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Construction Company’s Management Fee Deduction Rejected by SCIT

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CMSB v e Director General Inland Revenue

This case involves a tax dispute between a taxpayer company (CMSB) and the Inland Revenue Board (IRB) over the deductibility of management fees for two construction projects.

Background Facts

CMSB claimed deductions for management fees paid to a related company (CIWE) for two dam construction projects. IRB disallowed the deductions.

Issues in Dispute

Whether the management fees are deductible under Section 33(1) of the Income Tax Act 1967.

Taxpayer’s Contention

The fees were wholly and exclusively incurred for the completion of the projects which produced income.

IRB’s Contention

The fees cannot be matched to CMSB’s actual function as a management service provider. Hence not deductible.

Revenue Law

Section 33(1) allows the deduction of expenses wholly and exclusively incurred in producing income.

SCIT’s Decision

SCIT dismissed CMSB’s appeal. Held that CMSB failed to prove its case for deduction under the tax law.

Unfortunately, without the grounds of judgement, we do not have enough information to provide a complete analysis of this case.

Reference:

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