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[2016] ZASCA 121
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Commissioner of the South Africa Revenue Service v Marula Platinum Mines Limited (218/2015) [2016] ZASCA 121; [2016] 4 All SA 299 (SCA); 2017 (2) SA 398 (SCA); 79 SATC 127 (22 September 2016)
Links to summary
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Reportable
Case
No:
218/2015
In
the matter between:
THE
COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE
SERVICE
APPELLANT
and
MARULA
PLATINUM MINES LIMITED
RESPONDENT
Neutral
citation:
CSARS
v Marula Platinum Mines
(218/2015)
[2015] ZASCA 121
(22 September 2016)
Coram:
Navsa,
Cachalia, Tshiqi and Mathopo JJA and Fourie AJA
Heard:
08
September 2016
Delivered:
22
September 2016
Summary:
Interpretation
of s 23F(2) of the Income Tax Act 58 of 1962 (the ITA), read with the
definition of ‘trading stock’ in
s 1 of the ITA and the
application thereof to the respondent’s business operations:
such operations involving a manufacturing
process: respondent
excluded unquantified sales of concentrate from its gross income
under s 24M of the ITA: commissioner entitled
to invoke s 23F(2) of
the ITA by disallowing a percentage of the s 11(
a
)
deductions claimed by respondent.
ORDER
On
appeal from:
The
Tax Court of South Africa: Gauteng, (Victor J sitting as court of
first instance):
1
The appeal is upheld and the cross-appeal is dismissed.
2
The respondent is ordered to pay the appellant’s costs of
appeal and cross-appeal, including the costs of two counsel.
3
The order of the Tax Court is set aside and replaced with an order in
the following terms:
‘
(a)
The appeal is dismissed.
(b)
The assessments for the years 2007, 2008 and 2009 are referred back
to the Commissioner for the South African Revenue
Service to
calculate the amounts added back in terms of s 23F(2) of the Income
Tax Act 58 of 1962 so as to exclude overheads, but
to include on-mine
operation costs, concentrating and smelting operation costs, royalty
fees and drying charges.
(c)
The appellant is ordered to pay the respondent’s costs of
appeal.’
JUDGMENT
Fourie
AJA (Navsa, Cachalia, Tshiqi and Mathopo JJA concurring)
[1]
The appellant, the Commissioner for the South African Revenue Service
(the Commissioner), appeals against the judgment of the
Tax Court of
South Africa, Gauteng (the Tax Court), upholding
in part the appeal of the respondent, Marula Platinum
Mines (Pty) Ltd
(Marula), against the Commissioner’s assessments of the income
tax payable by Marula for the 2007, 2008 and
2009 years of assessment
(the years of assessment). The appeal is in terms of s 133(2)(
b
)(i)
read with s 135 of the Tax Administration Act 28 of 2011 (the TAA).
Marula has lodged a cross-appeal in terms of s 139 of the
TAA,
against the partial dismissal by the Tax Court of Marula’s
appeal against the Commissioner’s assessments.
[2]
The adjudication of the appeal involves the application and
interpretation of s 23F(2) of the Income Tax Act 58 of 1962 (the
ITA), read with the definition of ‘trading stock’ in s 1
of the ITA. In essence, the central issue for determination
is
whether the operations of Marula whereby mineral-bearing ore was
extracted from the land and subjected to processes resulting
in a
mineral-bearing concentrate, amounted to a manufacturing process,
with the result that the ore and concentrate constituted
‘trading
stock’ as contemplated in s 1 of the ITA.
[3]
It is necessary, firstly, to provide the factual background to the
dispute between the parties. Those facts are largely common
cause.
[4]
Marula is a subsidiary of Impala Platinum Holdings Ltd, one of the
world’s primary producers of platinum group metals,
ie
platinum, palladium, gold rhodium, uridium and ruthenium (pgm’s),
as well as base metals such as nickel, copper and cobalt.
During the
years of assessment Marula was involved in mining in Limpopo. It did
not own the land which it mined, but held mining
rights in respect of
the areas where it conducted its operations.
[5]
Marula’s operations comprised two distinct phases, namely:
Phase
1: The extracting of the ore from the underground rock and
bringing it to the surface, such ore containing pgm’s
as well
as base metals.
Phase
2: The crushing and milling of the mineral-bearing ore to
expose the mineral elements and then subjecting it to a froth
floatation process from which a mineral-bearing concentrate in powder
form was derived.
