Commissioner for South African Revenue Services v Foodcorp Limited (134/98) [2000] ZASCA 179 (31 May 2000)

Commissioner for South African Revenue Services v Foodcorp Limited (134/98) [2000] ZASCA 179 (31 May 2000)

Section 37 of the Income Tax Act does not apply to the transaction because there was no change of ownership of a 'mining property' as defined by the court. The land on which mining was carried out remained registered in the respondent's name, and only rights and interests in the joint venture were transferred. The...

Source-derived case information.

Citation
[2000] ZASCA 179
Parties
Appellant: Commissioner for South African Revenue Services; Respondent: Foodcorp Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
31 May 2000
Case Number
134/98
Procedural Posture
Civil Appeal / Appeal From Special Income Tax Court; Cross Appeal by Respondent
Outcome
Appeal dismissed; cross-appeal succeeds to the extent that the Commissioner must reassess without applying section 37.
Judges
F H Grosskopf, Zulman, Streicher, Melunsky, Mthiyane
Legal Topics
Income Tax Act Section 37, Recoupment of Capital Expenditure, Mining Property Definition, Joint Venture Assets, Gross Income Inclusion
Tax Law Commercial and Corporate Income Tax Act Section 37 Recoupment of Capital Expenditure Mining Property Definition Joint Venture Assets Gross Income Inclusion

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Parties

Commissioner for South African Revenue Services

Appellant

Foodcorp Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Special Income Tax Court; Cross Appeal by Respondent

Legal Issues

  1. 1 Does section 37 of the Income Tax Act 58 of 1962, read with paragraph (j) of the definition of 'gross income', apply to the R20 million received by the respondent?
  2. 2 Was there a change of ownership of a 'mining property' as contemplated by section 37?
  3. 3 Should the Commissioner have applied section 37 to the transaction or only paragraph (j)?

Ratio Decidendi

Section 37 of the Income Tax Act does not apply to the transaction because there was no change of ownership of a 'mining property' as defined by the court. The land on which mining was carried out remained registered in the respondent's name, and only rights and interests in the joint venture were transferred. The Commissioner erred in relying on section 37 to determine the amount received for development assets. The correct approach is to determine the amount received by the respondent in respect of the disposal of assets according to paragraph (j) of the definition of 'gross income', without reference to section 37. The matter must be remitted to the Commissioner for further...

Court Disposition

Appeal dismissed; cross-appeal succeeds to the extent that the Commissioner must reassess without applying section 37.

Orders

  • The appeal is dismissed with costs.
  • The orders of the court a quo are set aside.