Robin Consolidated Industries Ltd. v Commissioner for Inland Revenue (496/95) [1997] ZASCA 12; (1997 (3) SA 654 (SCA); [1997] 2 All SA 195 (A); (14 March 1997)

Robin Consolidated Industries Ltd. v Commissioner for Inland Revenue (496/95) [1997] ZASCA 12; (1997 (3) SA 654 (SCA); [1997] 2 All SA 195 (A); (14 March 1997)

The Supreme Court of Appeal held that Robin Consolidated Industries Limited did not carry on trade during the 1988 tax year. The two sales of goods in bond were found to be mere realisations of assets in the course of liquidation, not trading activities. The court affirmed the established interpretation of section 20(1) of the Income Tax Act, namely that assessed losses can only be carried forward if there is income from trade in the relevant year and if a new balance of assessed loss is struck each year. The court found no basis to depart from the rule in SA Bazaars v CIR, noting that the language of the statute supports the requirement for continuity and annual assessment of losses. The...

Citation
[1997] ZASCA 12
Parties
Appellant: Robin Consolidated Industries Limited; Respondent: Commissioner for Inland Revenue
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
14 March 1997
Case Number
496/95
Procedural Posture
Civil Appeal / Appeal From Transvaal Income Tax Special Court
Outcome
Appeal dismissed with costs, including costs of two counsel where employed and costs of the condonation application.
Judges
Mahomed, Hefer, Howie, Schutz, Scott
Legal Topics
Assessed Loss Carry Forward, Income Tax Act Interpretation, Trade Definition, Liquidation Realisation
Tax Law Civil Procedure Assessed Loss Carry Forward Income Tax Act Interpretation Trade Definition Liquidation Realisation

Case Brief

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Parties

Robin Consolidated Industries Limited

Appellant

Commissioner for Inland Revenue

Respondent

Procedural Posture

Civil Appeal / Appeal From Transvaal Income Tax Special Court

Legal Issues

  1. 1 Whether Robin Consolidated Industries Limited carried on trade during the 1988 tax year.
  2. 2 Whether assessed losses can be carried forward in the absence of trading or trading income in the relevant tax year.
  3. 3 Whether the rule in SA Bazaars v Commissioner for Inland Revenue should be departed from.

Ratio Decidendi

The Supreme Court of Appeal held that Robin Consolidated Industries Limited did not carry on trade during the 1988 tax year. The two sales of goods in bond were found to be mere realisations of assets in the course of liquidation, not trading activities. The court affirmed the established interpretation of section 20(1) of the Income Tax Act, namely that assessed losses can only be carried forward if there is income from trade in the relevant year and if a new balance of assessed loss is struck each year. The court found no basis to depart from the rule in SA Bazaars v CIR, noting that the language of the statute supports the requirement for continuity and annual assessment of losses. The...

Court Disposition

Appeal dismissed with costs, including costs of two counsel where employed and costs of the condonation application.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel where two were employed.
  • The appellant is to pay the costs of the condonation application on the same basis.