b-01a-666-12-2023 — MULTI-PURPOSE CREDIT SDN BHD v KETUA PENGARAH LEMBAGA HASIL DALAM NEGERI

Catchwords

Appeal against the Learned High Court Judge’s (“Learned Judge”) decision in affirming the Special Commissioner of Income Tax’s (“SCIT”) decision that the loan debts which were waived during the relevant/subject Year of Assessment shall be treated as taxable income despite the admitted and undisputed fact that the taxpayer already had been fully taxed on the loan amount (by not deducting the loan debt as a deductible operating expense/liability and instead treating the loan as a gross income) during the preceding Year of Assessment (“YA”) before the loan debt was eventually waived. Judicial Review – Income Tax - Tax Release – Deductible Interest - Deduct the loan as operating expense / liability outright or Initially treat the loan disbursement as an income (no deduction) - Interpretation and the true effects of Section 30(4) of the Income Tax Act 1967 (“ITA”) - Whether or not the Learned Judge and the SCIT was correct to find that Section 30(4) of the ITA irrelevant and inapplicable - Whether or not the Learned Judge and the SCIT was correct to apply the lex generalis in Section 4 and Section 22 of the ITA in the case for waiver of debt; Whether or not the Learned Judge and the SCIT was correct to find that the Revenue was entitled to impose a 2nd Tax Collection against the Waived Debt during (Y) despite having collected against the loan sum during (X); and Whether or not the categorisation of the loan debt (as CAPEX or OPEX) in the specific circumstance of this case would carry any material impact against the appropriate tax treatment.

Practice Areas

Appeal against the Learned High Court Judge’s (“Learned Judge”) decision in affirming the Special Commissioner of Income Tax’s (“SCIT”) decision that the loan debts which were waived during the relevant/subject Year of Assessment shall be treated as taxable income despite the admitted and undisputed fact that the taxpayer already had been fully taxed on the loan amount (by not deducting the loan debt as a deductible operating expense/liability and instead treating the loan as a gross income) during the preceding Year of Assessment (“YA”) before the loan debt was eventually waived. Judicial Review

Judges (3)

Ahmad Kamal bin Md. Shahid Coram Azimah binti Omar Delivered S. Nantha Balan a/l E.s. Moorthy Coram

Counsel (7)

Lembaga Hasil Dalam Negeri Firm Rosli Dahlan Saravana Partnership Firm Muhammad Danial Izzat bin Zulbahari Counsel Respondent Normareza Binti Mat Rejab Counsel Respondent S. Saravana Kumar Counsel Appellant Syazana Safiah Binti Rozman Counsel Respondent Tan Jia Hua Counsel Appellant

Parties (2)

KETUA PENGARAH LEMBAGA HASIL DALAM NEGERI Respondent MULTI-PURPOSE CREDIT Sdn Bhd Appellant

Summary

Multi-Purpose Credit Sdn Bhd appealed the High Court's decision affirming the Special Commissioner of Income Tax's ruling that waived loan debts should be treated as taxable income, despite the company having already been fully taxed on the loan amount in a prior year of assessment. The Court of Appeal allowed the appeal, holding that once the loan sum was already taxed during the year of disbursement (by not deducting it as an expense), the Revenue could not impose a second tax on the same amount during the year of waiver. The additional assessments and penalties were declared unlawful and ordered to be refunded.

What was the outcome of MULTI-PURPOSE CREDIT SDN BHD v KETUA PENGARAH LEMBAGA HASIL DALAM NEGERI?

<p>Multi-Purpose Credit Sdn Bhd appealed the High Court's decision affirming the Special Commissioner of Income Tax's ruling that waived loan debts sh...

Statutes Cited

Income Tax Act 1967 (Cap 53)

Cases Cited (2)

MY (2)

[2005] 5 MLJ 717 [2024] 3 MLJ 1