Mokhtar Sidin JCA:

[1] Arising from the majority decision of the Special Commissioners the taxpayer appealed by way of case stated to the High Court. The majority decision of the Special Commissioners are as follows:

ADALAH DIPUTUSKAN BAHAWA keuntungan daripada pelupusan-pelupusan harta itu adalah merupakan keuntungan daripada aktiviti perniagaan.

ADALAH DIPUTUSKAN SELANJUTNYA BAHAWA pampasan yang diterima oleh pihak Perayu berkaitan dengan pengambilan sebahagian daripada Lot 2833 Daerah Timur Laut Pulau Pinang oleh Pemungut Hasil Tanah Daerah tersebut itu adalah juga merupakan keuntungan daripada aktiviti perniagaan.

[It is decided that the profit arising from the disposal of the houses is profit from its business activities.

It is further decided that the compensation received by the appellant in respect of the acquired portion of Lot 2833 North East District Penang paid by the Collector of Land Revenue is also profit from its business activities.]

[2] The learned judge who heard the appeal dismissed the appeal in respect of the first order and affirmed the order of the Special Commissioners whereby the profit arising from the disposal of the houses was profit from the taxpayer's business activities. In respect of the second order the learned judge allowed the appeal by the taxpayer and held that the compensation was not taxable.

[3] Being dissatisfied with the decision of the learned judge, the revenue appealed against the order of the learned judge allowing the appeal by the taxpayer in respect of the compensation. The taxpayer also, being dissatisfied with the decision of the learned judge dismissing their appeal in respect of the disposal of the houses, appealed to this Court.

[4] Thus there are two appeals in this case. The first appeal, No W-01-10-97 is the appeal by the Ketua Pengarah Hasil Dalam Negeri (the revenue) against the decision of the learned judge who allowed the appeal by the taxpayer that the compensation paid by the Government for the compulsory acquisition of a piece of the taxpayer's land be vacated. We have dismissed this appeal with costs after hearing the submissions of the parties. We now give our reasons for doing so.

[5] The second appeal, No W-01-11-97, is the appeal by the taxpayer against the decision of the learned judge who had affirmed the decision of the Special Commissioners that the profit made by the taxpayer on the disposal of 88 units of houses was assessable to tax. We have reserved judgment on this appeal and now we give our reasons and decision in respect of the second appeal.

Facts

[6] The taxpayer was incorporated on 5 July 1956. Amongst its objects are:

(a) to acquire by purchase, lease, exchange, hire or otherwise by way of investment or with a view to resale or otherwise any lands and hereditaments of any tenure or any other form of real or personal property, rights or privileges or any interest in the same or in any mortgages, shares and securities; to sell, lease, let, mortgage or otherwise dispose of the lands, houses, buildings, hereditaments and other property of the Company; to develop and turn to account any land acquired by the Company or in which the Company is interested and in particular by laying out and preparing the same for building purposes, constructing, altering, pulling down, docorating, maintaining, furnishing, fitting up and improving buildings and by planting, paving, draining, farming, cultivating, letting on building lease or building agreement and by advancing money to and entering into contracts and arrangements of all kinds with builders, tenants and others;

(b) to carry on the business of house agents and also all or any of the following businesses, namely builders and contractors, decorators, merchants, and dealers in stores, sand, lime, bricks, timber, hardware and other building requisites;

(c) to enter into agreements for letting houses, buildings, furniture, fittings to any person, company or authority and to collect rents, interest and other moneys