SUNWAY REIT HOLDINGS SDN BHD v KETUA PENGARAH HASIL DALAM NEGERI

w-01a-610-08-2022 Court of Appeal (Mahkamah Rayuan) 5 March 2025 • W-01(A)-610-08/2022 • 28 min read
20 cases cited (0 SG, 20 foreign)

Catchwords

The case concerns the deductibility of interest expenditure for tax purposes. The Court of Appeal ruled in favor of Sunway REIT Holdings Sdn Bhd, holding that the return of capital received from Sunway REIT is taxable income. It also held that section 33(1) of the ITA does not allow for apportionment of interest expenditure, making Public Ruling No. 2/2011 ultra vires. Consequently, the court allowed the full deduction of RM18,188,537.62 in interest expenditure against the taxable income for the relevant year. The High Court’s decision was set aside, with costs awarded to the appellant.

Practice Areas

The case concerns the deductibility of interest expenditure for tax purposes. The Court of Appeal ruled in favor of Sunway REIT Holdings Sdn Bhd, holding that the return of capital received from Sunway REIT is taxable income. It also held that section 33(1) of the ITA does not allow for apportionment of interest expenditure, making Public Ruling No. 2/2011 ultra vires. Consequently, the court allowed the full deduction of RM18,188,537.62 in interest expenditure against the taxable income for the relevant year. The High Court’s decision was set aside, with costs awarded to the appellant.

Judges (3)

Alwi bin Abdul Wahab Coram Lim Chong Fong Delivered Supang Lian Coram

Counsel (7)

Lembaga Hasil Dalam Negeri Firm Rosli Dhalan Saravana Partnership Firm Ahmad Isyak bin Mohd Hassan Counsel Respondent Azleena binti Md Khairuddin Counsel Respondent Lim Chinn Wei Counsel Appellant Nur Amira binti Ahmad Azhar Counsel Appellant S. Saravana Kumar Counsel Appellant

Parties (2)

Ketua Pengarah Hasil Dalam Negeri Respondent SUNWAY REIT HOLDINGS Sdn Bhd Appellant

Case Significance

SUNWAY REIT HOLDINGS SDN BHD v KETUA PENGARAH HASIL DALAM NEGERI is a Court of Appeal (Mahkamah Rayuan) decision dated March 5, 2025 (citation: w-01a-610-08-2022). <p>Sunway REIT Holdings appealed the High Court's dismissal of its claim for full deduction of RM18.19 million in interest expenditure against taxable income from Sunway REIT distributions. The Court of Appeal allowed the appeal, holding that s.33(1) of the Income Tax Act does not permit apportionment of interest expenditure, making Public Ruling No. 2/2011 ultra vires, and allowed the full deduction.</p> The panel comprised Alwi bin Abdul Wahab, Lim Chong Fong and Supang Lian, with Lim Chong Fong delivering the judgment. Counsel appearing: Ahmad Isyak bin Mohd Hassan (counsel for respondent), Azleena binti Md Khairuddin (counsel for respondent), Lim Chinn Wei (counsel for appellant), Nur Amira binti Ahmad Azhar (counsel for appellant), S. Saravana Kumar (counsel for appellant).

Summary

Sunway REIT Holdings appealed the High Court's dismissal of its claim for full deduction of RM18.19 million in interest expenditure against taxable income from Sunway REIT distributions. The Court of Appeal allowed the appeal, holding that s.33(1) of the Income Tax Act does not permit apportionment of interest expenditure, making Public Ruling No. 2/2011 ultra vires, and allowed the full deduction.

What was the outcome of SUNWAY REIT HOLDINGS SDN BHD v KETUA PENGARAH HASIL DALAM NEGERI?

<p>Sunway REIT Holdings appealed the High Court's dismissal of its claim for full deduction of RM18.19 million in interest expenditure against taxable...

Statutes Cited

Courts of Judicature Act 1964
s 69(4)
Income Tax Act 1967 (Cap 53)

Cases Cited (20)

UK (5)
[1937] AC 473 [1942] AC 130 [1966] 1 QB 273 [1978] AC 297 [1979] 2 All ER 22
MY (15)
[1965] 1 MLJ 228 [1972] 2 MLJ 110 [1981] 2 MLJ 150 [1982] 1 MLJ 235 [1984] 1 MLJ 248 [1994] 2 MLJ 713 [1994] 3 CLJ 541 [2000] 2 AMR 1363 [2000] 2 CLJ 481 [2000] 3 CLJ 409 [2009] 4 MLJ 682 [2009] 5 CLJ 518 [2014] 1 AMR 97 [2014] 1 MLJ 272 [2015] 5 CLJ 923