JUDGMENT

Abdul Malik Ishak J:

Introduction

By way of encl. (1), the plaintiff sought for the following prayers:

1. Declarations that:

(a) The Director General of (the) Inland Revenue Board has wrongfully determined under Section 21 of the Income Tax Act 1967 (Act 53) (Revised 1971) that the basis period of the Plaintiff is as follows:

1st May 1998 to 30th April 1999 to be taxed for the year of assessment 2000 on preceding year basis;

1st May 1999 to 31st December 2000 to be taxed for the year of assessment 2000 on current year basis;

1st January 2001 to 31st December 2001 to be taxed for the year of assessment 2001;

and such determination by the Director General of Inland Revenue Board is consequently invalid and/or null and void.

(b)Alternatively, the Director General of the Inland Revenue Board in arriving at his decision (as) set out in paragraph (a) above, erred in law and on the facts in invoking the anti avoidance provisions embodied in Section 10 of the Income Tax (Amendment) Act 1999.

(c)The Director General of the Inland Revenue Board ought to have determined the basis periods for the Plaintiff as follows:

1st May 1998 to 31st December 1999 to be taxed for the year of assessment 2000 on preceding year basis;

1st January 2000 to 31st December 2000 to be taxed for the year of assessment 2000 on current year basis.

(d) The Plaintiff should be exempted from tax for the period from 1st May 1998 to 31st December 1999.

(e)In the event the Plaintiff has paid any monies as tax for the basis period as determined by the Director General of (the) Inland Revenue Board as set out in paragraph (a) above, such monies (shall) be refunded forthwith to the Plaintiff.

2. Costs; and

3. Such further or other relief as the Court deems fit and proper.

Facts Of The Case

The plaintiff was formerly known as Berjaya Prudential Assurance Berhad which was incorporated on 6 December 1983. On 6 April 1998, a company known as Sri Han Suria Sdn Bhd ("SHSSB"), which was incorporated on 8 December 1997, acquired 100% of the shares of Berjaya Prudential Assurance Berhad thereby making it a wholly owned subsidiary of SHSSB. Thereafter, Berjaya Prudential Assurance Berhad changed its name to Prudential Assurance Malaysia Berhad - the present plaintiff.

Prior to the acquisition of the shares of the plaintiff by SHSSB, the plaintiff's financial year end was April 30th - which was in line with the year end of its holding company known as Berjaya Capital Berhad. Whereas SHSSB's year end is on 31 December. As provided for under s. 168(1)(b) of the Companies Act 1965 , the plaintiff being a subsidiary company of SHSSB was obliged to change its financial year so that it coincides with that of its holding company, namely, SHSSB. Thus, according to the plaintiff with its change in the accounting year end to that of 31 December, the accounts of the plaintiff would be made up as follows:

Financial Periods Number Of Months

1 May 1997 to 30 April 1998 twelve (12) months

1 May 1998 to 31st December 1998 eight (8) months (change

of year to 31 December 1998)

1 January 1999 to 31 December 1999 twelve (12) months

1 January 2000 to 31 December 2000 twelve (12) months

and thereafter

By letter dated 13 July 1998, the plaintiff wrote to Bank Negara Malaysia and informed the Governor that the plaintiff was changing its name to Prudential Assurance Malaysia Berhad and further that the plaintiff was also changing its financial year end to 31 December. So, according to the plaintiff, its accounts for 1998 would be from 1 May 1998 to 31 December 1998 - a period of eight months. On 23 October 1998 - which was the budget day, the Minister of Finance whilst presenting the 1999 budget in Parliament announced that the tax assessment system based on income derived in the preceding year would be changed to the current year, beginning from the year 2000. In order to facilitate this change, the Minister of Finance also announced a tax waiver of income derived in 1999. So it was pointed out that by reason of the change