JUDGMENT

Ahmad Kamal Md Shahid J:

Introduction

[1] This is an appeal by the appellant by way of Case Stated against the Deciding Order of the Special Commissioners of Income Tax (SCIT) dated 22 August 2014 according to para 34 of Schedule 5 of the Income Tax Act 1967 ( ITA ).

[2] The SCIT by majority decision allowed the appeal by way of Form Q filed by the respondent against the following income tax assessments:

[3] The issue for the determination of the SCIT is essentially on the deductibility of the "provision for the purchase of the timber concession" as reflected in the Journal Voucher in the sum of RM1,148,000.00 for the year of assessment (YA) 2004 and RM896,000.00 in the YA 2005, respectively. In other words, whether the SCIT was wrong in law to determine that the disputed item/expenses claimed by the respondent as its cost of producing its gross income should be allowed under s 33(1) of the ITA .

[4] The appellant raised the assessment because the appellant disallowed the expenses as those expenses are provision not 'incurred' under s 33(1) of the ITA .

Background Facts

[5] The established facts found by the SCIT are as stated in para 8 on pp 4 and 5 of the Case Stated and are