High Court affirms SCP Assets’s multi-storey car parks as ‘plant’

High Court judge Alice Loke said the correct test was the 'functionality test' – whether the asset was the means by which the business was carried on, rather than merely the place where the business was conducted.KUALA LUMPUR: The High Court has upheld a ruling that multi-storey car parks owned by SCP Assets Sdn Bhd qualify as a "plant" under the Income Tax Act 1967, dismissing an appeal by the Inland Revenue Board (LHDN) director-general.Justice Alice Loke held that SCP Assets was entitled to claim capital allowances on the nearly RM495 million it spent acquiring the car parks.The dispute arose after SCP Assets, which operates parking facilities and derives its income from parking fees, sought confirmation from the LHDN director-general that the acquisition costs qualified for capital allowances.The director-general rejected the claim, contending that the multi-storey car parks were permanent structures or business premises rather than a "plant" eligible for capital allowances.SCP Assets subsequently appealed to the Special Commissioners of Income Tax (SCIT), which ruled in its favour.In her recently released written judgment, Loke held that the correct test was the "functionality test" – whether the asset was the means by which the business was carried on, rather than merely the place where the business was conducted.Applying that test, Loke found that the multi-storey car parks were not simply premises from which SCP Assets operated its business, but the very apparatus through which it generated income from its parking operations.She also rejected the director-general's argument that the case should be distinguished because SCP Assets owned the car parks, whereas the taxpayer in Tropiland operated them under a lease.Loke held that the difference in ownership did not affect the legal principle that an asset qualifies as a "plant" if it functions as an essential tool or apparatus in carrying on a business.She affirmed the SCIT's decision, entitling SCP Assets to claim capital allowances on the acquisition costs of the multi-storey car parks.Senior revenue counsel Azrul Safinas Rosli, together with revenue counsel Norhamizah Han and Munirah Abd Wahid, appeared for the LHDN director-general.SCP Assets was represented by S Saravana Kumar, Felicia Wong and Dharsini Kumar.