Commissioner of Inland Revenue v Zentrum Holdings Ltd CA215/05

The Commissioner of Inland Revenue sought to appeal a decision of the Taxation Review Authority, which had overturned certain income tax assessments made against Zentrum Holdings Ltd. The Commissioner wished to argue, for the first time on appeal, that the transactions in question were shams rather than relying on the previous argument that they amounted to illegitimate tax avoidance. Zentrum sought to prevent this on the basis that the Commissioner was precluded from raising new arguments on appeal. The Court of Appeal considered whether the Commissioner was precluded from arguing that the transactions were shams on appeal to the High Court. The Court concluded that the principle articulated in Commissioner of Inland Revenue v V H Farnsworth Ltd did not apply to the dispute resolution procedure under the Tax Administration Act 1994. As the appeal to the High Court was by way of rehearing, the Commissioner was not precluded from arguing that the transactions were shams on appeal. The Court also considered whether the Commissioner's proposed argument was caught by the time bar in section 108 of the Tax Administration Act 1994. The Court concluded that the argument was not caught by the time bar. The appeal was allowed and the case was remitted to the High Court to be determined in accordance with this judgment.