00:00 The Court of Appeal has ordered the Inland Revenue Board to refund a Penang-based manufacturer
00:08 R286 million for additional taxes and penalties imposed for the year 2008.
00:16 Justice Colin Lawrence Sekerah, in delivering the unanimous decision of a three-member bench,
00:22 held that the High Court and Special Commissioners of Income Tax had erred in upholding the tax
00:27 assessment issued by LHDN.
00:30 The bench agreed with electronics manufacturer Keysight Technologies Malaysia's Sundarian
00:35 Berhad that the proceeds from the sale of intellectual property rights are a capital
00:39 receipt instead of income, and therefore not taxable.
00:45 Keysight had sold its IP in the form of technical know-how under a global restructuring programme,
00:51 after which LHDN initiated an audit and eventually assessed the proceeds from the sale of the
00:57 IP as income.
00:59 Keysight paid the R286 million assessment to LHDN and filed an appeal to the SCIT, which
01:06 was dismissed in March 2020.
01:09 The High Court affirmed the decision in May 2021.
01:14 The Court of Appeal, in overturning the earlier judgments, also found that LHDN's assessment
01:19 was time-barred as it was issued past the expiry of the five-year limitation period
01:25 under the Income Tax Act 1967.
01:28 (gentle music)
