Malaysia vs Shell Timur Sdn Bhd, June 2019, High Court, Case No BA-25-81-12/2018

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In FY 2005 Shell Timur Sdn Bhd in Malaysia had sold its economic rights in trademarks to a group company, Shell Brands International AG. The sum (RM257,200,000.00) had not been included in the taxable income, but had – according to Shell – been treated as a capital receipt which is not taxable.

The tax authorities conducted a transfer pricing audit beginning in June 2015 and which was finalized in 2018. Following the audit an assessment was issued where the gain had been added to the taxable income of Shell Timur Sdn Bhd.

According to the tax authorities they were allowed to issue the assessment after the statutory 5-year time-bar in cases of fraud, wilful default or negligence of a taxpayer.

An application for leave was filed by Shell.

Courts decision

The Court dismissed the application.

“I am, by the doctrine of stare decisis, bound by these pronouncements of the Court of Appeal and Federal Court. Hence, it is crystal clear that in matters concerning the raising of assessments of tax under section 91(1) or 91(3) of the ITA, challenges by the tax payer are best left to be dealt by the SCIT, unless of course if there are any exceptional circumstances.
(27) In this case, I do not find exceptional circumstance that would warrant leave to be granted for judicial review. Which would then make this application
an abuse of process. Wherefore, the I dismissed the application for leave.”



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