Longevity (M) Sdn Bhd is involved in several property development projects. In September 2020, it entered into a joint venture agreement with Prosperity Construction (M) Sdn Bhd to develop a parcel of land belonging to Prosperity Construction (M) Sdn Bhd into a township in Negeri Sembilan. However, owing to a disagreement between the two companies and weak economy subsequently, the joint venture was terminated and Longevity (M) Sdn Bhd received a sum of RM12 million as compensation to terminate the joint venture agreement.

To determine whether the compensation received is a taxable or nontaxable, overview of the chargeability of income under the Income Tax Act, 1967