The court ruled that the Minister of Finance has discretion under the Income Tax Act and is not legally obligated to set aside Notices of Additional Assessment, requiring applicants to exhaust domestic remedies first.

JUDGMENT

Ahmad Kamal Md Shahid J:

Introduction

[1] The Applicant on 3 December 2020, filed an application for leave to commence judicial review proceeding (encl 1) under O 53 of the Rules of 2012 (ROC) seeking inter alia, the following:

1.1 An order for the Respondent to exercise its power under s 135 and/or s 127(3A) of the Income Tax Act 1967 ( ITA ) to set aside or exempt Inland Revenue Board's (IRB) decision in the form of Notices of Additional Assessment (Forms J) for the years of assessment (YAs) 2017 and 2018 for the total sum of RM4,280,655.60 on the grounds that the said Form J were illegal, void, unlawful and/or in excess of authority, had been irrational and/or unreasonable and resulted in a denial of the Applicant's legitimate expectations;

1.2 A Declaration that the Applicant is entitled to claim the losses in YAs 2017 and 2018 amounting to RM2,292,182.64 and RM1,988,472.96 respectively surrendered by Puncak Niaga Construction Sdn Bhd (PNC) according to the Group Relief Scheme provided under s 44A(1) of the ITA ;

1.3 That all further proceedings including the enforcement and effect of the said Form J be stayed until the full and final determination of the application to quash the said Form J;

1.4 That all necessary and consequential directions and orders be given;

1.5 That the costs of this application be costs in the cause; and

1.6 All other and further relief which this Honourable Court deems fit and proper.

[2] In essence, the Applicant, Puncak Niaga Management Services Sdn Bhd filed an application for leave to commence judicial review against the Honourable Minister of Finance (Respondent) seeking various reliefs among others an order for the Honourable Minister of Finance to exercise his powers under s 135 and/or s 127(3A) of the ITA to set aside or exempt the Notices of Additional Assessment (Form J) for YAs 2017 and 2018 raised by the Intervener.

[3] After the hearing, I dismissed the Applicant's application for leave to commence judicial review (Enclosure 1). I will now set out the grounds for my decision.

Backgrounds Facts

[4] The background facts of this case are extracted from the Statement with suitable modification and are as follows:

4.1 The Applicant is a wholly owned subsidiary of Puncak Niaga Holdings Berhad (PNH). The principal activity of the Applicant is to provide management services to PNH and other subsidiaries of PNH which includes PNC;

4.2 In the course of carrying out its project, losses of PNC were surrendered to the Applicant, but the IRB disallowed the same on the premise that losses arose from the uncompleted projects. I am advised by the Applicant's solicitors and verily believe that the IRB has no basis in law to do so as the ITA does not make any restriction of this nature;

4.3 The undisputed chronology of key events leading to this application is as follows:

4.4 As the Respondent had failed to respond to the Applicant's request to issue a direction under s 135 of the ITA and/or exempt under s 127(3A) of the , the taxes arbitrarily raised via the said Form J, the Applicant is making the present application to preserve its legal rights. The Respondent's decision in his failure to respond is treated as rejecting the Applicant's application for request under s 135 of the and/or application for tax exemption under s 127(3A) of the .

The Law

[5] The Federal Court in WRP Asia Pacific Sdn Bhd v. Tenaga Nasional Bhd, [2012] 4 MLJ 296, speaking through Suriyadi Halim Omar FCJ (as he then was) held:

"... Leave may be granted if the leave application is not thought of as frivolous, and if leave is granted, an arguable case in favor of granting the relief sought at the substantive hearing may be the resultant outcome. A rider must be attached to the application though ie unless the matter for judicial review is amenable to judicial review absolutely no success may be envisaged."

[6] The test laid down for leave to commence a judicial review in WRP Asia Pacific Sdn Bhd (supra) are as follows:

6.1 w