Background facts 1. This appeal concerns a charge to profits tax in relation to a payment received by the appellant taxpayer upon the disposal of a property that had been owned by it as a long-term capital asset. 2. The appellant, Perfekta Enterprises Limited, was the owner of a building situated on a site in Kwun Tong, Kowloon (the “Lot”), which the appellant used as its manufacturing base in Hong Kong since 1969. The appellant’s manufacturing base shifted from Hong Kong to the Mainland from the late 1970s, and it made a series of applications in 1991 to 1993 to various government departments to enable the redevelopment of the Lot. 3. On 21 April 1994, the appellant’s board of directors discussed a proposal from Cheung Kong (Holdings) Limited (“Cheung Kong”) for the redevelopment of the Lot. The minutes of the meeting (the “Minutes”) showed that the board of directors decided to proceed with the discussions with Cheung Kong, and that any such joint development venture with Cheung Kong should be carried out by a subsidiary company of the appellant. 4. On 30 July 1994, the appellant, Cheung Kong and Great Poka Limited (a subsidiary of Cheung Kong) (“Great Poka”) entered into an agreement concerning the redevelopment of the Lot (the “Redevelopment Agreement”). Under this agreement, Great Poka agreed to pay a sum of HK$165,104,100 to the appellant (the “Initial Payment”) as consideration for the right to develop the Lot. In return, the appellant agreed to transfer the ownership of the Lot to its wholly owned subsidiary (later known as Prodes Company Limited, “Prodes”). It was also agreed that the appellant would procure Prodes to enter into a new agreement (the “New Agreement”) with Great Poka to carry out the redevelopment joint venture. 5. Pursuant to the Redevelopment Agreement, the Initial Payment was duly paid, the Lot was assigned to Prodes, and Prodes, Great Poka and Cheung Kong entered into the New Agreement. Procedural history 6. Under section 14(1) of the Inland Revenue Ordinance (Cap.112) (the “IRO”), profits tax would not be chargeable on the Initial Payment if it was a profit arising from the sale of a capital asset. It would only be chargeable if the profit was derived by the appellant from its carrying on of “a trade, profession or business” in Hong Kong. In a Determination dated 19 May 2011, the Deputy Commissioner of Inland Revenue took the view that the Initial Payment should be assessable to profits tax. 7. The appellant appealed to the Board of Review contending that the Initial Payment was a capital receipt on which profits tax was not chargeable. By a majority, the Board of Review allowed the appellant’s appeal and remitted the assessment to the respondent for revision or annulment. The Board majority found that, although there was a change of intention on the part of the appellant, there was no relevant change of intention to one of trading. This was based on its finding that the appellant intended to sell the Lot and use part of the proceeds to invest in a joint venture to be carried out by Prodes (the “Reinvestment Theory”). In contrast, the Board minority found that the appellant changed its intention into one of trading as at the date of the Redevelopment Agreement. 8. The respondent successfully appealed to the Court of First Instance. Chung J set aside the Board majority’s decision, holding that there was no evidential basis for the Reinvestment Theory. The appellant’s appeal to the Court of Appeal on this issue was dismissed. The majority agreed with Chung J and the Board minority’s view that the appellant had changed its intention to one of trading in respect of the Lot. Godfrey Lam J dissented on this ground, and took the view that there was no change of intention on the part of the appellant. The central issue before this Court 9. The central issue before this Court was whether the majority in the Court of Appeal erred in concluding that the appellant had changed its intention, and had disposed of the Lot as a trading asset. 10. It was common ground that the Lot had been held by the appellant as a long-term capital asset prior to its disposal, therefore it would be necessary to find that there was a change of intention on the part of the appellant in order for the Initial Payment to be taxable under section 14(1) of the IRO. 11. It was also common ground that the role of an appellate court on an appeal on a point of law only is limited. If the fact-finding tribunal’s conclusion is a reasonable one, the appellate court cannot disturb that finding. The courts (including this Court) can therefore only substitute a different conclusion to that drawn by the Board if the contrary conclusion is the true and only reasonable conclusion on those primary facts. 12. The respondent contended that the true and only reasonable conclusion on the facts was that the appellant did change its intention from capital holding to trading via its subsidiary, Prodes, as held by the Board minority. It argued that the appellant embarked on a venture in the nature of trade as a property developer. 13. The Court rejected this argument because the Minutes clearly showed that the redevelopment venture would be carried out by its subsidiary (i.e. Prodes). The Court is not free to disregard the fact that the appellant and Prodes were two separate legal entities. The operations of Prodes could not be treated as those of the appellant itself on the facts. The provisions of the Redevelopment Agreement and the appellant’s subsequent actions also showed that the appellant all along intended that Prodes, rather than the appellant, would carry on the redevelopment with Great Poka and Cheung Kong. 14. The respondent argued, alternatively, that the appellant engaged in a trade in the nature of procuring its subsidiary to enter into the joint venture agreement. This argument was not raised before the Court of First Instance or the Court of Appeal. In any event, the proper question that the Court has to answer is “What trading or business venture has the taxpayer embarked upon?” On the facts of the case, it was no part of the appellant’s business to act as a procurer of joint venture participants for property developers. The Court therefore also rejected the respondent’s alternative argument. 15. The Court concluded that the true and only reasonable conclusion on the facts is that the appellant did not change its intention in relation to the Lot and did not enter into a venture in the nature of a trade in disposing of it. The Court therefore substituted this conclusion in place of that reached by the Board of Review and the courts below. 16. In these circumstances, it was therefore unnecessary to address the question of whether the court can substitute the finding of a minority decision of a board of review/tribunal as the finding of that board of review/tribunal, with the consequence that any challenge to the minority decision becomes a challenge to a conclusion from primary facts which can only succeed if it is demonstrated to be unreasonable, illogical or plainly wrong. DISPOSITION: 17. Accordingly, the Court unanimously allowed the appeal and annulled the assessment.