Gunn Chit Tuan SCJ:

This was an appeal by the Director-General of Inland Revenue (the appellant) against the judgment of the High Court given at Kuala Lumpur on 2 February 1989. The learned Judge had dismissed the appellant's appeal against the deciding order of the Special Commissioners of Income Tax who had decided that the disposal of a piece of land known as Lot No. 1, Section 1, Town of Batu Ferringhi (formerly known as Lot 132(2) Mk. 17, Batu Ferringhi, Penang and hereinafter referred to as "the subject land") with an area of approximately 37 acres owned by Khoo Ewe Aik Realty Sdn. Bhd. (the respondent) was not an adventure in the nature of trade and that the profit of the disposal was not assessable to income tax and development tax amounting to RM6,926,394.40 as it was the realisation of an investment.

The Special Commissioners of Income Tax in their Case Stated for the opinion of the High Court pursuant to paras. 34 and 35 of Schedule 5 to the Income Tax Act 1967, found, inter alia, that the following facts were proved or admitted:

Mr. Khoo Ewe Aik (deceased) and his wife, Ooi Jeu Yen (also deceased) were landed proprietors of real properties situated in the State