National Co-Operative Dairies Ltd. v Commissioner for Inland Revenue (202/1988) [1991] ZASCA 162; 1992 (1) SA 694 (AD); [1992] 4 All SA 58 (AD) (26 November 1991)

National Co-Operative Dairies Ltd. v Commissioner for Inland Revenue (202/1988) [1991] ZASCA 162; 1992 (1) SA 694 (AD); [1992] 4 All SA 58 (AD) (26 November 1991)

The court held that the appellant's tankers and trucks do not qualify for the tax allowances claimed. The machinery initial and investment allowances under sections 12(1)(a) and 12(2)(a) require direct use in a process of manufacture, which in this case is pasteurisation. The court found that pasteurisation only begins at the depot, and the tankers and trucks are used for conveyance, not directly in the manufacturing process. Similarly, the deductions under sections 27(2)(d) and (e) require direct use for storing or subjecting members' products to a primary process. The court determined that the tankers are not used for storage, as their function is conveyance, and no primary process...

Citation
[1991] ZASCA 162
Parties
Appellant: National Co-Operative Dairies Limited; Respondent: Commissioner for Inland Revenue
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
26 November 1991
Case Number
202/1988
Procedural Posture
Civil Appeal / Appeal From Special Income Tax Court; Leave to Appeal Granted; Judgment Delivered
Outcome
Appeal dismissed with costs, including costs of condonation application.
Judges
Corbett, Van Heerden, Nienaber, Van Den Heever, Nicholas
Legal Topics
Income Tax Deductions, Machinery Investment Allowance, Primary Process Definition, Agricultural Cooperative Taxation
Tax Law Commercial and Corporate Income Tax Deductions Machinery Investment Allowance Primary Process Definition Agricultural Cooperative Taxation

Case Brief

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Parties

National Co-Operative Dairies Limited

Appellant

Commissioner for Inland Revenue

Respondent

Procedural Posture

Civil Appeal / Appeal From Special Income Tax Court; Leave to Appeal Granted; Judgment Delivered

Legal Issues

  1. 1 Whether the appellant's tankers and trucks qualify for tax allowances under sections 12(1)(a), 12(2)(a), 27(2)(d), and 27(2)(e) of the Income Tax Act 58 of 1962.
  2. 2 Whether the use of tankers and trucks constitutes direct use in a process of manufacture or a primary process as required by the Act.
  3. 3 Whether the cooling and conveyance of milk by the appellant amount to processes qualifying for tax deductions.

Ratio Decidendi

The court held that the appellant's tankers and trucks do not qualify for the tax allowances claimed. The machinery initial and investment allowances under sections 12(1)(a) and 12(2)(a) require direct use in a process of manufacture, which in this case is pasteurisation. The court found that pasteurisation only begins at the depot, and the tankers and trucks are used for conveyance, not directly in the manufacturing process. Similarly, the deductions under sections 27(2)(d) and (e) require direct use for storing or subjecting members' products to a primary process. The court determined that the tankers are not used for storage, as their function is conveyance, and no primary process...

Court Disposition

Appeal dismissed with costs, including costs of condonation application.

Orders

  • The appeal is dismissed with costs, including the costs occasioned by the appellant's application for condonation of the late filing of the record.