David Wong Dak Wah J:

Appeal

[1] This is an appeal by the appellant against the decision of the Special Commissioners of Income Tax (Special Commissioners) handed down on 2 August 2006.

Brief Facts

[2] The relevant facts are briefly and accurately summarized by the learned counsel for the appellant and for convenience I reproduce the same here:

1. The respondent acquired 9 parcels of land in 1975 and 1979. (lands)

2. In 1983, the respondent and a few other land owners signed an agreement with Hock Lee Construction Sdn Bhd (HLC) to develop the land into residential houses and, commercial and industrial shop houses. HLC is the respondent's subsidiary company (wholly owned in 1994).

3. In 1994, the respondent together with other land owners and HLC entered into a supplementary agreement for the allocation of units under the proposed development.

4. In 1997 to 1999, the respondent disposed 85 units back to HLC and nine units to other buyers.

5. The gains from the disposals were treated by the appellant as business income from an adventure in the nature of trade and consequently taxed under s 4(a) of the ITA.

6. The assessment raised on the respondent related to the years of assessment 19