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Property gains can be subject
to income tax
22/04/2006 The Star By RAPHAEL WONG
PUTRAJAYA: The Court of Appeal has ruled that property which has been sold
for a profit can be subject to income tax despite being earlier assessed
under the real property gains tax (RPGT).
In a written judgment, Court of Appeal judge Justice Zaleha Zahari said
there was no rule of law which precluded the Inland Revenue Board (IRB) from
discharging an assessment under the RPGT and later proceed with an
assessment under the Income Tax Act (ITA).
She said the IRB was free to revise and discharge an assessment under RPGT
and to then raise an assessment under the ITA if the facts and circumstances
warranted it.
Justice Zaleha stated this when dismissing the appeal by Terentum Theatre
Sdn Bhd against the High Court's judgment to uphold the Income Tax Special
Commissioner's decision to dismiss the company's appeal against the
re-assessment of tax for the sale of its land.
On May 30, 1973, Teruntum bought 1.62ha of land in Kuala Lumpur for RM2.3mil
to build a theatre and applied to the then Kuala Lumpur Municipality (now
DBKL) for conversion of the land.
However, the municipality rejected Teruntum's plan to build a cinema on Oct
21, 1980.
Teruntum sold the land to a third party in two transactions – the first on
Dec 4, 1980 for RM10mil, and the second on Feb 29, 1984, for RM13,171,200.
The then Inland Revenue Department imposed a RM367,566.80 real property
gains tax and issued a certificate of clearance after payment was made.
On July 19, 1990, the IRB re-assessed Teruntum's tax under the ITA and
ordered it to pay RM9.4mil for the sale of the land.
Teruntum appealed to the Income Tax Special Commissioner on Sept 21, 1990
but it was dismissed on April 22, 1995.
Dissatisfied with the IRB's decision, Teruntum filed an action at the High
Court against the board but the application was dismissed on July 16, 1998.
In her judgment read by Court of Appeal registrar Hasnah Datuk Mohammed
Hashim, Justice Zaleha also said Teruntum had not been subjected to double
taxation. |
