Malay States, agreed, inter alia, with the Standard Waygood Company (hereinafter called 'the vendor company'), a company registered in New South Wales, as follows: '(1) The vendor company shall sell and the purchaser company shall purchase all those the goods chattels moneys credits debts bills notes things in action agreements securities bonds shares and other assets more particularly described in the schedule hereto. (2) As consideration for the said sale, the purchaser company shall pay to the vendor company the sum of one thousand six hundred and sixty-six pounds thirteen shillings and four pence (£1,636-13-4) which shall be paid and satisfied by the allotment to the vendor company or its nominee or nominees of one hundred and eighty-four thousand nine hundred and ten (184,910) shares of six shillings and eight pence (6/8) each in the capital of the purchaser company credited as fully paid up. (3) The purchse and sale hereby agreed to be made shall be completed forthwith when the said consideration shall be paid and satisfied and the vendor company shall execute and do all such assurances and things as shall be reasonably required by the purchaser company for the vesting in it of the said premises so sold. (4) The said premises are sold as at the first day of January one thousand nine hundred and thirty-one on and from which date the purchaser company shall be entitled to the profits received in respect thereof and all moneys or property into which the said premises or any of them have been converted, exchanged or substituted.' The property described in the schedule referred to in (1) above was stocks and shares to the value of £54,350 together with cash and wool amounting to £7,285-13-4. On 17 June 1931, this instrument was presented to the Collector of Stamps Duties, Ipoh, for stamping. He decided that the instrument was a conveyance and, under Item 28, Sch A of the Stamp Enactment, assessed the duty at RM$1,772-70. The appellant company appealed against his adjudication and contended that the instrument was an agreement chargeable with a duty of 25 cents under Item 5, Sch A of the Stamp Enactment 1930.

Held: the instrument was an agreement chargeable with 25 cents duty under Item 5, Sch A of the Stamp Enactment.

Stanway Ltd v Collector of Stamp Duties, Ipoh [1931-32] FMSLR 239 Court of Appeal, Federated Malay States (Thorne Ag CJ, Mudie and Mcfall JJ).

[Annotation: Decision of Prichard J [1931-32] FMSLR 68 reversed.]

Where the value of land affects the stamp duty on an instrument, the Collector of Land Revenue may be consulted and his opinion is admissible evidence of the value but may be controverted by other evidence. On an appeal by way of case stated, the appellants' solicitors should make the first draft of the case and the case should contain all necessary materials.

Cheong Yok Choy & Anor v Collector of Stamp Duties [1950] MLJ 276 High Court, Kuala Lumpur (Taylor J).

A purchased land from GE, a company with common shareholders, for S$5.2m. R assessed the value of the property at S$15.5m in reliance of the valuation of the Chief Assessor and charged stamp duty according to this valuation. A based their case on three valuations obtained from CKS, a firm of valuers. A case was stated for the decision of the court by R.

Held: (1) the valuations submitted by A were not accepted by the court as they were based on properties that were not directly comparable; (2) the court also felt that the valuation made by the Chief Assessor was too high and substituted a lower valuation; (3) as A had paid more stamp duty than was due, the excess was ordered to be refunded. Both parties bore their respective costs in the appeal.

City Developments Ltd v Commissioner of Stamp Duties [1991] 2 MLJ 512 High Court, Singapore (Chan Sek Keong J).

A1-A2 had lent money to D1-D2 whereby the loans were secured by charges over land. The loan agreements provided, inter alia, for interest on the principal sums to be capitalized at the end of each calendar month and to be added to the principal sums. D1-D2 defaulted in repayment of the principal and interest. A1-A2 then applied to the High Court for orders for sale of the land charged. The High Court stayed the proceedings pending payment of stamp duties on the interest which was capitalized under the charges. A1-A2 appealed to the Supreme Court.

Held, allowing the appeals: (1) the object of the Stamp Act 1949 (Act 378) is to raise revenue by requiring documents, and not transactions, to be stamped; (2) capitalized interest and compound interest mean the same thing. Although the instruments provided for the interest to be capitalized, yet as unpaid interest it retained the character of interest and the instruments need not be separately and further stamped under s 14 of the 1949 Act. Section 28(1) of the 1949 Act is also applicable in this case so that the stamp duty is only chargeable on the original loan amounts.

United Malayan Banking Corp Bhd v Pekeliling Triangle Sdn Bhd and Another Appeal [1991] 2 MLJ 559 Supreme Court, Malaysia (Abdul Hamid Omar LP, Mohamed Azmi and Gunn Chit Tuan SCJJ).

