Whether incentive trips for dealers reaching sales targets are allowable deductions (under Section 33) or just deductions as entertainment expenses?

Ketua Pengarah Hasil Dalam Negeri v. Khind-Mistral (Borneo) Sdn. Bhd. 2018 AMTC 83 

Issue:	Whether incentive trips for dealers reaching sales targets are allowable deductions (under Section 33) or just deductions as entertainment expenses?
Answer:	Incentive trips were not entertainment within the meaning of Section 18 Income Tax Act 1967 as it was given to dealers who have achieved their sales target. So it is fully deductible.
Facts/Case Study :	1.      The Company appointed dealers to sell their products; 2.      The Company introduced a scheme to motivate and reward dealers who have reached their sales target by awarding them with incentive trips. 3.      These incentive trips were on top of commissions to the dealers; 4.      The Company had deducted ALL THE EXPENSES for these incentive trips. 5.      Inland Revenue Board (IRB) argued that these expenses were in fact “entertainment” expenses under Section 18 of the Income Tax Act.
Decision:	1.       The incentive trips where not merely given to the dealers but ONLY THOSE WHO HAVE ACHIEVED THEIR SALES TARGET. 2.       The aim of the incentive trip scheme was to boost the sales of the Company therefore its income. 3.      The incentive trips were not “entertainment” within the meaning of Section 18 of the Income Tax Act. 4.       The Judge in this case was of the view that the trips where no in the nature of “hospitality” mentioned in Section 18. 5.       The Company was not being hospitable. 6.       The dealers had to “earn” those incentive trips. There were not given to all the dealers but only to those who have achieved the sales target. Only those who contributed to and have generated more income for the Company.
Cases referred:	Aspac Lubricants v. Ketua Pengarah Hasil Dalam Negeri 2007 AMTC 238 [2007] 5 CLJ 353 Court of Appeal
Judge:	Rhodzariah Bujang J