The overcharge arose from disallowance of expenses linked to Petronas’ overseas country-office related expenses for that year.
PUTRAJAYA, (Jan 29): The Court of Appeal here today instructed the Director-General of Inland Revenue (DGIR) to refund RM15.672 million to Petronas within six months from today for taxes overcharged to the company for the 2010 assessment year.
The overcharge arose from disallowance of expenses linked to Petronas’ overseas country-office related expenses for that year.
The Court of Appeal’s three-member bench comprising Justices Datuk P. Ravinthran, Datuk Wong Kian Kheong and Datuk Nadzarin Wok Nordin made the decision after allowing the appeal brought by the national oil and gas company.
The disputed expenses incurred by the national oil and gas company were for its overseas country offices in Sudan and Vietnam which the High Court had ruled that the Country Office expenditure was not deductible under Section 15 (1) of the Petroleum (Income Tax) Act 1967 (PITA).
In delivering the court’s decision, Justice Wong said the High Court and the Special Commissioners of Income Tax (SCIT) had erred in ruling that Petronas was not entitled to deduct its office-related expenses under PITA.
Justice Wong said the 2010 tax return had been filed within the stipulated time and that the company also duly paid all taxes due from the company to the DGIR within the stipulated time periods.
He said the court disagreed with the DGIR’s argument that Petronas had been negligent in submitting its 2010 tax returns, adding that even if there existed the company’s negligence regarding the 2010 tax return, both the High Court and SCIT had erred in law by not deciding on whether such negligence on the company’s part had caused the tax loss.
He also said both High Court and SCIT should have decided that the country-office expenses had been expended by the company outside Malaysia.
“In view of the reasons stated, especially the errors of law committed by both the SCIT and High Court, the DGIR was barred by Section 39 (1) of the PITA from issuing the Form JA (the additional assessment), and we set it aside,” he said.
He said the DGIR is to refund RMRM11,392,044 and RM4,280,556 to Petronas within six months from today.
“With the agreement of both parties, no order as to costs for this appeal, proceedings in the High Court and before SCIT,” he said.
In today’s proceeding, lawyers S. Saravanan Kumar and Nur Amira Ahmad Azhar represented Petronas while Senior Revenue Counsel Ashrina Ramzan Ali and Revenue Counsel Nik Amyrah Syarinie Mohd Dusuki appeared for the DGIR. – Bernama
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