MK Land unit’s appeal against RM80.77mil tax dismissed
PETALING JAYA: MK Land Bhd’s wholly owned subsidiary Saujana Triangle Sdn Bhd’s appeal against the decision of the High Court on the Inland Revenue Board’s (IRB) notices of assessment and additional assessments totalling RM80.77mil has not been granted.
“The High Court and Court of Appeal’s decision had been based on the availability of an alternative remedy via an appeal to the Special Commissioners of Income Tax which had been lodged by Saujana Triangle on June 1, 2017,” said MK Land in a filing with Bursa Malaysia.
“The amount of income tax and penalties totalling RM80.77mil allegedly owing by Saujana Triangle now becomes due. Saujana Triangle’s solicitors and tax consultants had advised that there are reasonable grounds to challenge the validity of the said notices of assessment and additional assessment raised by the IRB and the penalties imposed via its appeal to the Special Commissioners of Income Tax,” said MK Land.
It will make further announcement should there be any material update on the matter.
Last May, Saujana Triangle received a surprise tax bill from the IRB.
According to a filing with Bursa then, Saujana Triangle had been served with notices for an additional income tax of RM55.7mil and a 45% penalty of RM25.07mil.
The tax bill of RM80.77mil was in relation to years of assessment 2009-2011 and 2013. MK Land said the IRB decided to impose the additional income tax and penalty for three reasons.
One, it considered the gains from the disposal of land held under Investment Properties in year of assessment 2009 as revenue in nature, instead of capital in nature.
The IRB has also disregarded the five-year time barred period to raise the said assessments in respect of the land disposal.
Finally, the IRB has disallowed certain development costs on the basis that these were only provisions and the amounts had yet to be paid. Thus it does not treat them to be incurred for the purpose of Section 33 (1) of the Income Tax Act, 1967 (as expenses that qualify for tax deduction).