The court determined that the Minister's powers under the Income Tax Act are discretionary and not subject to compulsion, and ruled the applicant's claims were without merit.

Introduction

[1] On 23 November 2022, I dismissed the application for leave to commence judicial review proceeding by the applicant, Sime Darby Property (Selangor) Sdn Bhd against the Minister of Finance ("the Minister") for the following principal reliefs (stated in encl 1):

(i) an order for the Minister to exercise his powers under s 135 and/or s 127(3A) of the Income Tax Act 1967 (" ITA ") to set aside or exempt the notices of additional assessment for the years of assessment ("YA") 2016 dated 17 February 2021 ("the assessment") on the ground that the assessment is illegal, void, unlawful and/or in excess of authority, irrational, and/or unreasonable and resulted in the applicant's legitimate expectation ("first principal relief); and

(ii) a declaration that ss 3 and 5 of the ITA provide that income tax is only chargeable upon income and as such there is no basis for the Minister to disallow the applicant's claim for deduction of losses under the group relief following its erroneous inclusion of the deemed Liquidated Ascertained Damages (LAD) charges as the surrendering company's income ("second principal relief).

[2] I now state the reasons for my decision.

The Background Facts

[3] The following salient facts averred in the affidavit verifying facts give context to the filing of the instant application for leave. The applicant is a private company limited by shares incorporated in Malaysia and is principally engaged in the business of property development. On 8 August 2019, the Director General of Inland Revenue ("the DGIR") completed a tax audit on the applicant and presented the applicant with its preliminary findings for the YA 2015, YA 2016 and YA 2017. This resulted in an exchange of correspondences between the applicant and DGIR.

[4] Eventually, on 20 December 2019, the DGIR produced his audit findings and informed the applicant that consequent to the adjustment made to the surrendering company the applicant's claim for deduction under the group relief is to be adjusted. The audit findings were at the request of the applicant put on hold pending the outcome of the tax audit on the surrendering company. Thereafter, on 4 February 2021, the DGIR maintained his position on the group liability issue and informed that the losses surrendered by the surrendering company had been adjusted and as a result the applicant's claim of losses surrendered amounting to RM22,763,355.00 will be disallowed. On 17 February 2021 the applicant was served with the notice of additional assessment for the YA 2016.

Subject Matter Of The Instant Application

[5] About eight months later, by letter dated 14 October 2021 the applicant applied to the Minister to exercise his powers under s 135 of the ITA to give directions to the DGIR to set aside or to exercise his powers under s 127(3A) of the to exempt the assessment made by the DGIR. The applicant gave the Minister until 29 October 2021 to respond to the said request. The Minister did not respond and the applicant treated the act of not replying its letter an act of "having rejected the applicant's application". The applicant referred to this deemed or purported decision by the Minister as the 'decision' which is subject matter of the instant application for leave.

The Grounds Of Review

[6] The grounds in support of the reliefs sought in the application were stated in the O 53 Statement as follows:

(a) The decision of the Minister was ultra vires, illegal, void, unlawful and/or in excess of authority on account of the Minister failing to realise that:

(i) the DGIR had acted arbitrarily by disallowing the applicant's group relief under s 44