KUALA LUMPUR (Nov 16): Tenaga Nasional Bhd (TNB) and Malakoff Corp Bhd said their joint venture company Kapar Energy Ventures Sdn Bhd (KEV) has filed an application for judicial review to challenge the notices of assessment from the Inland Revenue Board (IRB) amounting to RM595.95 million.

KEV filed the application against the Minister of Finance at the High Court to challenge the matters arising from the notices of assessment, TNB and Malakoff said in separate bourse filings.

KEV is a 40%-associate of Malakoff, with the remaining 60% stake held by TNB's wholly-owned unit TNB Power Generation Sdn Bhd.

The company operates the second largest thermal power plant in Malaysia with a generation capacity of 2,200MW, according to KEV’s website.

KEV had on Nov 1 received notices of assessment for the years of assessment (YAs) 2011, 2012 and 2014, and notices of additional assessment for 2013, 2015, 2016, 2017 and 2018, amounting in aggregate to RM595.95 million. The notices were all dated Oct 29, 2021.

When announcing the notices on Nov 5, TNB said the IRB took the position that the redeemable unsecured loan stock (RULS) granted to KEV by TNB and Malakoff to finance the acquisition and operation of Stesen Janaelektrik Sultan Salahuddin Abdul Aziz in Kapar should be treated as an equity transaction and thus, capital in nature.

“Consequent to this, the interest expenses incurred by KEV in relation to the RULS are not allowed by the IRB as expenses deductible under Section 33(1)(a) of the Income Tax Act 1967.

Furthermore, the IRB had also disallowed KEV's revision of revenue for the YAs 2004 to 2009,” said TNB.

Shares of TNB closed unchanged at RM9.59 on Tuesday (Nov 16), giving the utility giant a market capitalisation of RM54.91 billion. The counter has retreated by 7.97% so far this year.

Malakoff's share price settled down 1.5 sen or 1.89% at 78 sen, valuing the company at RM3.88 billion. Year-to-date, the share price of the power generation company has fallen by 12.85%.