The nature of the powers and duties of the Commissioner under section 64(2) of the Ordinance has been settled since the decision in Mok Tsze [1962] HKLR 258, in which Fung v Commissioner of Inland Revenue J said: is to review and revise the assessment and this, in my view, requires him to “His duty perform an original and administrative, not an appellate and judicial, function, of considering what the proper assessment should be. He acts putting himself de novo, in the place of the assessor, and forms, as it were, a second opinion in substitution for the opinion of the assessor.” These principles were recently reaffirmed by the Court of Final Appeal in (2009) 12 Shui On Credit Co Ltd v Commissioner of Inland Revenue HKCFAR 392. The taxpayer had entered into a complicated scheme of transactions with a view to avoiding tax. It was assessed to profits tax under the anti-avoidance provisions of section 61A of the Ordinance, which requires that the or would have had, but for this the transaction “has, section” effect of conferring a tax benefit on a person. The Commissioner took the view that there was no need to resort to section 61A because, despite the scheme, the sums in question were chargeable to profits tax under the ordinary provisions of sections 16 and 17 of the Ordinance. He therefore made an assessment under those sections. The taxpayer objected that he was not entitled in dealing with an objection to make an assessment upon an entirely different basis. But Lord Walker of Gestingthorpe, citing the case, said that the Mok Tsze Fung was to consider whether, and if so in what de novo Commissioner’s duty amount, the taxpayer should be assessed to profits tax. He was not confined to deciding whether the assessment had been made on the right basis.
The nature of the powers and duties of the Commissioner under section 64(2) of the Ordinance has been settled since the decision in Mok Tsze Fung v Commissioner of Inland Revenue [1962] HKLR 258, in which J said: “His duty is to review and revise the assessment and this, in my view, requires him to perform an original and administrative, not an appellate and judicial, function, of considering what the proper assessment should be. He acts de novo, putting himself in the place of the assessor, and forms, as it were, a second opinion in substitution for the opinion of the assessor.” These principles were recently reaffirmed by the Court of Final Appeal in Shui On Credit Co Ltd v Commissioner of Inland Revenue (2009) 12 HKCFAR 392. The taxpayer had entered into a complicated scheme of transactions with a view to avoiding tax. It was assessed to profits tax under the anti-avoidance provisions of section 61A of the Ordinance, which requires that the transaction “has, or would have had, but for this section” the effect of conferring a tax benefit on a person. The Commissioner took the view that there was no need to resort to section 61A because, despite the scheme, the sums in question were chargeable to profits tax under the ordinary provisions of sections 16 and 17 of the Ordinance. He therefore made an assessment under those sections. The taxpayer objected that he was not entitled in dealing with an objection to make an assessment upon an entirely different basis. But Lord Walker of Gestingthorpe, citing the Mok Tsze Fung case, said that the Commissioner’s duty was to consider de novo whether, and if so in what amount, the taxpayer should be assessed to profits tax. He was not confined to deciding whether the assessment had been made on the right basis.
FACV000014_2013.docx