Malaysia Case Law: Decisions & Judgments

Topic

Badges of trade

Legal area

Court

16 Dec 2025

INQPHARM GROUP SDN BHD Ketua Pengarah Hasil Dalam Negeri

Citation

WA-25-9-01/2021 (Mahkamah Tinggi)
Court

High Court
Case number

WA-25-9-01/2021 (Mahkamah Tinggi)

The application for judicial review was dismissed because the challenge raised fact-sensitive issues (characterisation of receipts, factual disputes on nature of assets transferred, and alleged negligence) which must be determined by the specialist domestic forum (SCIT); accordingly the applicant failed to exhaust the available statutory remedy and judicial review was inappropriate; ancillary issues (time-bar, penalties, reasons) likewise require factual determination by SCIT.
24 Sept 2025

MB VEST SDN BHD Ketua Pengarah Hasil Dalam Negeri

Citation

JA-25-2-01/2024 (Mahkamah Tinggi)
Court

High Court
Case number

JA-25-2-01/2024 (Mahkamah Tinggi)

Preliminary objection upheld: the supplemental affidavit raised an unpleaded 'time-barred' issue and was disallowed. Judicial review dismissed because an adequate domestic remedy before the Special Commissioners of Income Tax existed and had been invoked; no jurisdictional error or plain illegality justified bypassing SCIT. On the merits the disposals evidenced badges of trade and were taxable as business income under s.4(a) Income Tax Act 1967; the 15% penalty under s.113(2) was lawfully imposed. No stay granted. Costs awarded to Respondent.
3 Jul 2025

Lembaga Hasil Dalam Negeri (LHDN) PROFOUND RELIANCE SDN BHD

Citation

WA-14-12-05/2022 (Mahkamah Tinggi)
Court

High Court
Case number

WA-14-12-05/2022 (Mahkamah Tinggi)

The court allowed the DGIR appeal (WA-14-12-05/2022) and set aside the SCIT decision for YA2009-2010, holding that Profound's tax returns were correctly assessed as business income under s.4(a) ITA because the Development Agreement and surrounding facts disclosed badges of trade and active commercial participation; s.131 relief was properly refused because the returns were made in accordance with the DGIR's prevailing practice (Public Ruling No.1/2009) and Profound's s.131 application for YA2011 failed the precondition of no outstanding tax; global costs RM10,000 awarded to DGIR.
3 Jul 2025

Profound Reliance Sdn Bhd Ketua Pengarah Hasil Dalam Negeri

Citation

WA-14-13-05/2022 (Mahkamah Tinggi)
Court

High Court
Case number

WA-14-13-05/2022 (Mahkamah Tinggi)

The court held that the DGIR lawfully rejected Profound's s.131 applications because the returns were prepared in accordance with the DGIR's prevailing practice (Public Ruling No.1/2009) and there was insufficient evidence of an 'error or mistake'; on the merits the disposals exhibited badges of trade and formed part of a commercial arrangement within the group, such that the gains were taxable as business income under the ITA 1967 rather than capital gains under the RPGT 1976. The SCIT misdirected itself on facts and law regarding intention to trade for YA2009‑2010 and was set aside accordin…
2 Jul 2025

Ketua Pengarah Hasil Dalam Negeri EXCEPTIONAL LANDMARK SDN BHD

Citation

WA-14-2-02/2023 (Mahkamah Tinggi)
Court

High Court
Case number

WA-14-2-02/2023 (Mahkamah Tinggi)

The High Court found no legal error or perverse finding in the SCIT's application of the badges of trade to the totality of evidence; SCIT's factual findings (investment purpose in M&A, classification as non-current asset, lack of repetition, absence of marketing or brokers, maintenance works only) supported treatment of the disposal as capital and subject to RPGT with the applicable ministerial exemption, so the DGIR's additional assessment and s113(2) penalty were unwarranted; consequently the SCIT decision was upheld and the appeal dismissed.
8 May 2024

KETUA PENGARAH HASIL DALAM NEGERI MALAYSIA REVENUE POINT SDN BHD

Citation

W-01(A)-103-02/2022 (Mahkamah Rayuan)
Court

A
Case number

W-01(A)-103-02/2022 (Mahkamah Rayuan)

The Court of Appeal held the SCIT’s findings that the disposals were an adventure in the nature of trade were supported by evidence and reasonably reached; the High Court erred in substituting its view. Accordingly the gains from sale of the 59 units are trading receipts taxable under section 4(a) ITA; best judgment assessments for YA2009 and YA2010 and penalties under section 112(3) ITA were valid. The SCIT decision is reinstated.
30 Nov 2023

INTERNATIONAL NATUROPHATIC BIO-TECH (M) SDN. BHD KETUA PENGARAH HASIL DALAM NEGERI MALAYSIA

Citation

W-01(A)-732-12/2021 (Mahkamah Rayuan)
Court

A
Case number

W-01(A)-732-12/2021 (Mahkamah Rayuan)

Given the totality of proven facts the Special Commissioners correctly inferred the shop lots were acquired for resale or constituted an adventure in the nature of trade: delivery of vacant possession to sale occurred within a short period, purchases were director‑financed, separate strata titles and strategic location facilitated resale, there was absence of efforts to let the properties and the company did not substantiate claimed exigent reasons for sale; appellate court will not disturb SCIT findings supported by evidence. The assessment of RM543,906.00 under Section 4(a) ITA and impositi…
4 Jul 2022

Ketua Pengarah Hasil Dalam Negeri CASH BAND (M) BERHAD

Citation

WA-14-12-08/2021 (Mahkamah Tinggi)
Court

High Court
Case number

WA-14-12-08/2021 (Mahkamah Tinggi)

The High Court upheld the SCIT: the respondent acquired and used the lands as a capital asset for a golf club, held them for seven years while actively managing the club, did not actively participate in development (PA and DA delegated development to Setia Eco), bore no development risk (guaranteed minimum, no profit sharing), and the badges of trade support a capital disposal; therefore the proceeds were capital receipts subject to RPGT and not revenue under s4(a) ITA, so the appeal by the DGIR is dismissed.
27 Jun 2022

KETUA PENGARAH HASIL DALAM NEGERI MALAYSIA NG HUAN TONG

Citation

JA-14-4-07/2020 (Mahkamah Tinggi)
Court

High Court
Case number

JA-14-4-07/2020 (Mahkamah Tinggi)

High Court upheld the SCIT's factual findings that the disposals were investment-driven and occasioned by an urgent commercial need to acquire HSM 2079, not part of a profit-making trading scheme; there was no error of law in SCIT's application of badges of trade and accordingly the disposals were not taxable as income under the ITA and the Revenue's case stated was dismissed.
12 Jan 2022

KIND ACTION (M) SDN BHD Ketua Pengarah Hasil Dalam Negeri

Citation

JA-25-40-12/2020 (Mahkamah Tinggi)
Court

High Court
Case number

JA-25-40-12/2020 (Mahkamah Tinggi)

The application was dismissed because the Respondent acted within statutory powers under the Income Tax Act; the negligence exception under s91(3) justified late assessments, the issues raised were fact‑based and within the province of the Special Commissioners (SCIT), there was no bad faith or breach of natural justice, and no exceptional circumstances existed to bypass the statutory appeal route.