Mohamed Dzaiddin J

This is an appeal by the Revenue by way of case stated against the decision of the Special Commissioners of Income Tax under para. 34 of Schedule 5 of the Income Tax Act 1967 made on April 28, 1983 on the ground that it was wrong in law. The Special Commissioners held that the requisition dated May 16, 1980 issued by the appellant for the real property gains tax amounting to $11,989.40 for the year of assessment 1978 under section 12 of the Real Property Gains Tax Act, 1976 ("the Act") for properties known as holdings 1579 and 1580 of section 4, Bandar Butterworth, District of Province Wellesley North ("the subject properties") was wrong. Their finding is that pursuant to para. 28 of Schedule 2 of the Act the subject properties were deemed to be acquired by the respondent prior to January 1, 1970. They are also of opinion the acquisition value is the market value as at that date, and therefore the rate of tax to be applied in the circumstances of the case is only 5 percent.

The facts as found by the Commissioners are as follows:

"i) The respondent is the administrator of the estate of Cheah Poh In @ Cheah Poh Im (who died intestate in December, 1941) pursuant to Letters of Administration granted by the Japanese Military Administration, and legally substituted by an Order of the Penang High Court on June 26, 1947;

ii) the respondent is also the lawful son of the deceased and by an Order of the Penang High Court dated August 25, 1975 (endorsed on September 4, 1975 by the Commissioner for Land Registration Department) the subject properties were vested in him as the sole beneficiary of the deceased;

iii) by an Agreement of Sale dated December 18, 1978, the respondent agreed to sell to Teh Ah Kong of No. 62, Irving Road, Penang, Lim Ah Khim of 314-A Perak Road, Penang and Ong Lay Wah of No. 62, Irving Road, Penang, the subject properties at a purchase price of $160,000;

iv) on the subject properties stood a house numbered TBP 1283, which was occupied by a tenant, and the subject properties were sold without vacant possession of the said house;

v) the sale of the subject properties was duly completed and was registered on June 15, 1979;

vi) in 1965 the State Government of Penang compulsorily acquired certain portions of the subject properties as follows: Lot No. Original area Area acquired Remaining area 157927,361 s.f. 17,237 s.f. 10,124 s.f. 158023,005 s.f. 1,050 s.f. 21,955 s.f.

vii) the open market values of the subject properties at the following dates were as follows: (a)as at 1.1.70$ 90,000 (b)as at 4.9.75$128,300 (c)as at 18.12.78$160,000

viii) the appellant served a requisition (dated May 16, 1980) on the respondent pursuant to section 12 of the Act in respect of the chargeable gain accruing to the respondent on the disposal of the subject properties on the following basis:

Disposal price (on December 18, 1978):$160.000 Less Court fees $ 192 Commission $3,200 $3,392 $156,608 Acquisition Price, i.e. valuation as at 1.1.1970 (the deemed date of acquisition): $ 90,000 (paragraph 4(3) Schedule 2) Chargeable Gain: $ 66,608 Less exemption under paragraph 2, Schedule 4$ 6,661 Net Chargeable Gain:$ 59,947

Real Property Gains Tax on the Net Chargeable gain at 20 percent, i.e. $11,989.40, pursuant to Schedule 5 —'Disposal in the fourth year after the date of acquisition of the chargeable asset,' i.e. assuming the actual date of acquisition was August 25, 1975."

The central issues in this appeal are simply these:

1) When is the date of acquisition? Because this is also the date to determine the acquisition price.

2) Does para. 28 Schedule 2 apply in this case?

At the outset of his submission, En. Abdul Hamid, Senior Federal Counsel, for the Revenue conceded that the Revenue cannot take two dates for the purpose of computation of the gains tax, one before January 1, 1970 under para. 4(3) of Schedule 2 and the other on the date of vesting of the subject properties to the respondent i.e. September 4, 1975. However, he