Decision No
 

PENALTY TAX -
 

late filing of returns - whether an application for extension of time is an excuse - whether payment of tax under the First Estimated Assessment a mitigating factor - whether quantum of penalty excessive -unintentional - ss 68(9) and 82A of the Inland Revenue Ordinance ('IRO') - frivolous appeal - order to pay cost
 

onus of proof on taxpayer on appeal - positive evidence - negative evidence - what relevant factors in assessing the appropriate penalty - imposition of additional assessments should be done in a consistent manner - additional assessments found to be excessive - the Board adjusted the penalty/additional assessments to the rate of 100% of tax undercharged - ss 68(4), 82A and 82B of the Inland Revenue Ordinance ('IRO'). [Decision in Chinese]
 

whether reasonable excuse - whether excessive
 

submission of incorrect tax returns without reasonable excuse - grossly understated assessable profits in tax returns for several years of assessment - penalties imposed range from 101.14% to 111.15% of the tax undercharged - s 82A of the Inland Revenue Ordinance ('IRO')
 

late filing of tax return - reasonable excuse - ss 51(1) and 82A of the Inland Revenue Ordinance ('IRO')
 

incorrect tax return - Practice Notes 'Locality of Profits'
 

personal assessment on his total income - s 42(1) of the Inland Revenue Ordinance ('IRO')
 

acquisition and proposed development of real property by 50:50 joint venture between two groups of companies - transfer of 50% shareholding in joint venture vehicle of offshore company acquired by one joint venture partner - sale of offshore company to subsidiary of other group within short period of time - whether transfer of offshore company an adventure in the nature of trade - intention at time of purchase - whether profit earned - Sharkey v Wernher principle - ss 14 and 68(4) of the Inland Revenue Ordinance ('IRO')
 

whether profits from the sale of a property assessable to profits tax - onus of proof resting upon taxpayers to displace the inference of trade arising from the rapid succession of purchase and sale - gross abuse of the appeal mechanism - s 68(4) and 68(9) of the Inland Revenue Ordinance ('IRO')
 

whether diminution in value of properties - whether deductible
 

lodging appeal against Commissioner's determination - taxpayer seeking extension of time to lodge - taxpayer failing to give reasons for failure to lodge - absent from Hong Kong - no automatic right of extension - burden on taxpayer - s 66(1A) of the Inland Revenue Ordinance ('IRO')
 

whether gratuity
 

net assessable income - deduction - fees incurred for Chinese opera course by a police constable - ss 12(1), (6) and 70 of the Inland Revenue Ordinance ('IRO')
 

notice of appeal - extension of time - discretion - s 66(1A) of the Inland Revenue Ordinance ('IRO')
 

whether certain amounts in dispute are rent, which is deductible as opposed to salary, which is taxable in full - retrospectively alter the nature of the income accured by, and paid to, the taxpayer is never allowed - whether 'prevented' from giving the requisite notice of appeal - ss 8(1), 9(1)(a), 66(1) and 66(1A) of the Inland Revenue Ordinance ('IRO')
 

married person's allowance - child allowance - s 29 of the Inland Revenue Ordinance ('IRO') - whether the taxpayer had the predominant care of his two sons
 

housing benefits - whether should be classified as a refund of rent or an allowance - s 9(1)(a) and 9(1A)(a) of the Inland Revenue Ordinance ('IRO')
 

exemption - whether severance payment/ long service payment - whether entitled to 10% tax refund under the Tax Exemption (1997 Tax Year) Order - ss 8(1), 9(1), 68(4) and 87 of the Inland Revenue Ordinance ('IRO')
 

deductions - home loan interest - premium on Hong Kong Housing Authority flat - s 26E of the Inland Revenue Ordinance ('IRO')
 

recognized retirement scheme - s 9(1)(ab)(i) of the Inland Revenue Ordinance ('IRO')
 

allowable deductions - membership fee - s 12(1) of the Inland Revenue Ordinance ('IRO')
 

mortgage loan - allowable home loan interest deduction - basis of calculation of deduction- s 26E of the Inland Revenue Ordinance ('IRO')