1. Todi 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 is prohibited under Malaysian law. The company's financial statement for the year ended 31 December 2020 showed a total turnover from the sale of liquor of RM25 million which includes RM3.2 million derived from the 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:

   For each of the above scenarios, explain the taxability of income OR deductibility of expenses in accordance with Income Tax Act 1967.

   (20 marks)