Kuala lumpur: The Court of Appeal here today instructed the Director-General of Inland Revenue (DGIR) to refund RM15.672 million to Petronas within six months for taxes overcharged to the company for the 2010 assessment year. The overcharge arose from the disallowance of expenses linked to Petronas' overseas country-office related expenses for that year.

According to BERNAMA News Agency, the Court of Appeal's three-member bench comprising Justices Datuk P. Ravinthran, Datuk Wong Kian Kheong, and Datuk Nadzarin Wok Nordin made the decision after allowing the appeal brought by the national oil and gas company. The disputed expenses incurred by Petronas were for its overseas country offices in Sudan and Vietnam, which the High Court had ruled were not deductible under Section 15 (1) of the Petroleum (Income Tax) Act 1967 (PITA).

In delivering the court's decision, Justice Wong stated that the High Court and the Special Commissioners of Income Tax (SCIT) had erred in ruling that Petronas was not entitled to deduct its office-related expenses under PITA. Justice Wong noted that the 2010 tax return had been filed within the stipulated time and that the company duly paid all taxes due within the required periods.

Justice Wong highlighted that the court disagreed with the DGIR's argument that Petronas had been negligent in submitting its 2010 tax returns. He added that even if there was negligence regarding the 2010 tax return, both the High Court and SCIT had erred in law by not deciding whether such negligence had caused the tax loss. He also pointed out that both the High Court and SCIT should have determined that the country-office expenses had been expended outside Malaysia.

Justice Wong concluded that due to the errors of law committed by both the SCIT and High Court, the DGIR was barred by Section 39 (1) of the PITA from issuing the Form JA (the additional assessment), and thus the court set it aside. The DGIR is required to refund RM11,392,044 and RM4,280,556 to Petronas within six months.

With the agreement of both parties, there was no order as to costs for this appeal, proceedings in the High Court, and before SCIT. In today's proceeding, lawyers S. Saravanan Kumar and Nur Amira Ahmad Azhar represented Petronas, while Senior Revenue Counsel Ashrina Ramzan Ali and Revenue Counsel Nik Amyrah Syarinie Mohd Dusuki appeared for the DGIR.