Nippon Computer Sdn Bhd (NCSB) (tax resident) borrowed RM1 million from its parent company in Japan, Nippon Holdings Limited for the purchase of plant and machinery for use in its factory in Malaysia. The company was manufacturing portable hard disks. Interest expense of RM80,000 was incurred for 2021. Another subsidiary company, Nippon Electronic Sdn Bhd (NESB) (tax resident), also borrowed RM2 million from Nippon Holdings Limited for the construction of its factory in Indonesia. An interest expense of RM150,000 was capitalized in the accounts for the year ended 31.12.2021.

Determine whether the above interest was derived from Malaysia and explain the tax treatment of the interest in the hands of the recipient