KPHDN v Aneka Jasaramai Express Sdn Bhd

- .. Income derived from the sale of bus tickets in Singapore for journeys which emanate from the Singapore bus stretch into Malaysia is not income derived from Malaysia.

In KPHDN v Aneka Jasaramai Express Sdn Bhd Rayuan Sivil No. W-01-47-03 the CA dismissed the appeal by the IRB. The decision of Raus Sharif J (as his lordship then was) in KPHDN v Aneka Jasaramai Express Sdn Bhd (2005) MSTC 4095 was therefore affirmed. The crux of the decision is that income derived from the sale of bus tickets in Singapore for journeys which emanate from the Singapore bus stretch into Malaysia is not income derived from Malaysia.

Source: Francis LK Tan and Janice Kon, "Case Commentaries", Tax Guardian (Vol. 2/No. 3/2009/Q4), p. 41

KPHDN v Casio Computer Co. Ltd, KPHDN v Binastra Holding Sdn Bhd, Oil Research and Development Board Malaysia and Another v Premium Vegetable Oil Sdn

- Para 34A(1), Second Schedule, RPGT Act 1976

In KPHDN v Casio Computer Co. Ltd R 3(R1) 14-07-06, the High Court allowed the appeal of the IRB. The SCIT held that a purposive approach must be adopted in the interpretation of a tax statute and by adopting such an approach, the disposal of shares by the taxpayer in a manufacturing company which "unintentionally" becomes a real property company cannot be said to have disposed of a chargeable asset. This is because para 34A(1) of the Second Schedule to the Real Property Gains Tax Act 1976 was enacted for the purpose of bringing to tax individuals who make use of companies to avoid paying real property gains tax. The High Court however ruled that it was bound by the recent Court of Appeal decision in KPHDN v Binastra Holding Sdn Bhd Rayuan Sivil W-01-80-05, the facts of which are similar to those of the Casio case. There is no written judgment by the Court of Appeal (CA) and as such, the basis of the CA's decision is not known. However, at the High Court, the principle of adopting a purposive approach in the interpretation of statutes including tax statutes was referred to. If the rationale for the CA's decision was that a purposive approach was inapplicable, this would be in conflict with the Federal Court decision of Palm Oil Research and Development Board Malaysia and Another v Premium Vegetable Oil Sdn Bhd [2004] 2 CLJ 265.

Source: Francis LK Tan and Janice Kon, "Case Commentaries", Tax Guardian (Vol. 2/No. 3/2009/Q4), p. 41

Detail of Para 34A(1), Second Schedule, RPGT Act 1976 : Please click - http://www.kpmg.com.my/kpmg/publications/tax/42/a0169sc002.htm

KT & Co. v Ketua Pengarah Hasil Dalam Negeri, OPD Sdn Bhd v KPHDN, NVA Sdn Bhd v KPHDN (S. 113 (2), ITA 1967)

In KT & Co. v Ketua Pengarah Hasil Dalam Negeri (1991) MSTC 2594 the Special Commission of Income Tax (SCIT) determined that good faith as a defense is not applicable under Section 113(2) of the Income Tax Act (ITA) 1967 on the ground that there is nothing in Section 113(2), unlike Section 113(1) which says that good faith is a defense. This determination is however not followed in subsequent determination by the SCIT. For example, in OPD Sdn Bhd v KPHDN (2009) MSTC 3846 the SCIT ruled that since the incorrect return or information was made in good faith the penalty imposed was to be waived. Similarly, in NVA Sdn Bhd v KPHDN (2009) MSTC 3897 the SCIT also determined that if a deduction of an expenditure is claimed in good faith any penalty imposed is wrong in law.

Although good faith is not provided for in Section 113(2), the section if interpreted literally could lead to taxpayers acting on professional advice which the Inland Revenue Board (IRB) does not accept as correctly being liable to penalty. It should be noted that Section 113(2) talks about submitting incorrect return or giving false information. It is submitted that difference of opinion cannot be the basis of falsehood, particularly where a taxpayer acts on professional advice.

The 2009 determinations are under appeal and it is hoped that the superior courts will provide some guiding principles in this area.

Source: Francis LK Tan and Janice Kon, "Case Commentaries", Tax Guardian (Vol. 2/No. 3/2009/Q4), p. 41

Detail of Section 113, ITA 1967 : Please click - http://www.kpmg.com.my/kpmg/publications/tax/22/a0053s0113.htm