SHAH ALAM, Aug 7 — The High Court here yesterday allowed the judicial review application by Toh Puan Na’imah Abdul Khalid, the wife of former Finance Minister Tun Daim Zainuddin, to quash an additional tax assessment notice amounting to RM313.8 million issued by the Inland Revenue Board (IRB).

Judge Evawani Farisyta Mohammad ruled that the IRB had acted beyond its jurisdiction under the Income Tax Act 1967 when it issued the additional assessment notice dated August 13, 2024, for the 2018 assessment year.

She said the Income Tax Act 1967 applied only to income earned in Malaysia and foreign-sourced income remitted into Malaysia, while the assets in dispute were Na’imah’s properties abroad and did not constitute income received in the country.

“Based on the reasons stated, the court hereby allows the applicant’s judicial review application with costs,” she said in the grounds of judgment.

The judge also ruled that the additional assessment notice was unlawful as the amount of share ownership involved had previously been assessed through the joint assessment of Na’imah and the late Daim for the 2018 assessment year.

According to Evawani Farisyta, the IRB’s action had resulted in double taxation, contrary to the provisions of the Income Tax Act 1967.

She also ruled that the market value of assets abroad could not be treated as taxable income solely by reason of ownership, as such a provision is not provided for under the Income Tax Act 1967.

The judge said that if the IRB was of the view that income had not been declared when the assets were acquired in the 1990s, the appropriate assessment should have been made for that period rather than for the 2018 assessment year.

Evawani Farisyta also found it unreasonable for the IRB to require Na’imah to submit documents pertaining to assets acquired more than 20 years ago, as the Income Tax Act 1967 only mandates that taxpayers keep such records for seven years.

She held that the failure to furnish documents that were no longer legally obliged to keep could not justify the issuance of an additional assessment notice.

Na’imah was represented by S. Saravana Kumar, Nur Amira Ahmad Azhar and Dharshini Sharma, while the IRB was represented by senior revenue counsel Marina Ibrahim and Fatimah Roslan.

In her application, Na’imah sought to challenge the additional assessment notice issued by the IRB on August 13, 2024, over three overseas assets allegedly used in the settlement of loans between Ilham Baru Sdn Bhd and Ilham Tower Sdn Bhd and Welberton Private Equity Corp under a settlement agreement dated January 18, 2018.

Previously,  the same court dismissed an application by Na’imah for an interim stay against an order requiring her to pay RM313.82 million in income tax arrears to the IRB.

The court found no exceptional circumstances warranting the stay, emphasising that the respondent (IRB) holds the legal authority to enforce tax collection under the Income Tax Act 1967.

However, on October 28, 2024, the Court of Appeal unanimously allowed Na’imah’s application for a temporary stay of payment of RM313.82 million in income tax arrears to the IRB pending the disposal of her appeal. — Bernama