Back
COURT OF APPEAL, PUTRAJAYA
KYROS INTERNATIONAL SDN BHD – Appellant
Versus
KETUA PENGARAH HASIL DALAM NEGERI – Respondent
[Civil Appeal No: B-01-16-2010]
Certainly. Based on the provided legal document, here are the key points summarized:
The appellate court emphasized the importance of respecting primary findings of fact made by Special Commissioners of Income Tax, unless there are clear legal errors or a lack of evidence. Findings of primary facts are generally unassailable and can only be disturbed in limited circumstances (!) (!) .
The standard for appellate interference varies depending on whether the facts relate to physical or psychological matters. Findings concerning physical facts are rarely disturbed unless plainly wrong, whereas psychological facts require cogent reasons for any interference (!) (!) (!) .
The case involved the exemption of overseas franchise payments from income tax and the correctness of penalties imposed under the Income Tax Act. The Special Commissioners allowed the appeal regarding exemption but upheld the penalty, which was contested by the respondent (!) (!) .
The appellate court reaffirmed that findings of fact by Special Commissioners are to be given utmost respect and only be disturbed under specific, limited conditions. The court highlighted the importance of the Special Commissioners explicitly stating their findings of fact and the unassailability of primary facts unless legal errors are evident (!) (!) (!) .
The court clarified that the proper approach to appellate interference depends on whether the facts are physical or psychological, with a stricter approach applied to psychological facts. The court must carefully review the evidence, the reasoning of the lower tribunal, and the grounds of appeal before deciding to overturn findings (!) (!) (!) .
The decision underscores that findings based on facts established outside Malaysia, such as the operation of franchisees overseas, are significant in determining tax exemption eligibility. The court found that the Special Commissioners' conclusion that the franchise activities took place outside Malaysia was supported by evidence and should be respected (!) (!) (!) .
The court reaffirmed that the discretion to impose penalties lies solely with the revenue authority and that penalties should only be imposed when there is evidence of deliberate non-disclosure or misconduct. In this case, the full disclosure and good faith conduct of the taxpayer justified the court's decision to uphold the penalty waiver (!) (!) (!) (!) .
The legal principles governing appellate review stress the importance of a meticulous review of the record, including pleadings, evidence, and reasons provided by the lower tribunal. The appellate court must demonstrate that it has applied its mind and provided cogent reasons if it chooses to overturn primary factual findings (!) (!) .
The distinction between physical and psychological facts is crucial, with the latter requiring more detailed reasoning for any interference. The court highlighted that reliance solely on general statements or incomplete reasoning is insufficient for overturning findings of fact (!) (!) .
The role of Special Commissioners is recognized as specialized, and their findings are to be given significant deference. Any attempt to challenge these findings must meet strict legal criteria, demonstrating that the findings are unsupported by evidence or involve legal misconceptions (!) (!) .
In summary, the court upheld the findings of the Special Commissioners regarding the location of franchise activities and the exemption of overseas franchise income, emphasizing the limited scope for appellate interference and the importance of thorough judicial review.
| Table of Content |
|---|
| 1. conclusion of the appeals (Para 1) |
| 2. court's reasoning on appellate interference (Para 2 , 3 , 4 , 5 , 9) |
| 3. key issues determined by scit (Para 6 , 7) |
| 4. arguments presented by appellant and respondent (Para 8 , 10 , 11 , 13) |
| 5. application of legal principles in appellate context (Para 12 , 14) |
| 6. legal reasoning regarding franchise fees. (Para 15) |
[1] This is our judgment in respect of the appellant's appeal and the respondent's cross appeal. We heard both the appeals on 5 December 2012 and allowed the appellant's appeal and dismissed the respondent's cross appeal with costs to the appellant. My learned brothers, Datuk Linton Albert and Datuk Wira Mohtarudin bin Baki, have read the judgment in draft form and approved the same.
[2] The appeal revolves on a complaint of the appellant that the learned High Court Judge interfered in the finding of facts of the Special Commissioners of Income Tax (SCIT) and to drive home the point relies on the case of Chua Lip Kong v. Director-General of Inland Revenue , 1981 MarsdenLR 464 where the Privy Council in no uncompromising terms held:
"Their Lordships cannot stress too strongly how important it is that, in every Case Stated for the opinion of the High Court, the Special Commissioners should state clearly and explicitly what are the findings of fact upon which their decision is based and not the evidence upon which those findings, so far as they consist of primary facts, are founded. Findings of primary facts by the Special Commissioners are unassailable. They can be neither overruled nor supplemented by the High Court itself; occasionally they may be insufficient to enable the High Court to decide the question of law sought to be raised by the case stated, but in that event it will be necessary for the case to be remitted to the commissioners themselves for further findings."
[emphasis added]
[3] At this stage of our judgment itself, we must say that courts exercising the appellate jurisdiction have over the years placed upon themselves various levels of self-imposed restrictions for appellate interference on the finding of facts of trial courts or tribunal, or statutory appeal by case stated as in the instant case [see Colgate Palmolive (M) Sdn Bhd v. Yap Kok Foong and Another Appeal, 2001 MarsdenLR 1662 ]. It must also be noted that the scope of appellate interference may be further restricted depending on the nature of the appeal as the jurisdiction relating to appeal, revision, review, reference, etc and the jurisprudence relating to such 'heads' are not one and the same [see Hari Shankar v. Rao Girdhari Lal AIR [1963] SC 698].
[4] When dealing with appellate interference on finding of facts, it is important to appreciate that the Evidence Act 1950 categorises facts into two types. They are physical facts and psychological facts. Physical facts under the Act refer to anything, state of thing, or relations of thing capable of being perceived by the senses. Psychological facts refer to any mental condition of which any person is conscious of.
[5] As a general rule finding of facts of trier of facts is rarely disturbed by an appellate Court more so when it relates to physical facts. As long as the trier of facts has directed his mind to the relevant issues, and had acted in accordance with the law and the decision passes the test of reasonableness, the finding of facts relating to physical facts will not be ordinarily disturbed notwithstanding the judgment is brief and direct to the point. However, when it relates to psychological facts the trier of facts is expected to give more cogent reasons to ensure every aspect of the relevant evidence has been considered in the right perspective to pass the test of reasonableness. [See Lee Ing Chin @ Lee Teck Seng & Ors v. Gan Yook Chin & Anor, 2003 MarsdenLR 1561 ]. Failure to give sufficient reasons in the grounds of judgment may result in appellate interference. This is evident from decided criminal cases and very seldom in civi
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
