KUALA LUMPUR (April 16): Comfort Gloves Bhd said two subsidiaries of the group have commenced legal action over an additional tax demand totalling RM99.3 million by the Inland Revenue Board (IRB).

In a bourse filing on Tuesday, the group said Rubber Gloves Industries Sdn Bhd (CRGI) and Gallant Quality Sdn Bhd (GQ) had received additional income tax assessments from IRB on Feb 27, totalling RM13.6 million in additional net tax and RM85.7 million in penalties.

The additional assessment was due to the IRB’s readjustment of the tax basis period when the group changed its financial year end to Dec 31, 2021, despite having obtained necessary approvals previously, said Comfort Gloves.

“Based on legal and professional advice obtained, CRGI and GQ have a strong legal basis to initiate legal proceedings to challenge the basis and validity of the disputed notices of tax assessment raised by the DGIR (director general of Inland Revenue), including the penalty imposed.

“Among others, CRGI and GQ commenced judicial review proceedings in the High Court against the DGIR, to challenge his decision to readjust the tax basis periods and appeal to [the] Special Commissioners of Income Tax,” the group said.

Comfort Gloves said that GQ was granted an interim stay by the court on March 25, pending disposal of the judicial review leave application, with the hearing set for May 13.

Meanwhile, CRGI was granted leave by the court on April 4, to challenge the decision of the DGIR.

“The DGIR assured the High Court that no recovery action would be taken against CRGI, until the judicial review application is resolved,” said the group.

Comfort Gloves said there will not be any imminent material operational or financial impact on the group, pending the outcome of the legal proceedings.

Shares in Comfort Gloves settled one sen or 2.27% lower at 43 sen on Tuesday, giving the group a market capitalisation of RM250.67 million.