MBS Sdn Bhd started its business on 1 March 2013 and made up its accounts to 31 December annually. The company bought a piece of land in April 2013 for RM 250,000 for the purpose of constructing a new factory.

2013 Expenditure RM

1 Mar Legal fees (30% was related to the acquisition of site) 27,000

1 Apr Approval of plan fee for local authority 3,200

15 May Architect's fee 12,500

23 July Levelling land 28,000

8 Sept Construction costs 188,000

12 Oct Wiring and plumbing 48,000

The building was completed on 8 December 2013. 72% of the building was used as a factory and the remainder as an office until it was sold to Jaqel Sdn Bhd for RM 315,000 on 30 October 2017. Jaqel Sdn Bhd used the whole building as a factory.

Jaqel makes up its accounts to 31 December annually. The company constructs a building for a childcare centre for its employees on 1 February 2019 costing RM 170,000. On 1 June 2019, Jaqel Sdn Bhd purchased a machine for RM 88,000. The company also incurred RM 130,000 being the cost of preparing the site for the installation of the machine.

a). Compute the industrial building allowances / balancing charges/allowance (if any) for MBS Sdn Bhd and Jaqel Sdn Bhd for the relevant years of assessment up to the year of assessment 2019. (15 marks)

b). If MBS Sdn Bhd plans to venture into the agriculture sector, explain the tax treatment MBS Sdn Bhd should be aware of.