See Mee Chun JCA

(delivering majority judgment of the court):

INTRODUCTION

[1]There are two appeals being heard together. Appeal 726 is the appeal of Etiqa Family Takaful Bhd (‘taxpayer’) against the decision of the High Court (‘HC’) dismissing its appeal for year of assessment (‘YA’) 2011, 2012 and 2013. Appeal 746 is the appeal by the Director General of Inland Revenue (‘Revenue’) against the decision of the HC in allowing the taxpayer’s appeal for YAs 2008, 2009 and 2010.

[2]The taxpayer is in the principal business of managing the general and family takaful business. From 1 December 2007, the taxpayer also commenced managing takaful investment-linked business upon the transfer of the takaful assets, liabilities and business of Maybank Takaful Bhd to it.

BACKGROUND FACTS

[3]The Revenue raised notices of additional assessment (Form JA) for YAs 2008 to 2013 with additional tax payable and penalties as set out below:

The taxpayer being aggrieved by the Revenue’s decision filed notices of appeal (Form Q) for the YAs in question.

[4]On 19 February 2021, the Special Commissioners of Income Tax (‘SCIT’) disallowed the taxpayer’s appeal. An appeal to the HC ensued. On 14 September 2022, the HC allowed in part the taxpayer’s appeal.

DECISION OF THE HC

[5]The grounds of judgment (‘GOJ’) of the HC judge dated 15 November 2022 is to be found in encl 27/10–25.

[6]The HCJ dealt with the first issue of whether the SCIT was right in holding that the commission expenses on the wakalah fee could not be deducted as the expenses of the shareholders fund under s 33Income Tax Act 1967s 33(1)ITA

[7]The HCJ had no problem accepting the taxpayer’s submission that s 33(1)ITA

[8]This was next stated in paras 33, 34 and 35:

[33] The learned SRC submitted that the ITA treats the takaful business as a separate and distinct business. It is for this reason, according to the learned SRC, that Parliament inserted s 60AAITAs 60AAITA

[34] I find merits in this line of argument. If indeed s 33(1)s 60AA ITA

[35] I find support in the said proposition in the judgment of Abdoolcader SCJ in Foo Loke Ying & Anor v Television Broadcasts Ltd & Ors

The court however is not at liberty to treat words in a statute as mere tautology or surplusage unless they are wholly meaningless. On the presumption that Parliament does nothing in vain, the court must endeavour to give significance to every word of an enactment, and it is presumed that if a word or phrase appears in a statute, it was put there for a purpose and must not be disregarded.

[9]The HCJ then went to consider whether the SCIT had correctly concluded that the taxpayer was negligent within the meaning of s 91(3)ITA

[41] With respect, a reasonably different interpretation of the relevant provisions in the ITA can hardly be held as negligence within the meaning of s 91(3)ITA

[10]Accordingly, the SCIT was found to have erred in concluding that the taxpayer was negligent and that the Revenue had not successfully discharged its burden of proof under s 91(3)ITA

[11]For the same reason under s 113(2)ITA

[12]In para 45, the findings of the HC were as follows:

[45] For the reasons aforesaid, the finding of this court is as follows:

(a)the commission expenses incurred by the appellant in the shareholders’ fund for the YAs 2008 to 2013 to earn the wakalah fee from the general takaful fund are not deductible as the expenses of the shareholders’ fund under s 33ITA

(b)in the absence of any proof of intentional wrongdoing on the appellant’s part the DGIR had not successfully discharged its burden of proof under s 91(3)ITAs 113(2)ITA

ORDER OF THE HC

[13]The order of the HC is to be found in encl 27/30–32:

... HEREBY ORDERED that:

(1)The Appellant’s appeal in relation to the Notice of Additional Assessment (‘Form