(a)(i) Moonlight Property Sdn Bhd (MPSB) is in the business of property development since 2004. In 2008, MPSB purchased a piece of land in Jitra for the purpose of developing it into a residential area and submitted an application to the Kedah State Government for approval. MPSB has incurred development costs such as planning and surveying costs.
In 2015, the land was, however, compulsorily acquired by the Kedah Government for the purpose of widening the roads. MPSB was offered compensation of RM15 million based on the prevailing market price.
State, with reasons, whether or not the compensation received is taxable under the Income Tax Act 1967.
(ii) Kampar Developer Sdn Bhd (KDSB) places an order to purchase a crane costing RM600,000 from Japan in May 4. The crane was shipped to Malaysia in December 2014 but the full payment was made in January 2015. Transport charges to ship the crane from Japan was RM45,000. During the intervening eight-month period, the Ringgit appreciated by 15% against the Japanese Yen. As a result, an exchange gain of RM24,000 occurred.
Is the gain of RM24,000 arising from currency adjustments taxable under the Income Tax Act 1967? Provide appropriate reasons for your answer.
(b) ZAG Motor Sdn Bhd (ZAGM), a company in the motor parts industry, makes up its accounts to 30 June annually. The following information relates to the company's non-current assets for the year ended 30 June 2015.
(i) ZAGM purchased a production machine (heavy machine) costing RM1,500,000 on 26 December 2014. The site preparation cost was RM280,000 and it was brought into use on 12 June 2015.
(ii) On 23 December 2013, ZAGM purchased a second-hand truck amounting to RM240,000 for its business. The truck was totally damaged due to an accident which took place on 2 March 2015 and insurance compensation of RM188,000 was received by ZAGM on 6 June 2015.
Compute the capital allowances, balancing allowances/charges (if any) for ZAG Motor Sdn Bhd up to year of assessment 2015.