HSBC Institutional Trust Services (Singapore) Ltd v Chief Assessor
Jurisdiction | Singapore |
Judge | Sundaresh Menon CJ |
Judgment Date | 17 January 2013 |
Neutral Citation | [2013] SGCA 4 |
Citation | [2013] SGCA 4 |
Docket Number | Civil Appeal No 80 of 2012 |
Date | 17 January 2013 |
Hearing Date | 27 November 2012 |
Plaintiff Counsel | Tan Kay Kheng, Tan Shao Tong and Novella Chan (WongPartnership LLP) |
Published date | 25 January 2013 |
Defendant Counsel | Foo Hui Min, Joanna Yap and Alvin Chia (Inland Revenue Authority of Singapore) |
Court | Court of Appeal (Singapore) |
Year | 2013 |
This is an appeal against the decision of a High Court judge (“the Judge”) who held that a portion of the rent of a unit within a shopping centre representing the depreciation of certain asset items in the common area of the shopping centre (“the Asset Items”) should be included in the gross rent for the purposes of computing the “annual value” of the unit in assessing property tax. The decision of the Judge was reported in
The facts are straightforward and undisputed. The appellant, HSBC Institutional Trust Services (Singapore) Limited (“the Appellant”), is the trustee of CapitaMall Trust which owns,
The Property is a shopping centre comprising 180 units which are normally leased to tenants carrying on various types of businesses. The Asset Items consist of escalators, lifts, air-conditioning and fire safety systems installed within the Property. It is common ground that the Asset Items are fixtures.1
The Appellant’s evidence is that a sum calculated at the rate of $0.20 per square foot per month (“the $0.20 psf”) was included in each tenant’s monthly gross rent. This sum was to represent the annual depreciation of the plant and machinery of the Property including,
The Appellant had sought to exclude the depreciation component in the computation of the annual value of the units in the Property for the purposes of assessment of property tax. However, the Respondent ruled that the depreciation component should not be excluded in the computation of the annual value of the units in the Property for the valuation years of 2004 and 2005 (see the Judgment at [4]). This dispute thus gave rise to the present proceedings.
The proceedings belowThe Appellant appealed to the Valuation Review Board (“the Board”) against this ruling of the Respondent. On 24 May 2011, the Board found for the Appellant and held that the depreciation component of the rent should be regarded as part of the total cost of services. As the depreciation component pertained to services rather than rent, the Board considered it irrelevant that the Asset Items (to which the depreciation component related) were permanent features and an integral part of the Property. The Board thus held that the depreciation component ought to be excluded from the gross rent in the computation of the annual value of each unit of the Property.
The Respondent then appealed to the High Court. The Judge reversed the decision of the Board and held that the depreciation component in the gross rent paid by the tenant of each unit had to be included in the computation of annual value (see the Judgment at [43]). She reasoned as follows:
The following are the issues before this Court:
These issues will be considered
As previously stated by this Court in
The charging provision is found in s 6(1) of the PTA, which provides as follows:
6. —(1) As from 1st January 1961, a property tax shall, subject to the provisions of this Act, be payable at the rate or rates specified in this Act for each year upon the annual value of all houses, buildings, lands and tenements whatsoever included in the Valuation List and amended from time to time in accordance with the provisions of this Act.
Pursuant to s 6(1) of the PTA, property tax is payable upon the “annual value” as defined in s 2(1) of the PTA, the material part of which reads as follows:
Related to rent or letting
“annual value” — (a ) in relation to a house or building or land or tenement, not being a wharf, pier, jetty or landing-stage, means the gross amount at which the same can reasonably be expected to belet from year to year,the landlord paying the expenses of repair, insurance, maintenance or upkeep and all taxes (other than goods and services tax) ; ...[emphasis added in italics and bold italics]
Two phrases in s 2(1) of the PTA in particular require further analysis here. The first is the phrase “reasonably be expected to be let from year to year”,
Pursuant to
Although the gross rent of a property gives some indication of annual value, and is often “an important factor and/or starting-point” in the assessment of annual value, it is by no means conclusive as the gross rent might contain elements which have nothing to do with rent or letting (see
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