The taxpayer purchased land in 1971 with the intention of developing a hotel complex and theatre club. However, it changed its intention and decided to develop the property for commercial and housing development in 1979. The Revenue assessed the taxpayer to income tax and based the assessment on the original cost of property in 1971 instead of 1979. The Revenue argued that the property was stock in trade from the date of purchase in 1971. The taxpayer appealed to the Special Commissioners on the grounds that at the time of purchase it was a capital asset, but changed its intention to become part of its stock in trade in 1979 and therefore should have been valued at that date.

The Special Commissioners held that the property was acquired by the taxpayer as trading stock and was already a current asset when approval for its development was given.

The High Court confirmed that the taxpayer acquired the property as trading stock, and that the taxpayer had no evidence to show that the land was purchased initially for investment purposes.
 
 
In FYC (f) v Ketua Pengarah Hasil Dalam Negeri (1997) MSTC 2941, the taxpayer born in 1941, retired as a chief accountant in 1991. The taxpayer was paid a retirement gratuity and was assessed to tax by the Revenue. The taxpayer appealed to the Special Commissioners on the grounds that gratuity received was exempt from tax as her retirement was approved by virtue of a company staff code before October 18 1979 as according to the requirements of Section 1(4) of the Income Tax Amendment Act, 1980.

Section 1(4) of the Income Tax (Amendment) Act, 1980 provides that a retirement gratuity will be exempted if a person has reached the age of 50 and has obtained approval to retire before October 18, 1979.

The Special Commissioners held that the approval received by virtue of the staff code was not a proper approval for retirement but was merely the terms and conditions of service between the employee and employer which could be varied. As such, the taxpayer's gratuity was not exempt from tax as the taxpayer was only 39 years old.
   



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