JUDGMENT

Hamid Sultan Abu Backer JC:

[1] This is my judgment in respect of the appeal by the appellant by way of case stated, pursuant to para. 34 sch. 5 of the Income Tax Act 1967 (ITA 1967), against the decision of Special Commissioners who had ruled that: (i) the respondent's investment in Ngiu Kee Corporation (M) Bhd. (Ngiu Kee) was made as a long term investment. (ii) the respondent was not at any time a trader in shares nor were the shares in Ngiu Kee acquired as part of the respondent's trade; (iii) the respondent's investment was not undertaken as an "adventure in the nature of trade", for a profit seeking motive.

[2] The parties rely on the following authorities:

(i) Chua Lip Kong v. Director-General of Inland Revenue (ii) Edwards v. Bairstow & Harrison 36 TC 207 (iii) Lower Perak Co-operative Housing Society Bhd v. Ketua Pengarah Hasil Dalam Negeri, [1994] 2 MLJ 713 (iv) NYF Realty Sdn. Bhd. v Comptroller of Inland Revenue, [1974] 1 MLJ 182 (v) W Holdings Private Limited v. The Comptroller of Income Tax [1992] 1 MSTC 5,135 (vi) PUSB v. DGIR [1995] 4 BLJ 281 (vii) Ketua Pengarah Hasil Dalam Negeri v. Penang Realty Sdn Bhd & Another Appeal, [2006] 3 MLJ 597 (viii) ALF Properties Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri; [2005] 5 MLJ 717; [2005] 3 CLJ 936; [2005] 6 AMR 709 (ix) Lim Foo Yong Sdn Bhd v. The Comptroller-General Of Inland Revenue (x) Bukit Yew Sdn. Bhd. v. Director-General of Inland Revenue, [1987] 2 MLJ 379; [1987] CLJ (Rep) 492; [1987] 2 CLJ 134 (xi) Mount Pleasure Corporation Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri, [2005] 4 CLJ 521 (xii) E v. Comptroller-General of Inland Revenue, [1970] 2 MLJ 117 (xiii) Iswera v. Ceylon Commissioner of Inland Revenue [1995] 1 WLR 663 (xiv) Director-General of Inland Revenue v. Khoo Ewe Aik Realty Sdn Bhd (xv) Kota Kinabalu Industries Sdn Bhd v. Director General of Inland Revenue (xvi) Director General of Inland Revenue v. Mamor Sdn Bhd; [1982] CLJ (Rep) 89; [1982] CLJ 532; [1982] 2 MLJ 169 (xvii) Ketua Pengarah Hasil Dalam Negeri v. Aneka Jasaramai Ekspress Sdn Bhd; [2003] 8 CLJ 199; [2004] 2 MLJ 188 (xviii) MR Properties Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri; [2004] 8 CLJ 459; [2005] 7 MLJ 260 (xix) Simmons (as liquidator of Lionel Simmons Properties Ltd) v. Inland Revenue Commissioners [1980] 2 All ER 798 (xx) Californian Copper Syndicate (Limited and Reduced) v. Harris (Surveyor of Taxes) Vol. V Part III TC 159 (xxi) Leeming v. Jones (H.M. Inspector Taxes) Vol. XV Part V TC 333 (xxii) Lionel Simmons Properties Ltd. (in liquidation) and Others v. Commissioners of Inland Revenue Vol. 53 TC 461 (xxiii) Marson (Inspector of Taxes) v. Morton and related appeals [1986] STC 463 (xxiv) Turner v. Last (H.M. Inspector of Taxes) Vol. 42 TC 517.

[3] The appellant's complaint before this court can be summarised as follows: (i) the respondent is an investment company (ii) it purchased shares in Ngiu Kee (iii) the shares purchased were not for long term investment. (iii) the shares were disposed off (iv) the respondent made a profit out of the sale of shares (iv) the shares were acquired with a view to make a quick profit (v) the intention of the respondent to venture into the purchase of shares was in the nature of trade and in consequence attracts s. 4(a) ITA 1967 and is liable to payment of income tax.

[4] The respondent's contention before the Special Commissioners can be summarised as follows: (i) the purchase of the shares of Ngui Kee was asset in the nature of investment (ii) it was meant to be a long term investment (iii) there was no intention to resell the shares immediately for profit and this was an investment scheme and not a profit making scheme (iv) it was an isolated act and did not have an organised structure in terms of employees and resources to carry out share trading activities (v) the respondent was forced to sell the shares because of unstable market conditions which was not anticipated at the time of purchase.

[5] The issues for determination