Back
2023 MarsdenLR 1268
HIGH COURT MALAYA SHAH ALAM
ENG CHIN TIAN & ORS – Appellant
Versus
KETUA PENGARAH HASIL DALAM NEGERI – Respondent
[Civil Appeal No: BA-14-2-08/2022]
The court affirmed that the consideration for shares in a real property company is defined by the Share Sale Agreement, with the loan transfer to purchasers constituting valid consideration.
Headnote:(A) Income Tax Act 1967 - Schedule 5, para 34 - Real Property Gains Tax Act 1976 - para 34A - Appeal concerning assessment notice issued for Y/A 2004 - Appellants are shareholders of a real property company - Court determined consideration for shares as RM6,799,500.00 based on Share Sale Agreement - The court emphasized that the loan obligation transferred to purchasers constitutes part of the consideration. (Paras 11, 17, 34, 36)
(B) Jurisdiction of High Court - High Court's jurisdiction to hear appeals from SCIT is limited to questions of law - The SCIT's decisions are final unless there are legal misdirections or errors. (Paras 12, 14)
Facts of the case:
Appellants, as shareholders of Gagah, contested the assessment of disposal price for shares following a sale agreement. The SCIT ruled the consideration as RM6,799,500.00, which appellants disputed, claiming it to be RM2,799,500.00.
Findings of Court:
The court confirmed the SCIT's decision, affirming the consideration for shares as RM6,799,500.00, noting the appellants' benefit from the loan transfer.
Issues: Whether the SCIT correctly assessed the disposal price and the implications of the loan transfer on consideration.
Ratio Decidendi: The court held that the purchase price was accurately stated in the Share Sale Agreement, and the appellants' liability for the loan was transferred to the purchasers, thus constituting valid consideration.
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. background of the appeal and parties involved. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. high court's jurisdiction on appeals from scit. (Para 11 , 12) |
| 3. court's authority and limitations in reviewing scit decisions. (Para 13 , 14 , 15 , 16) |
| 4. definition and understanding of consideration in law. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
| 5. dispute over the correct consideration amount. (Para 27 , 29) |
| 6. implications of loan responsibility under the share sale agreement. (Para 30 , 31 , 32 , 33) |
| 7. final determination of purchase price and its implications. (Para 34 , 35) |
| 8. upholding the scit decision. (Para 36) |
Introduction
[1] This is an appeal by the appellants on the question of law pursuant to para 34 of Schedule 5 of the Income Tax Act 1967 (" ITA ").
[2] This appeal stems from a notice of assessment issued by the respondent dated 4 May 2017 for the year of assessment ("Y/A") 2004.
Brief Facts
[3] The facts of this appeal are as follows. Syarikat Gagah Makmur Sdn Bhd ("Gagah") is the beneficial owner of a piece of agricultural land under Sandakan Lease No: 085330016 in Sungai Lokan Telupid di Daerah Beluran, Sabah with a land area of 906.60 acres. The appellants are the shareholders of Gagah, which is a real estate company.
[4] On 27 April 2004, Gagah entered into Sales and Purchase agreement with Express Credit Sdn Bhd (140202-W) to acquire a land under Sandakan Lease No 08533016 in Sungai Lokan Telupid, Daerah in Beluran, Sabah ("the said Land") for the sum of RM6,799,500.00.
[5] Gagah obtained a loan facility from Public Bank Berhad for a sum of RM4,000,000.00 for the purchase of the said land.
[6] On 30 November 2004, the appellants and others entered into Share Sales Agreement to dispose their shares in Gagah to Yap Lam Boon and Ang Kun Huat, the new shareholders.
[7] Only two (2) appellants, namely Eng Chin Tian and Lim Kee Yik, filed Form CKHT 1 on 26 September 2012, while the other two appellants, namely Teh Heng Lee and Lim Chee Lee did not.
[8] The respondent issued Form K dated from 28 April 2017 and 4 May 2017 for the appellants for Y/A 2004.
[9] The appellants appealed to the Special Commissioner of Income Tax who dismissed the appellants' appeal.
[10] The appellants then lodged an appeal in this Court.
Law Pertaining To Appeals From The SCIT
[11] With regard to whether, the High Court has jurisdiction to hear appeals from the SCIT, para 34 of Schedule 5 of the ITA provides as reproduced below:
"(1) Either party to the proceedings before the Special Commissioners may appeal to the High Court on a question of law against a deciding order made in those proceedings."
[12] Furthermore, para 39 of Schedule 5 of the ITA further reads:
"The High Court shall hear and determine any question of law arising on an appeal under para 34 and may in accordance with its determination thereof:
(a) order the assessment to which the appeal relates to be confirmed, discharged or amended;
(b) remit the appeal to the Special Commissioners with the opinion of the Court thereon; or
(c) make such other order as it thinks just and appropriate."
[13] In the case of Kenny Heights Development Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri ; [2015] 5 CLJ 923; [2015] 3 AMR 205, the Court of Appeal stated:
"[24] We make the general observation that Courts, acting in accordance with the law, are at all times bound by the legislation placing jurisdiction and authority in specialised bodies such as the SCIT.The legislation specified that the deciding order of the SCIT is final and allowed appeals to the Court on question of law and not any grievance. It underlines, within the SCIT's jurisdiction, its authority, and prevents the Courts being buried under an avalanche of tax appeals by parties unhappy with the determination of the KPHDN and the SCIT."
[Emphasis Added]
[14] Morever, in the case of Saujana Hotel Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2012] 5 MLRH 170, the Court held:
"[8] It is trite that it is open for
