The Court of Appeal has ordered the Inland Revenue to refund RM15.6 million to Petronas, overturning a ruling that disallowed deductions for overseas office expenses.
PUTRAJAYA: The Court of Appeal has ordered the Director-General of Inland Revenue (DGIR) to refund RM15.672 million to Petronas within six months.
The ruling overturns a previous decision that disallowed tax deductions for the national oil company’s overseas office expenses in Sudan and Vietnam for the 2010 assessment year.
A three-member bench led by Justice Datuk Wong Kian Kheong allowed Petronas’s appeal today.
Justice Wong stated that both the High Court and the Special Commissioners of Income Tax had erred in law.
He said they incorrectly ruled that Petronas was not entitled to deduct its country-office related expenses under the Petroleum (Income Tax) Act 1967.
The court found that the expenses were incurred outside Malaysia and were therefore deductible.
Justice Wong also rejected the DGIR’s argument that Petronas had been negligent in filing its 2010 tax return.
He said even if there was negligence, the lower courts failed to determine if it caused a tax loss.
“The DGIR was barred by Section 39(1) of the PITA from issuing the additional assessment, and we set it aside,” Justice Wong said.
The refund comprises RM11,392,044 and RM4,280,556, to be paid within six months from today’s date.
The court also made no order as to costs for the appeal and the prior proceedings.
Lawyers S. Saravanan Kumar and Nur Amira Ahmad Azhar represented Petronas in the proceedings.
Senior Revenue Counsel Ashrina Ramzan Ali and Revenue Counsel Nik Amyrah Syarinie Mohd Dusuki appeared for the DGIR.
