Blue Circle Cement Ltd. v Commissioner for Inland Revenue (39/84) [1984] ZASCA 14; [1984] 2 All SA 188 (D) ; 1984 (2) SA 764 (A) (16 March 1984)

Blue Circle Cement Ltd. v Commissioner for Inland Revenue (39/84) [1984] ZASCA 14; [1984] 2 All SA 188 (D) ; 1984 (2) SA 764 (A) (16 March 1984)

The Supreme Court of Appeal held that the railway line constructed by the appellant constituted 'plant' within the meaning of section 12(1) and (2) of the Income Tax Act. The Court applied the functional test, finding that the railway line was apparatus used in carrying on the industrial process of manufacturing cement, as the conveyance of limestone from the quarry to the factory was integral to production. The Court rejected a restrictive interpretation of 'plant' and found that neither the length of the railway line nor the distance between the quarry and the factory excluded it from being classified as plant. The Special Court erred by disregarding the formal concessions made by the...

Citation
[1984] ZASCA 14
Parties
Appellant: Blue Circle Cement Limited; Respondent: Commissioner for Inland Revenue
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
16 March 1984
Case Number
39/84
Procedural Posture
Civil Appeal / Appeal From Transvaal Income Tax Special Court
Outcome
Appeal allowed with costs; order of the Special Court set aside; case remitted to the Commissioner for revision of assessment in accordance with the judgment.
Judges
Corbett, Miller, Nicholas, Galgut, Howard
Legal Topics
Income Tax Act, Capital Allowances, Definition of Plant, Machinery Initial Allowance, Investment Allowance
Tax Law Commercial and Corporate Income Tax Act Capital Allowances Definition of Plant Machinery Initial Allowance Investment Allowance

Case Brief

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Parties

Blue Circle Cement Limited

Appellant

Commissioner for Inland Revenue

Respondent

Procedural Posture

Civil Appeal / Appeal From Transvaal Income Tax Special Court

Legal Issues

  1. 1 Whether the railway line constructed by the appellant constitutes 'plant' within the meaning of section 12(1) and (2) of the Income Tax Act.
  2. 2 Whether the appellant is entitled to machinery initial and investment allowances in respect of the cost of the railway line.
  3. 3 Whether the Special Court erred in finding that the railway line was not used directly in a process of manufacture.

Ratio Decidendi

The Supreme Court of Appeal held that the railway line constructed by the appellant constituted 'plant' within the meaning of section 12(1) and (2) of the Income Tax Act. The Court applied the functional test, finding that the railway line was apparatus used in carrying on the industrial process of manufacturing cement, as the conveyance of limestone from the quarry to the factory was integral to production. The Court rejected a restrictive interpretation of 'plant' and found that neither the length of the railway line nor the distance between the quarry and the factory excluded it from being classified as plant. The Special Court erred by disregarding the formal concessions made by the...

Court Disposition

Appeal allowed with costs; order of the Special Court set aside; case remitted to the Commissioner for revision of assessment in accordance with the judgment.

Orders

  • The appeal is allowed with costs, including the costs of two counsel.
  • The order of the Special Court is set aside and substituted with an order allowing the appeal.