SINGAPORE CEMENT MANUFACTURING COMPANY (PRIVATE) LIMITED v COMPTROLLER OF INCOME TAX

Facts

Singapore Cement Manufacturing Company (Private) Limited imports cement for sale to concrete suppliers. In 2013 it built a cement silo with a capacity of 24,000 tons, 65 metres high and 23 metres across, in preparation for higher demand for Portland fly-ash cement. Cement arriving by ship, on average 11,000 tons per shipment, is offloaded into the top of the silo over the 3 days a ship is docked at Jurong Port, stored in the upper part, and then dispensed from the bottom in batches of 35 tons into trucks over the following working days. The cement is not processed or transformed inside the silo, apart from filtration as it leaves.

On 3 June 2016 the company applied for an advance ruling under s 108 of the Income Tax Act on whether the silo was plant qualifying for accelerated capital allowance under s 19A. The Comptroller of Income Tax split the silo into two groups. Capital allowance was allowed on the mechanical and electrical equipment, such as the bucket elevator, pneumatic valves, fluid slides, aerated bin, blowers, computer system, batching chute and weighbridges, valued at $3,443,890. It was refused on the structural parts, including the silo walls, the inverted cone and the rooms housing equipment, which made up the larger share of the cost. The Income Tax Board of Review, after a site visit, found for the Comptroller, and the company appealed in Tax Appeal No 10 of 2022.

Issues

1. Whether the Board erred in law in its treatment of ZF and the foreign silo cases.
2. Whether the Board was right that the silo's function was storage and housing.
3. Whether the silo had to be treated as one indivisible asset rather than separate parts.
4. Whether the tax treatment of the company's other silos was a relevant consideration.

Holding

Choo Han Teck J affirmed the Board's finding that the silo was a building and not a plant, held that the Board's findings after its site visit were not unreasonable, and dismissed the appeal. Costs were to be heard later if the parties could not agree.

Reasoning

Whether an asset is plant is a question of fact, so unless the Board erred in law the company had to show its conclusion was unreasonable. The Board made no error of law. Under Singapore law plant and building are mutually exclusive, and English cases such as Schofield and Barclay Curle were decided under a regime that lets an asset be both, so they did not help answer which category the silo fell into.

On function, the company said the silo transported, controlled, filtered, batched, preserved and protected the cement. The court found that the first four functions were performed only by the equipment, which had already received allowances. Preservation and protection are functions integral to a building; treating them as pointing to plant would blur the line between plant and buildings such as warehouses. Without the equipment, the disputed assets served storage and housing.

On divisibility, the foreign cases treating grain silos and a cold room as plant again came from systems without mutual exclusivity. Section 19A did not stop the Comptroller from treating parts of the silo as separate assets, and that power was needed to avoid an all-or-nothing result. The company's own separate cost schedules, the fact that the equipment could only be fitted after the structure was built, and the use of different maintenance contractors supported separation. Even taken as a whole, the silo's main purpose was storage.

Finally, the treatment of the company's other, structurally similar silos was relevant. A silo could not be claimed as a building for the Industrial Building Allowance and also as plant under s 19A, as the two are mutually exclusive.

From the judgment