The court ruled that telecommunication towers qualify as capital allowances as 'plant', and that assessments beyond the limitation period were time-barred.

Background Facts Leading To This Appeal

[1] Vide a notice of appeal dated 23 October 2013 the appellant ('the appellant/taxpayer') had appealed against the decision of the learned Special Commissioners of Income Tax ('the SCIT') dated 27 September 2013, who had decided in favour of the respondent, ie the Ketua Pengarah Hasil Dalam Negeri ('the respondent/revenue')

[2] The appeal was made, to this court by way of case-stated, dated 15 January 2014, filed by the SCIT, under para 34, Schedule 5 of the Income Tax Act 1967 ('Act 53') for the opinion of this court on questions of law.

[3] Hence, the legal issues for the determination of this court as stated by the SCIT, were the same issues that were heard by the SCIT, namely:-

(a) on the first issue of time bar:-

Whether the notices of assessment ('the impugned notices') issued by the respondent/revenue for the Years of Assessment 2003 and 2004 are time-barred?

If s 91(3) of Act 53 is not satisfied, then the assessments are null and void and to be set aside.

(b) on the second issue of the entitlement of the appellant to claim capital allowance:-

Whether the appellant/taxpayer is entitled to claim capital allowance:-

(i) for the years of assessment ('YA') 2003-2004, if those assessment are not time-barred;

(ii) for the years of assessment 2005-2008, on the capital expenditure incurred for the appellant/taxpayer's telecommunication towers ('the towers') that are built on the basis that the telecommunication towers are plant of the appellants (the central issue underpinning this appeal).

[4] On the first issue, the SCIT had decided that:-

(a) the impugned notices for the YA 2003-2004 issued by the respondent/revenue were not time-barred.

(b) the respondent/revenue had the power to invoke s 91(3) of Act 53 to raise the assessments against the appellant/taxpayer for the YA 2003 and 2004 even though outside of the limitation period due to the negligence of the appellant/taxpayer in omitting to file correct returns by claiming wrongfully for the capital allowance for the towers it had built.

[5] On the second issue, ie the legal claim as to whether the appellant/taxpayer was entitled to claim the capital allowance for the towers, which it had built, were dealt with in entirety for the YA 2003-2008, of which the SCIT had decided that:-

(a) the telecommunication towers were premises in which the business of the appellant were conducted' and were not the apparatus by which the business activities of the appellant were carried on. (Emphasis added.)

(b) the appellant could not bring itself within the ambit ofSchedule 3 of Act 53, as the appellant did not satisfy the requirement that the telecommunication towers were plant in order to be entitled to claim capital allowance under the aforesaid provision. (Emphasis added.)

[6] Upon hearing the submissions of both parties, this court had allowed the appeal by the appellant/taxpayer, and had set aside the whole decision of the SCIT, and had answered the stated legal issues in the following terms viz:-

(a) on the first issue of time bar - the impugned notices of assessment for the YA 2003-2004.

(i) this court had found the decision of the SCIT that, the impugned notices for the YA 2003 and 2004 were not time-barred, was wrong in law. In other words, the impugned notices were indeed time-barred; and

(ii) this court had found that the respondent/revenue did not satisfy s 91(3) of Act 53 ie the respondent/revenue had failed to prove the negligence of the appellant/taxpayer to submit the correct returns for the YA 2003-2004 and, therefore the impugned notices were null and void, and hence was set aside by this court.

(b) on the second issue of the entitlement