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2022 MarsdenLR 1997
COURT OF APPEAL PUTRAJAYA
WIRAMUDA (M) SDN BHD – Appellant
Versus
KETUA PENGARAH HASIL DALAM NEGERI – Respondent
[Civil Appeal No: W-01(A)-513-10-2020]
Taxation of compensation from compulsory land acquisition is valid under Income Tax Act without infringing constitutional rights regarding adequate compensation.
Headnote:(A) Income Tax Act 1967 – Sections 4C and 24(1)(aa) – Land Acquisition Act 1960 – Section 8(1) and 16 – Appeal against judicial review application to quash Notice of Assessment for Year Assessment 2018 – Dismissal of application upheld due to constitutional validity of tax on compensation received from compulsory land acquisition. (Paras 20, 21, 22, 28, 49)
(B) Constitution of Malaysia – Article 13(2) – Adequate compensation – The court held that s 4C of the ITA 1967 is not unconstitutional under this article. (Paras 22, 33)
(C) Judicial Review – Availability of Alternative Remedy – The court ruled that the appellant could not bypass appeal to the Special Commissioners of Income Tax under s 99(1) of the ITA 1967, confirming that judicial review is limited to exceptional circumstances. (Paras 20, 47)
Facts of the case: The appellant sought to quash the Notice of Assessment arguing that taxation of compensation received from compulsory land acquisition was unconstitutional and incorrect. The High Court previously dismissed the application, leading to the appeal. (Paras 1, 20)
Findings of Court: The High Court's order of dismissal is valid; the assessment based on s 4C conforms with constitutional provisions; no grounds for judicial review due to absence of unique circumstances. (Paras 51, 59)
Issues: The main issues involved the constitutionality of s 4C concerning adequate compensation as protected by the Federal Constitution, the appellant's entitlement to an alternative remedy, and whether the land was classified as stock in trade. (Paras 21, 36)
Ratio Decidendi: The court articulated that the taxation imposed under s 4C is valid as it aligns with the compensation provisions and does not infringe upon the constitutional rights outlined in Article 13. Furthermore, where an alternative remedy exists, judicial review should not be pursued. (Paras 22, 35, 49)
Result: Appeal dismissed with costs.
JUDGMENT
[1] This is an appeal by Wiramuda (M) Sdn Bhd ("the appellant") against the decision of the High Court Kuala Lumpur on 29 September 2020 in dismissing the appellant's application for judicial review inter alia to quash the Notice of Assessment for Year Assessment 2018 dated 31 May 2019 issued by the Director-General of the Inland Revenue ("the Revenue").
The Background Facts
[2] In 1987, Selangor State Government had alienated to the appellant five parcels of land ("the land") for development project and the land are as follows:
(i) HS(D) 25128, PT25163
(ii) HS(D) 25129, PT25164
(iii) HS(D) 25130, PT25165
(iv) HS(D) 25131, PT25166
(v) HS(D) 25132, PT25167
[3] From 1993 until 1994, the appellant had carried out quarry activities on certain parts of the land. Thereafter, from 1996 until 2011 the quarry activities were continued by a third-party company and the appellant received income from the sale of the quarry rocks. The quarry activities ended in 2011 and the appellant remained dormant since then.
[4] On 1 July 2015, the appellant entered into a Sale and Purchase Agreement with Mach 8 Sdn Bhd to dispose of the land.
[5] On 23 July 2015, the State Government of Selangor issued a Gazette Notification No 2801, a declaration in Form D ("1st Form D") under s 8(1) Land Acquisition Act 1960 ("the LAA 1960") to compulsorily acquire parcels 25163, 25164, 25165, and 25167 for the SUKE Highway project.
[6] Thereafter, on 21 August 2015, a notice of inquiry in Form E was issued to the appellant pursuant to s 10 of the LAA 1960 for parcel 25167.
[7] On 26 August 2015, the appellant signed a Supplementary Sale and Purchase Agreement with Mach 8 Sdn Bhd to proceed with the land sale which was not affected by the compulsory acquisition under the 1st Form D.
[8] On 9 December 2016, the State Government of Selangor issued another declaration in Form D ("2nd Form D") under Gazette Notification No 4810 that changed the wide area of parcels 25163, 25164, and 25165 which were to be acquired. Parcel 25167 was acquired under the 1st Form D while parcels 25163, 25164, and 25165 were acquired under the 2nd Form D. A notice of inquiry in Form E was also issued to the appellant for parcels 25163, 25164, and 25165.
[9] As regards the acquisition of parcels 25163, 25164, 25165, and 25167, a notice to offer compensation in Form H was then issued to the appellant under s 16 of the LAA 1960. However, the appellant contended that the particulars of the parcels in Form H were inconsistent with the particulars of the parcels stated in the 1st and 2nd Form D.
[10] The appellant also filed an objection about the amount of compensation offered due to the difference of the parcels wide-area stipulated in Form H and 1st and 2nd Form D, which the appellant contended, would make the appellant suffer loss.
[11] Next, pursuant to s 22 of the LAA 1960, notice in Form K dated 13 September 2019 and 19 September 2017, was issued to the appellant informing about the acquisition of parcels 25163, 25164, 25165, and 25167. In this regard, the particulars of land in Form H correspond with the particulars in Form K.
[12] Further, on 9 November 2017, the State Government of Selangor had issued a third declaration in Form D ("3rd Form D") under Gazette Notification No 3709 to amend the particulars of parcels 25163 and 25165 in the 2nd Form D to correspond with the particulars stipulated in Form H and K.
[13] On 19 December 2017, the State Government took physical possession of the parcels in accordance with the 3rd Form D.
[14] On 22 January 2018, Mach 8 Sdn Bhd filed a judicial review application at the High Court Shah Alam against the Land Administrator and the State Government of Selangor for a declaration that the 3rd Form D is invalid and to be canceled.
[15] The appellant's objection as to the amount of compensation offered for the acquisition of the parcels was also referred to Shah Alam High Court under s 38(5) of the LAA 1960.
[16] On 12 March 2019, the High Court al
