This is an appeal by way of a case stated by the appellant against the decision of the pesuruhjaya khas cukai pendapatan made on 24 January 1997 which ruled that:

Adalah diputuskan bahawa amaun berjumlah RM881,270 yang telah disperuntukkan dalam akaun perayu, termasuk amaun yang telah dikenakan kepada akaun untung rugi, tidak dienarkan sebagai potongan di bawah s33(1) Akta Cukai Pendapatan 1967.

Maka dengan ini adalah diperintahkan bahawa rayuan ini ditolak ...

The background of this case can be summarized as follows. The appellant had set up a retirement and resignation benefits [scheme] for its employees in accordance with the provisions of the National Employees Benefit Manual. The purpose of the scheme was to provide benefits for employees who resign or whose services have been terminated other than for cause. For the Years of Assessment 1986 to 1991, the appellant had set aside a total sum of RM881,270 and charged this amount as vesting benefits in its relevant accounting records and claimed the said amount as a deduction of income. The Pengarah Hasil Dalam Negri (?the respondent?) disallowed the said sum to be regarded as a deduction. As a result of that, an appeal