Lam (centre) and Wong (left) with a company representative, Robert Lim at the High Court.
KUCHING: The Inland Revenue Board (IRB) yesterday dropped its appeal in the High Court against the decision of the Special Commissioner of Income Tax (SCIT) in allowing the tax appeal filed by a logging subcontracting company in Sibu over its claim for deductions for monthly payments made to the tuai rumah and penghulu of several longhouses.
The payments were made for the local leaders to help the company discuss, negotiate and settle with the residents of their respective longhouse, the disputes arising from the company who, while entering the designated forest areas to carry out logging activities, unknowingly encroached onto the residents’ occupation areas and causing damage to the areas, fruit trees and crops planted.
The IRB, during a tax audit on the company, regarded these payments as capital in nature and disallowed them for deductions and also raised additional assessments, requiring the company to pay substantial amount of additional tax plus the penalty imposed under Section 113(2) of the Income Tax Act 1967.
The company through its tax consultant subsequently filed a Notice of Appeal Form Q to appeal against the additional assessments to the Special Commissioners of Income Tax (SCIT).
After having heard the evidences of the witnesses and perused the lengthy written submissions submitted by the counsels from both parties, the SCIT decided by majority to allow the company’s appeal.
The IRB was not satisfied with the decision and appealed to the High Court where, during the course of case management and consequent to its further review of the appeal, it decided to withdraw its appeal.
The withdrawal of the appeal means the additional assessments will be wholly discharged.
The company was represented at the High Court by counsel KC Wong of KC Wong & Associates Advocates, assisted by tax consultant Lam Kam Wing.
Lam had also represented the company during the hearing before the SCIT.