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