WONG YUNG CHUN v Ketua Pengarah Hasil Dalam Negeri

Case Significance

Illustrates judicial intervention in a real property gains tax assessment under the Edwards v Bairstow principle where the revenue's conclusion is inconsistent with the primary facts, and applies the strict construction of taxing statutes in favour of the taxpayer, including the effect of section 433B consent on a non-citizen's acquisition date.

This High Court decision at Alor Setar is a tax appeal from the Special Commissioners of Income Tax concerning the assessment of real property gains tax on the disposal of land. The appellant, a Hong Kong citizen, was the beneficial owner of a one-tenth share of land in Kedah that he had agreed to sell under a sale and purchase agreement in 2017. As a non-citizen, the transfer required the consent of the State Authority under section 433B of the National Land Code (Kanun Tanah Negara), which was granted in March 2019, and the transmission and memorandum of transfer were registered later that month. The revenue authority had assessed the gain by treating the acquisition date as 31 May 2018 and adopting a particular acquisition value, and the Special Commissioners had upheld that assessment. On appeal, the central questions were the correct acquisition date for a non-citizen beneficiary — and in particular the effect of the State Authority's consent on the registration date — and the market value to be used, the appellant contending that the assessment rested on erroneous primary facts and inconsistent valuations. The court applied the principle in Edwards v Bairstow, under which a conclusion inconsistent with the primary facts discloses an error of law that permits appellate intervention, together with the rule that a taxing statute is to be construed strictly, ambiguity being resolved in favour of the taxpayer. It set aside the notice of assessment for the year of assessment 2018 and remitted the matter to the revenue authority to reassess the chargeable gains on the disposal of the one-tenth share, based on the agreed acquisition date of 26 March 2019 and an acquisition price or market value of RM885,719 for that share. The judgment illustrates judicial review of tax assessments where the findings are inconsistent with the primary facts.