Q v Comptroller of Income Tax

• Jurisdiction: Singapore
• Judgment Date: 26 February 1969
• Date: 26 February 1969
• Docket Number: District Court Appeal No 13 of,Civil Appeal No Y51 of 1968
• Court: High Court (Singapore)

Comptroller of Income Tax

Plaintiff

and

Q

Defendant

[1968] SGHC 32

Tan Ah Tah FJ

District Court Appeal No 13 of 1966

High Court

Revenue Law–Income taxation–Taxpayer practising as advocate and solicitor–Taxpayer left original law firm for another law firm–Taxpayer was assessed to additional tax under s 35 (3) of Income Tax Ordinance (Cap 166, 1955 Rev Ed)–Whether in withdrawing from original law firm and joining another law firm taxpayer commenced to carry on or exercise profession within meaning of s 35 (3)–Sections 35 (1), 35 (3), 36 (1), 36 (2) Income Tax Ordinance (Cap 166, 1955 Rev Ed)

The taxpayer was an advocate and solicitor at all material times. In 1962, he practised in the firm X & Co. On 31 December 1962, he retired as a partner in that firm and on 1 January 1963 became a partner in the firm Y & Z. The taxpayer was notified of an additional income tax assessment for the year of assessment 1963. This was on the basis that s 35 (3) of the Income Tax Ordinance (Cap 166, 1955 Rev Ed) (“the Ordinance”), which lays down the method of computation of the statutory income of any partner from, inter alia, any profession for the year of assessment in which he commenced to carry on such profession, would apply to him for the year of commencement 1963. The taxpayer appealed successfully to the Income Tax Board of Review against the additional tax assessment. The Comptroller of Income Tax then appealed to the High Court.

Held, allowing the appeal:

(1) The method of computation of the income of a partner from a partnership is set out in s 36 of the Ordinance. Section 36 (2) provides that in two sets of special circumstances the statutory income of any person who was engaged in the trade, profession or business both before and after the change shall, notwithstanding the change, be computed in accordance with the provisions of the Ordinance as if no such change had occurred: at [7] and [10].

(2) If a person was not placed in the special circumstances provided for by s 36 (2), it was not open to him to argue that those provisions of the Ordinance which were applicable to him should not be so applied simply because his case had not been dealt with by s 36 (2). The provisions of s 35 (3) of the Ordinance were clearly applicable to the respondent: at [11].

Income Tax Ordinance (Cap 166, 1955 Rev Ed) ss 35 (1), 35 (3), 36 (1), 36 (2) (consd); ss 35, 36

G S Hill (Rodyk & Davidson) for the appellant

Sat Pal Khattar (State Counsel) for the respondent.

Tan Ah Tah FJ

1 The respondent was in 1962 practising as an advocate and solicitor in the firm of M/s X & Co of which the respondent was a partner.

2 On 31 December 1962 the respondent withdrew from the partnership firm of M/s X & Co and on 1 January 1963, he became a partner in the firm of M/s Y & Z, also a firm of advocates and solicitors.

3 On 28 April 1965 the appellant by a notice of additional assessment assessed the respondent for the year of assessment 1963 to additional tax in the sum of $3,279.05 on the basis of what may be conveniently referred to as the commencement provisions of s 35 (3) of the Income Tax Ordinance (Cap 166) by reason of the fact that the respondent withdrew from the firm of M/s X & Co on 31 December 1962 and became a partner in the firm of M/s Y & Z on 1 January 1963.

4 On 3 May 1965 the respondent made an application to the appellant under s 76 (2) of the Income Tax Ordinance (Cap 166) for a review and revision of the said additional assessment.

5 The appellant refused to amend the additional assessment and a notice of refusal was issued to the respondent. The respondent thereupon appealed to the Income Tax Board of Review and the board allowed the appeal with costs. The decision of the board is set out in the following terms:

The board is of the opinion that the taxpayer by withdrawing from the partnership with Messrs X & Co a firm of advocates & solicitors on 31 December 1962 and becoming a partner in Messrs Y & Z another firm of advocates & solicitors, on 1 January 1963 did not commence to carry on or exercise a trade, business, profession, vocation or employment within the meaning of s 35 (3) of the Income Tax Ordinance (Cap 166) but was as such continuing in the exercise of his profession as an advocate and solicitor of the High Court of Singapore.

The appeal is allowed, the assessment annulled and the costs to be taxed and paid by the comptroller to the appellant.

6 It is against this decision of the board that this appeal has been brought.

7 The method of computation of the income of a partner from a partnership is set out in s 36 of the Income Tax Ordinance which provides:

1. (1) Where a trade, business, profession or vocation is carried on by two or more persons jointly -

   1. (a) the income of any partner from the partnership for any period shall be deemed to be the share to which he was entitled during that period in the income of the partnership such income being ascertained in accordance with the provisions of this Ordinance, and shall be included in the return of income to be made by such partner under the provisions of this Ordinance;

   2. (b) the statutory income of any partner from the partnership shall be computed in accordance with the provisions of s 35 of this Ordinance by treating...