Conshu (Pty) Ltd v Commissioner for Inland Revenue (437/92) [1994] ZASCA 104; 1994 (4) SA 603 (AD); [1994] 2 All SA 501 (A) (2 September 1994)

Conshu (Pty) Ltd v Commissioner for Inland Revenue (437/92) [1994] ZASCA 104; 1994 (4) SA 603 (AD); [1994] 2 All SA 501 (A) (2 September 1994)

The majority held that section 103(2) of the Income Tax Act is not limited to the year in which the agreement was entered into. The section's wording, including 'whenever' and 'at any time', indicates that the Commissioner may apply it in any year of assessment in which income is received or accrued as a result of the agreement, provided the other requirements are met. The failure to apply the section in the year of the agreement does not preclude its application in a subsequent year. The purpose of the provision is to prevent tax avoidance schemes involving the utilization of assessed losses, and a restrictive interpretation would undermine its effectiveness. The appeal was dismissed,...

Citation
[1994] ZASCA 104
Parties
Appellant: Conshu (Pty) Ltd; Respondent: Commissioner for Inland Revenue
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
2 September 1994
Case Number
437/92
Procedural Posture
Civil Appeal / Appeal From the Income Tax Special Court
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Hoexter, E M Grosskopf, Nestadt, Harms, Olivier
Legal Topics
Income Tax Act 58 of 1962, Assessed Loss Set Off, Tax Avoidance, Interpretation of Statutes
Tax Law Civil Procedure Income Tax Act 58 of 1962 Assessed Loss Set Off Tax Avoidance Interpretation of Statutes

Case Brief

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Parties

Conshu (Pty) Ltd

Appellant

Commissioner for Inland Revenue

Respondent

Procedural Posture

Civil Appeal / Appeal From the Income Tax Special Court

Legal Issues

  1. 1 Whether the Commissioner for Inland Revenue may apply section 103(2) of the Income Tax Act to disallow the set-off of an assessed loss in a tax year subsequent to the year in which the relevant agreement was entered into.
  2. 2 Whether the failure of the Commissioner to apply section 103(2) in the year of the agreement precludes its application in a later year.
  3. 3 What is the correct interpretation of 'assessed loss incurred by the company' under section 103(2).

Ratio Decidendi

The majority held that section 103(2) of the Income Tax Act is not limited to the year in which the agreement was entered into. The section's wording, including 'whenever' and 'at any time', indicates that the Commissioner may apply it in any year of assessment in which income is received or accrued as a result of the agreement, provided the other requirements are met. The failure to apply the section in the year of the agreement does not preclude its application in a subsequent year. The purpose of the provision is to prevent tax avoidance schemes involving the utilization of assessed losses, and a restrictive interpretation would undermine its effectiveness. The appeal was dismissed,...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs consequent upon the employment of two counsel.