New Adventure Shelf 122 (Pty) Ltd v Commissioner of the South African Revenue Services (310/2016) [2017] ZASCA 29; [2017] 2 All SA 784 (SCA); 2017 (5) SA 94 (SCA); 79 SATC 233 (28 March 2017)

New Adventure Shelf 122 (Pty) Ltd v Commissioner of the South African Revenue Services (310/2016) [2017] ZASCA 29; [2017] 2 All SA 784 (SCA); 2017 (5) SA 94 (SCA); 79 SATC 233 (28 March 2017)

The Supreme Court of Appeal held that the cancellation of the sale agreement did not entitle the appellant to have its capital gains tax assessment for the 2007 year re-opened or reduced. The statutory scheme under the Eighth Schedule to the Income Tax Act requires that any reduction in proceeds due to cancellation, termination, or variation of an agreement must be accounted for in the year the cancellation occurs, not retrospectively in the year the original gain was assessed. The assessment for the 2007 tax year had become final and conclusive under section 81(5) because no objection was lodged within the prescribed period. The court found the appellant's interpretation of the Eighth...

Citation
[2017] ZASCA 29
Parties
Appellant: New Adventure Shelf 122 (Pty) Ltd; Respondent: Commissioner of the South African Revenue Services
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 March 2017
Case Number
310/2016
Procedural Posture
Civil Appeal / Appeal From Western Cape Division of the High Court
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Shongwe, Leach, Wallis, Mocumie, Nicholls
Legal Topics
Capital Gains Tax, Tax Assessment Finality, Cancellation of Sale, Capital Loss, Eighth Schedule Interpretation
Tax Law Civil Procedure Capital Gains Tax Tax Assessment Finality Cancellation of Sale Capital Loss Eighth Schedule Interpretation

Case Brief

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Parties

New Adventure Shelf 122 (Pty) Ltd

Appellant

Commissioner of the South African Revenue Services

Respondent

Procedural Posture

Civil Appeal / Appeal From Western Cape Division of the High Court

Legal Issues

  1. 1 Whether the cancellation of a sale after assessment entitles the taxpayer to have the original capital gains tax assessment re-opened and reduced.
  2. 2 Whether the provisions of the Eighth Schedule to the Income Tax Act permit redetermination of a capital gain in a prior year due to subsequent cancellation of the sale.
  3. 3 Whether the taxpayer is entitled to relief under section 81 of the Income Tax Act after the objection period has lapsed.

Ratio Decidendi

The Supreme Court of Appeal held that the cancellation of the sale agreement did not entitle the appellant to have its capital gains tax assessment for the 2007 year re-opened or reduced. The statutory scheme under the Eighth Schedule to the Income Tax Act requires that any reduction in proceeds due to cancellation, termination, or variation of an agreement must be accounted for in the year the cancellation occurs, not retrospectively in the year the original gain was assessed. The assessment for the 2007 tax year had become final and conclusive under section 81(5) because no objection was lodged within the prescribed period. The court found the appellant's interpretation of the Eighth...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, such costs to include the costs of two counsel.