13/06/2012 (Borneo Post) - Special Commissioner of Income Tax (SCIT) yesterday ruled in favour of a local oil palm company in an appeal case involving a claim for reinvestment allowance on the huge amount of capital expenditures incurred on opening up land for the cultivation of oil palm fruits.

The decision will benefit all oil palm cultivation companies throughout the country.

The oil palm company wanted to claim the reinvestment allowance but the Inland Revenue Board (IRB) disallowed it because oil palm fruits are not the type of fruits as intended for the purpose of cultivation of fruits as stated under paragraph 9(cc) of Schedule 7A of the Income Tax Act 1967.

IRB contended that the word ‘fruits’ in the phrase ‘cultivation of fruits’ under paragraph 9(cc) means Malaysian fruits that are sweet and edible and do not include oil palm fruits and thus disallowed the claim.

The company being aggrieved by the assessment made by the IRB director-general in disallowing the claim through its tax agent filed in Notice of Appeal to appeal against the assessment made to the SCIT.

The SCIT after having heard and read the lengthy contentions and submissions from both parties unanimously decided that the phrase ‘cultivation of fruits’ under paragraph (9cc) of Schedule 7A of the Act includes oil palm fruits and allowed the appeal accordingly.

The company was represented by Dr Chew Peng Hui of Battenberg and Talma and assisted by Lam Kam Wing, a tax consultant of Tasmanco Consultancy Services Sdn Bhd, while the IRB was represented by two legal officers from its headquarters in Kuala Lumpur.