Ketua Pengarah Hasil Dalam Negeri V Sobrin Kapal Sdn Bhd
Case: Ketua Pengarah Hasil Dalam Negeri v Sobrin Kapal Sdn Bhd
Issue:
Whether an income received in year 1988 and 1989 from the charter of the respondent ship, MT Sofia to Petronas to transport dirty petroleum products belonging to the latter are liable for the income tax for the relevant years.
Facts of the case:
The taxpayer is the owner of a ship named MT Sofia which is registered under the Merchant Shipping Ordinance 1952 and was resident in Malaysia.
Entered an agreement between the taxpayer and Petronas on May 20, 1982. MT Sofia was chartered to Petronas commencing from anytime between April 1, 1982 to April 30, 1982 and to end in December 31, 1983 with to extend the period from time to time.
The hire rate was RM280, 500 per calendar month payable in advance from the time it was delivery to Petronas and the date it returns to the taxpayer.
The crew for the ship was provided by the taxpayer at its expense.
The purpose of the charter was to enable Petronas to use it to carry dirty petroleum products belonging to Petronas.
If an event of breakdown for more than 15 days, the taxpayer will provide a substitute ship for sport charter basis for Petronas at a rate to be agreed between parties.
Argument:
Sobrin Kapal Sdn Bhd
The taxpayer by the term of the charter party it was carrying on a business cargo by sea on board the ship within the meaning of transporting cargo by sea on board the ship within the meaning of section 54A(1) of the Act even though the ship was chartered to Petronas for its use to carry its cargo.
Thus, the income received is considered as a part of the section 54A (1).
Ketua Pengarah Hasil Dalam Negeri
The commissioner agreed that the income received by the respondent as exempted by referring section 54A (1) and also to the Carver’s Carriage by Sea Volume 1 pg23 and