Highrise Sdn Bhd carries on a business of wholesalers and retailers of imported liquor. The company has also been involved in the sale of locally distilled liquor, the sale of which prohibited under Malaysian Law.

The companys financial statement for the year ended 31 December 2020 showed a total turnover of RM10 million which includes RM2 million derived from sale of locally distilled liquor. The company contends that the profit from the sale of the local liquor is not liable to income tax since it is derived from illegal activity. Furthermore, the company had previously been convicted of selling this liquor and had paid a fine of RM50,000.

Required: State, with reasons, whether profits from illegal activity is taxable.