[2021] 5 MLRA 114
Court of Appeal, Putrajaya
Hanipah Farikullah, S Nantha Balan, Darryl Goon Siew Chye JJCA
[Civil Appeal No: W-01(A)-275-04-2018]
Hanipah Farikullah, S Nantha Balan, Darryl Goon Siew Chye JJCA


Darryl Goon Siew Chye JCA:

[1] This was an appeal against the decision of the High Court in allowing an appeal by the Director-General of Inland Revenue ('DGIR'), by way of case stated, against a deciding order of the Special Commissioners of Income Tax ('SCIT').

[2] The main issue in this appeal was whether real property gains tax ('RPGT') is payable upon the disposal of shares in a company whose total tangible assets consisted mainly of land.

[3] On 27 November 2015, pursuant to an appeal by the appellants, the SCIT had unanimously decided that a company by the name of Syarikat Bioford Development Sdn Bhd ('Bioford') was not a company subject to para 34A of Schedule 2 of the Real Property Gains Tax Act 1976 ('RPGTA').

[4] Consequently, the SCIT unanimously decided that the acquisitions by each of the appellants of 56,025 shares in Bioford that were subsequently disposed of by them were not subject to para 34A of Schedule 2 of the RPGTA.

[5] The effect of the SCIT's deciding order was that RPGT was not payable on the gains from the disposal of the said Bioford shares by the appellants.

[6] Dissatisfied with the decision of the SCIT, the DGIR required the SCIT to state a case for the opinion of the High Court pursuant to s 34 of Schedule 5 of the Income Tax Act 1967.

[7] On 11 April 2018, the High Court delivered its decision on the case stated. The High Court allowed the DGIR's appeal and held that RPGT was payable on the gains made by the appellants upon the disposal of their said Bioford shares.

The Basic Facts

[8] Bioford was a company incorporated on 7 January 2004.

[9] By a Sale and Purchase Agreement dated 8 September 2004, Bioford purchased a piece of land held under Grant 12115 Lot 29 Sek 83 Bandar and District of Kuala Lumpur measuring approximately 4.862 acres from two companies, Mishika (M) Sdn Bhd and Maharta Sdn Bhd, for a consideration of RM14,500,000.00. The two companies were joint proprietors of the said land.

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