Hong Kong’s Court of Final Appeal (CFA) ruled that year-end unrealized revaluation gains on listed securities held for sale were not taxable in Hong Kong. In a case called Nice Cheer Investment Limited (NCIL), the CFA rejected the CIR’s (Commissioner of Inland Revenue) reliance on the Spanish Prospecting case as supporting the CIR’s argument that unrealized profits were nonetheless taxable profits under the Inland Revenue Ordinance (IRO). The CIR had based its argument what it called two cardinal principles, i.e. for income tax purposes: (i) the word “profits” connotes actual or realized and not potential or anticipated profits; and (ii) neither profits nor losses may be anticipated.