The gains realized by a Hong Kong bank from the purchase and resale outside Hong Kong of certificates of deposit, bonds and gilt-edged securities were correctly found by the Commissioners not to be "profits arising in or derived from Hong Kong" from carrying on a trade or business in Hong Kong. The activities of the bank from which the income arose was the buying and selling of the securities in overseas markets and not the decision-making process in Hong Kong. Lord Bridge stated (p. 488):
"If [the taxpayer] has rendered a service or engaged in an activity such as the manufacture of goods, the profit would have arisen or derived from the place where the service was rendered or the profit making activity carried on. But if the profit was earned by the exploitation of property assets [such] as by letting property, lending money or dealing in commodities or securities by buying and reselling at a profit, the profit will have arisen in or derived from the place where the property was let, the money was lent or the contracts of purchase and sale were effected."
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