Whether feasibility study conducted to prepare recommendations to meet regulatory requirements is tax deductible? Whether the costs of the study is considered as revenue expense?

Ketua Pengarah Hasil Dalam Negeri v. Shell Refining Co. (FOM) Berhad [2014] 9 MLJ 689 [2018] AMTC 105

Issue:	Whether feasibility study conducted to prepare recommendations to meet regulatory requirements is tax deductible? Whether the costs of the study is considered as revenue expense?
Answer:	The payment made in conducting the feasibility study on the Company’s refinery was a revenue expense. It was tax deductible.
Facts/Case Study :	1.      The Company was established in 1960. 2.    The Company hired Shell Global Solutions International (SGSI) to conduct a feasibility study on the Company’s plant in Port Dickson. 3.      The Company was of the view that the payment made to SGSI (amounting to RM3,476,716.79) for the feasibility study is tax deductible under Section 33 of the Income Tax Act 1967. The Company was of the view that the payment was made for the purposes of ensuring business profitability and to comply with regulatory requirements and thus qualified for tax deductions under Section 33 (1). It was also argued that a revenue expense qualified for tax deduction even though no profit was generated. 4.      However the IRB was of the view that the payment was capital in nature. Further, feasibility study did not generate any income to the Company. IRB claims the Company had filed its return incorrectly and is subjected to penalty.
Decision:	1.       IRB’s witness committed many errors in imposing the penalty and in rejecting the tax deductions. 2.       The payment made to SGSI was an outgoings and expenses wholly and exclusively incurred during the relevant period by the Company in production of its gross income. 3.       The feasibility study was a revenue expense and it was tax deductible. 4.       The Company argued that the payment to SGSI for the report was to ensure its business remains profitable and to comply with current laws and as such must be allowed to be deducted under Section 33(1) of the Act. 5.    The “common sense test” must be applied to determined whether the expense could be deducted. 6.    The Company also argued that expenses incurred for the purpose to increase the efficiency of the business is tax deductible.
Cases referred:	Syarikat Jasa Bumi v. Ketua Pengarah Hasil Dalam Negeri [2000] 2 MLJ 317
Judge:	Zaleha Yusof J

 

What should I do if my father passes away with a Will?

Question: My father passed away recently. He left a Will. I am named as the Executor to the will. What should I do next?/What should I do if my father passes away with a Will?

When someone passes away leaving a Will, the Executor named in the Will must therefore carry out the instructions of the Deceased.

The Executor must file an application in Court to obtain the Grant of Probate. The Executor would appoint a lawyer to file the papers in Court to obtain the Grant of Probate.

What are the documents needed to prepare the application for a Grant of Probate: -

1.          Original Will of the Deceased;

2.          Original Death Certificate of the Deceased;

3.          Prepare the List of Assets and Liabilities of the Deceased;

4.          Prepare the List of Beneficiaries according to the Will;

5.          Locate the Witness to the Will. To obtain the Affidavit from the Witnesses.

Once the documents are prepared, prepare the Originating Summons to be filed in Court together with the Affidavit in Support, “Sumpah Pentadbir”, Notice of Appointment for Solicitors and Affidavits of the Witnesses. The Originating Summons must be filed in the High Court of Malaysia.

If the Witnesses to the Will could not be located, this situation needs to be explained in the Affidavit in Support as to why and what steps were taken to locate the witnesses.

Once the papers have been filed in Court, the Court will fix a Hearing date for the Hearing of the Originating Summons for Probate. (It must be filed under Code : 32NCVC).

During the hearing, the ORIGINAL Will and the ORIGINAL Death Certificate will be deposited in Court. The Executor must attend Court.

Once the Court grants Order in Terms to the Originating Summons, then file the “Notis Bayaran Pengeluran Geran (Kod 31 & 32) in Court. The Court will issue the Grant of Probate within a week.

Cause Papers: -

No.	Cause Papers
1.	Saman Pemula
2.	Afidavit Sokongan
3.	Sumpah Pentadbiran
4.	Notis Pelantikan Peguam Cara
5.	Afidavit Saksi 1
6.	Afidavit Saksi 2
7.	Notis Bayaran Pengeluaran Geran(Kod 31 & 32)

Sample of Affidavit in Support of Originating Summons for Grant of Probate:-