KUALA LUMPUR (Sept 2): DRB-Hicom Bhd (KL:DRBHCOM) said it has received a notice of assessment from the Inland Revenue Board (LHDN) amounting to RM246.25 million for the year of assessment 2020.

The notice was pursuant to LHDN’s decision “to treat the disposal of a long-term investment held in a subsidiary as income” in the assessment year, DRB-Hicom said.

The group intends to appeal and potentially initiate legal proceedings to challenge the notice, it said.

In a separate statement, DRB-Hicom said the notice of assessment relates to the disposal of its 97.37% equity interest in Alam Flora Sdn Bhd, which was completed in December 2019.

The investment was held by DRB-Hicom’s wholly-owned unit Hicom Holdings Bhd for 24 years.

According to DRB-Hicom’s 2019 annual report, the sale was satisfied with RM869 million cash from its buyer, Malakoff Corp Bhd’s subsidiary Tunas Pancar Sdn Bhd.

The deal resulted in a gain of disposal of RM514.67 million for DRB-Hicom, the annual report said.

It was a related party transaction as DRB-Hicom’s 55.92% shareholder Tan Sri Syed Mokhtar Al-Bukhary also has a deemed interest of 38.45% in Malakoff.

Shares of DRB-Hicom closed four sen or 3.42% lower at RM1.13 on Monday, giving it a market capitalisation of RM2.18 billion. The counter is down 18.7% this year.

* The article has been updated with a statement from DRB-Hicom on the transaction linked with the notice of assessment, which is the disposal of Alam Flora that was completed in 2019, and not DRB-Hicom’s sale of property assets and hospitality businesses to Tan Sri Syed Mokhtar Al-Bukhary that was completed in 2020, as reported earlier.