Section 17(1)(c) of the Ordinance prohibits deducting expenditure of a capital nature in ascertaining assessable profits for profits tax purposes. In so far as principles in deciding capital expenditure are concerned, the most frequently cited authority is the UK case of British Insulated and Helsby Cables v Atherton in which Lord Cave stated:

But when an expenditure is made, not only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such expenditure as properly attributable, not to revenue, but to capital.

Below are cases where the companies involved suffered losses or incurred certain expenditure:

v Company E is a garment manufacturer. For the purpose of business expansion, it moved into a bigger factory and incurred expenses in dismantling, transporting, and re-erecting of machinery.

vi Company F, a trading company in Hong Kong, pays a big sum of money to a foreign company for a registered trademark. Company F intends to market the trademark-related products in Singapore and Hong Kong.

Required Evaluate whether the loss suffered or expenditure incurred by each of the above companies is or is not deductible for profits tax purposes.