By a number of agreements in writing, the first defendant rented from the plaintiffs nine units of equipment. The second defendant had undertaken to guarantee the punctual payment by the first defendant of sums payable under the agreements. The first defendant paid only part of the rentals due and owing. The plaintiffs alleged that in breach of the terms of the agreement the first defendant had failed to keep the equipment in good order and repair and that as a consequence, the first defendant was liable for the cost of repairs. The plaintiffs claimed that they were entitled to retake possession of the equipment and claimed against the defendants the total rent and all moneys payable under the agreements. The plaintiffs brought an action against the defendants for their claim and applied for summary judgment under O 14 of the Rules of the High Court 1980. The defendants opposed the application on various grounds. The first ground was that the plaintiffs had delayed in making the application and that no reason had been advanced for the delay. Appearance was entered on 3 October 1985 and the defence was delivered on 18 October 1985. The application for summary judgment was filed on 12 December 1985. The defendants contended that the lease agreements were a subterfuge for sale and purchase agreements. They further contended that the lease agreements were illegal in that they were intended or meant to defeat the revenue laws of the country or, alternatively, that they were contrary to public policy. The defendants also said that even if the agreements were valid, the defendants would not be liable for the sum claimed but only for the actual damage or loss proved to have been caused by the breach of the agreements or in any other reasonable compensation which was not a penalty. The defendants said that the sums claimed constituted a penalty. They also said that the plaintiffs had failed to mitigate the loss and damage allegedly suffered by them.

Held, dismissing the application: (1) the plaintiffs were not precluded from taking out an O 14 summons after the defence was filed but the onus of explaining the delay thereafter was on the plaintiffs and in this case, the plaintiffs had not discharged the onus as they had not explained the delay; (2) the defendants had succeeded in raising a triable issue capable of being resolved only by the calling of evidence at a proper trial as to whether the relevant agreements were leasing or hire-purchase agreements. The only place for the proper airing of the issue was at a full trial by evidence including the arguments whether the defendants could in law be allowed to prove that the agreements were other than lease agreements. This would be another legal issue to be thrashed out at the trial; (3) if the defendants could prove that the agreements had the effect of misleading the Revenue, such agreements would be unenforceable on the ground of public policy. This point had never, in regard to leasing agreements, been taken up before anywhere. On this point alone, the court would have been prepared to let the case go to trial; (4) the cost of repairs totalling RM1,230,000 was nearly half of the plaintiffs' total claim but the plaintiffs failed to give invoices or receipts to show how, when, and where the vehicles concerned were repaired. The plaintiffs had to prove onus of damages. The plaintiffs had claimed to have undertaken repairs to the vehicles but at the material time the vehicles were still in the possession of the defendants. These facts gave rise to another triable issue; (5) the court was not unmindful of s 92 of the Evidence Act 1950 (Act 56), and it was for the defendants to argue at the trial as to whether it would be open to them to adduce evidence to contradict or vary the written terms of the agreements. This in itself was a question of law to be decided by the trial court and it was not for the instant court to shut the door in their face.

B-Trak Sdn Bhd v Bingkul Timber Agencies Sdn Bhd & Anor [1989] 1 MLJ 124 High Court, Kota Kinabalu (Abu Mansor J).

In this case, the learned trial judge had made an order of possession in favour of the respondents, the landlords, and had ordered the appellants, the tenants to pay mesne profits from the date of the expiry of the notice to quit to the date of delivery of possession. On appeal, the appellants contended that the trial judge erred in accepting the computations and calculations of the respondents and that he erred in law in failing to reduce the damages on the ground that the amount of the loss for which the damages represented compensation would have been diminished in the respondent's case by the incidence of income tax.

Held: (1) in this case, the trial judge was entitled to act on the respondent's evidence as that was the best evidence available, the appellants neither challenging it nor adducing contrary evidence; (2) the amount awarded to the respondents as mesne profits would be liable to income tax as 'any other profits arising from property' under s 10(1)(f) of the Income Tax Act (Cap 141, 1970 Ed) and, therefore, there was no reason for the learned trial judge to reduce the damages awarded to the respondent.

Raja's Commercial College v Gian Singh & Co Ltd [1975] 1 MLJ 54 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekeram and Tan Ah Tah JJ).

In this case, the respondents had obtained an order of possession against the appellants and the High Court had ordered the appellants to pay mesne profits from the date of the expiry of the notice to quit to the date of delivery of possession. The appellants appealed to the Court of Appeal and contended that the damages awarded should not have been the full amount of rent loss by the respondents but rather the amount less income tax which the respondents would have had to pay on the rent. The Court of Appeal rejected the appellants' contention and held (see [1975] 1 MLJ 54) that the mesne profits would be taxable under s 10(1)(f) of the Income Tax Act (Cap 141, 1970 Ed) as 'any other profits arising from property'. The appellants appealed to the Privy Council.

Held, dismissing the appeal: the mesne profits, as they were damages which came in place of lost income, fell to be treated as income for income tax purposes and it was immaterial whether the respondents were traders or investors. Accordingly, there was no reason for the damages awarded to the respondent to be reduced in this case.

Raja's Commercial College v Gian Singh & Co Ltd [1976] 2 MLJ 41 Privy Council Appeal from Singapore (Lord Diplock, Lord Simon of Glaisdale and Lord Fraser of Tullybelton).