An interesting question of whether a constructed Silo operated and deployed by a company (a Singapore tax resident and incorporated company, (“The Co”) in its computerised cement terminal in the business of  the provision of cement via cement tankers may be regarded as “plant” for the purposes of claiming accelerated capital allowances under Section 19A of the Singapore Income Tax Act (“the Act”).

The Co appealed against the unabsorbed capital allowances carried forward in the Notice of Amended Assessment for the Year of Assessment 2016 totalling $517,170 and the additional tax payable of $229,736.33 reflected in the Notice of Additional Assessment for the Year of Assessment 2017. The objection of the YAs related specifically to the treatment of the Silo construction costs of $13,515,678 and incidental professional fees of $1,076,876 as these have been disallowed as capital allowance claims under Section 19A of the ITA by the Comptroller.

The key factors that the Income Tax Review Board concluded that the Silo is not a “plant”:

  1. The Silo was constructed in the form of a large concrete structure which clearly reflects its permanent nature.
  2. It is an inextricable part of the group of buildings upon which the business is conducted.
  3. The exact operational role of the Silo was that of storage and housing of both equipment and cement.

As such, the Silo is treated as a structure and not “plant”. Interestingly, although it as an integrated whole was rejected as a plant, the review board did not assess whether separate components of the Silo (eg bucket elevator, bag filter system, fluid valves, pneumatic valves, aerated bin, vibrating filters, batching chutes, weighbridge, computer system, blowers etc) could be allowed individually. Understandably, the Co has taken the appeal position and gone for the full cost of the Silo as a whole to be treated as plant. This position is akin to one taking a building with all the separate components (eg bucket elevators etc) integrated and housed within a fully integrated facility to be treated as a plant. It is clear that these are two separate items: a structure and perhaps “plants” (at best). Sometimes it may be better to win some than risk it all.