Secan wins in tax challenge
Secan, a Hutchison Whampoa associate company, yesterday won its challenge to a tax bill involving interest of $873 million paid on the South Horizons development.
A judge ruled the Commissioner of Inland Revenue's board of review wrong to find the interest was already deducted from Secan's bill, or that it was no longer entitled to deduct the interest.
The sum was for interest and loan arrangement fees, or interest charges, paid by Secan for the financing of the Ap Lei Chau development in the four years to 1992.
At the time, Secan was 50 per cent owned by Hutchison Whampoa, 30 per cent by Cheung Kong (Holdings) and 20 per cent by Hongkong Electric Holdings.
The Inland Revenue's case was that Secan brought the interest expense in its profit and loss account as a component of the cost of its stock in trade.
However, Mr Justice Peter Cheung Chak-yau said this was 'simply incorrect' and the commissioner's reasoning 'flawed'.
'The board was wrong to find the interest was already deducted or that Secan is no longer entitled to deduct the interest,' the judge said.