The Assunta Hospital on Wednesday was allowed a stay of enforcement and effect of notices for the year of assessment for 2018, 2019 and 2020 after it obtained leave (permission) from the High Court in its judicial review application to challenge the Inland Revenue Board director-general’s decision on May 15, 2023 to withdraw the hospital’s tax exemption status.

KUALA LUMPUR (June 26): The Assunta Hospital on Wednesday obtained leave (permission) from the High Court here in its judicial review application to challenge the Inland Revenue Board (IRB) director-general’s decision on May 15, 2023 to withdraw the hospital’s tax exemption status.

Following that, Judge Datuk Ahmad Kamal Md Shahid also allowed a stay of enforcement and effect of notices for the year of assessment on the hospital for 2018, 2019 and 2020.

Ahmad Kamal allowed leave (permission) for the hospital to have the merits of their challenge heard after the IRB withdrew their objection for leave to be granted.

Assunta was represented by S Saravana Kumar from Rosli Dahlan Saravana Partnership, who confirmed the outcome to The Edge on Wednesday.

Assunta Hospital filed the judicial review on June 22, last year, where it sought a certiorari order to quash the IRB’s decision dated May 15, 2023 to withdraw the tax exemption status on the hospital under Section 44 (6) of the Income Tax Act 1967 (ITA)

The hospital claimed the IRB decision was ultra vires, illegal, void, unlawful, irrational and unreasonable of its legitimate expectation.

Furthermore, the hospital is also seeking a declaration that it is a tax-exempt charitable organization pursuant to Section 44(6) of the ITA.

In addition they sought a stay of enforcement and notices for the year of assessment of 2018, 2019, and 2020.

Tax exempted since 1974

An affidavit in support by Assunta’s chief executive officer Choo Voon Chee said the effect of the IRB’s decision is the withdrawal of tax exemption status as an approved charitable institution under Section 44(6) of the ITA and following that it issued notices of assessments.

Choo said this follows the IRB believing that the hospital had violated several conditions of its tax exemption status.

The hospital’s CEO said the decision by the IRB has no legal and factual basis as Section 44(6) clearly provides that the income of an approved charitable organisation in respect of contribution received for charitable purposes be exempted from income tax.

Choo further claimed the IRB is not entitled to unilaterally and arbitrarily impose new conditions on the tax exemption as it is a non-profit charitable organisation established in 1973.

He added by a letter dated Jan 29, 1975, the IRB granted the hospital approval for the tax exemption with effect on Jan 1, 1974.

The CEO claimed that the IRB imposed some new conditions in 2009 and 2017 and it claimed that none of them were breached with the exception of a delay in the submission of its audited accounts for 2019 and it claimed that the audited accounts had been submitted on Feb 23, 2022.

“There was no discrepancy or issues raised by the IRB with regards to the 2019 audited accounts. It is notable that the delay in submission was caused by the fact that the said audited accounts were prepared in 2020 when the world was battling the Covid-19 pandemic.

“Being a hospital and at the forefront in fighting the spread of the virus by treating thousands of patients who were seeking immediate medical treatment... there is a delay in the filing of the hospital’s tax return for 2019 and as a result it had been duly filed in 2023,” he said.

Choo claimed the IRB’s decision to withdraw the exemption is ultra vires, illegal, void, unlawful and in excess of authority and hence, the IRB has no basis in law to withdraw its tax exemption status that was granted since January 1974.

He claimed the withdrawal would result in assessments of tax liability of more than RM19 million which it claimed the amount was wrongfully imposed, is large and burdensome.

Choo further claimed that the IRB had failed to pay out RM3.807 billion in tax refunds for 2017 and prior to that.

“Even if the IRB is capable of refunding the disputed taxes paid, there is no guarantee that the hospital would receive a full refund within a stipulated time frame.

Thus, it would be unjust to require the hospital to pay such a large and burdensome amount of taxes as the IRB’s decision is illegal and irrational or unreasonable,” Choo added.