The Inland Revenue Board (IRB) has served MK Land Holdings Bhd’s fully-owned unit, Saujana Triangle Sdn Bhd (STSB), with notices for an additional income tax amounting to RM55.7 million and a 45 percent penalty of RM25.07 million, reported The Star.
With a total amount of RM80.77 million, the tax bill is in relation to assessment years 2009 to 2011 and 2013.
MK Land noted that the IRB imposed the additional income tax and penalty after it considered the company’s gains from the disposal of land held under investment properties during the assessment year 2009 as revenue instead of capital in nature.
It revealed that IRB disregarded the five-year barred period to increase said assessment in relation to the land disposal while disallowing certain development costs on the ground that these were just provisions and the amounts are yet to be paid.
As such, IRB does not consider them as expenses that qualify for tax deduction as provided in Section 33(1) of the Income Tax Act.
MK Land shared that its subsidiary disagreed with IRB’s assessments and would appeal them.
Upon the advice of its lawyers and tax consultants, STSB believes the land sales of the investment properties constituted capital transactions that are liable to real property gains tax (RPGT) for the year 2009, which is a tax-exempt year.
Moreover, the notices of assessment raised by IRB are statute barred and erroneous in law. STSB added that the accrual of development costs had been allowed based on accounting standards as well as the public ruling of IRB on property development.
Image sourced from The Star
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