KUALA LUMPUR (July 15): The "revocation" of tax breaks for businessman Tan Sri Syed Mokhtar Albukhary's Yayasan Albukhary was never brought to former finance minister Lim Guan Eng's attention while he was in office.

"It has never come to my desk or my attention when I was finance minister," Lim said when testifying in his ongoing defamation suit against former prime minister Tan Sri Muhyiddin Yassin over allegedly cancelling the tax breaks to the Islamic charitable organisation during Lim's tenure as the minister from May 2018 until February 2020.

Lim, who testified during the afternoon session of the trial on Monday, added that matters concerning recognition or validation of tax breaks, like in the case of Yayasan Albukhary, would only come to the minister's attention when there was an appeal.

Defence counsel Chetan Jethwani then suggested that as the Inland Revenue Board (IRB) fell under the purview of the minister of finance, the minister would be responsible should IRB decide to not recognise or validate tax breaks.

Lim disagreed with this suggestion, saying that IRB is an independent corporate body from the Ministry of Finance (MOF) and added that the defence counsel would have to refer to the Income Tax Act 1967 for the validation of the tax breaks.

In the morning session of the trial, Lim's counsel Guok Ngek Seong had referred to a letter from Yayasan Albukhary signed by Syed Mokhtar to Muhyiddin in February 2021 over the withdrawal of the tax exemption, "recently". Guok had referred to the letter in his opening statement, and Lim had cited the same letter in his witness statement.

In the letter, the organisation had stated that they were given tax breaks from 2016 till 2018 through the MOF that were not recognised "recently". As a result of that, the organisation had to bear the liability of additional taxes.

Lim, who is also the Bagan Member of Parliament, is suing the Bersatu chief over a series of comments Muhyiddin made in March last year. Lim claims that the defamatory statements implied that he had abused his position and power as the then finance minister by authorising the IRB to impose tax and penalties on a charitable organisation when it should not be taxed.

The DAP chief also claims that the Pagoh MP's statements implied that he was racist and was intentionally targeting the Islamic charitable organisation.

Both Prime Minister Datuk Seri Anwar Ibrahim and the MOF have also said that Lim did not cancel the approved tax exemption given to Yayasan Albukhary.

In his statement of defence, Muhyiddin claimed that he had received a letter from Syed Mokhtar appealing against the IRB decision not to grant the tax exemption to the organisation.

He said he had subsequently forwarded the letter to the then finance minister Tengku Datuk Seri Zafrul Abdul Aziz for his consideration, who later allowed the appeal sometime in 2021.

The trial before Judicial Commissioner Roz Mawar Rozain continues on Tuesday (July 16) with Muhyiddin expected to take the stand.

The prosecution closed its case on Monday, and the defence is expected to start on Tuesday.