[6]
From the inception of its operations, Marula planned to sell the
pgm’s and base metals in the form of a concentrate. At
no stage
did Marula sell or trade in the mineral-bearing ore that it extracted
during phase 1 of its operations. It was simply
too bulky and
therefore Marula was unable to economically transport the ore by road
or rail. The concentrate in powder form derived
from phase 2 of its
operations could be economically transported and sold by Marula.
[7]
Marula sold the concentrate to its fellow subsidiary company, Impala
Refinery Services (Pty) Ltd (IRS),
[1]
in terms of a
written contract concluded with IRS (the contract). The payment
provisions of the contract were structured in such
a way that the
purchase price of the concentrate was dependent on the ruling market
prices for the different pgm’s, while
payment by IRS in respect
of the purchases of the concentrate, would only be made five months
later. It is difficult to understand
why it was necessary to defer
payment by IRS in this manner, save that it allowed Marula, as
recorded hereunder, to defer part
of its income to the next tax year.
[8]
In the result, Marula submitted returns for the years of assessment
wherein it deferred, in terms of s 24M of the ITA, the inclusion
in its gross income of the selling price for the concentrate to IRS
(in respect of the last four months of each year), to the following
year of assessment. However, the expenditure incurred by Marula in
respect of the sales of the concentrate, was claimed as a deduction
under s 11(
a
)
of the ITA in the year that it was incurred, and not in the year of
assessment that the selling prices of the concentrate were
included
in Marula’s gross income. The expenditure consisted of on-mine
operation costs, concentration and smelting operation
costs,
overheads, royalty fees and drying charges. Simply put ─ there
was a disjuncture in a tax year between expenditure
and income.
[9]
The Commissioner took the view that, in respect of each of the years
of assessment, Marula had correctly excluded unquantified
sales of
concentrate to IRS from its gross income under s 24M of the ITA.
However, the Commissioner invoked the provisions of s
23F(2) of the
ITA by disallowing a percentage of the s 11(
a
) deductions
claimed by Marula in respect of each of the years of assessment. As
will become apparent in due course, s 23F(2) provides
that
expenditure relating to the acquisition of ‘trading stock’
(which is generally deductible) is to be disregarded
to the extent
that any amounts relating to the disposal of that trading stock did
not accrue during the same year of assessment
in which the
expenditure had been incurred. The following expenses incurred by
Marula in the respective years of assessment, were
disallowed:
(a)
2007: R63 254 644
(b)
2008: R220 592 861
(c)
2009: R170 388 451
[10]
This disallowance of expenses incurred by Marula resulted in a
substantial increase in its liability for the payment of income
tax
in the years of assessment, which prompted an unsuccessful objection
to the assessments and the eventual appeal to the Tax
Court. In
essence, Marula took the view that the expenditure incurred by it
related to mining activities and not to the production,
manufacturing, purchasing or acquisition of trading stock. The
deductions claimed in respect thereof could therefore not be recouped
under s 23F(2) of the ITA.
[11]
The Tax Court held that the ore mined by Marula formed part of a
mining process; that it was not economically viable to sell
the ore
in that form nor did Marula intend selling it in that state; and,
therefore, the ore did not constitute trading stock.
The Tax Court
further found that once the mineral ore had been concentrated into ‘a
higher value product’ it qualified
‘to be characterised
as trading stock’. It therefore held that the Commissioner was
entitled, in terms of s 23F(2)
of the ITA, to recoup the
deduction of expenses only in respect of phase 2, and not phase 1 of
Marula’s operations. The Tax
Court referred the assessments
back to the Commissioner for reconsideration on the basis that s
23F(2) of the ITA applied only
to phase 2, being the ‘concentrator
phase’. It further held that the deductions for administration,
audit and drying
charges did not fall within the purview of s 23F(2)
of the ITA.
[12]
The Commissioner appealed the judgment and orders made by the Tax
Court, while Marula noted a cross-appeal against the Tax
Court’s
order allowing the Commissioner to recoup the deductions for the
second phase in terms of s 23F(2) of the ITA. I
should add that, in
argument before the Tax Court, the Commissioner conceded that the
recoupment of deductions relating to administration
and audit charges
was incorrectly made, while Marula conceded that the royalty fees had
been correctly recouped. Therefore, the
remaining issues to be
decided by this court relate to the application of s 23F(2) with
regard to the expenditure incurred by Marula
during the years of
assessment in respect of:
(a)
the phase 1 operation;
(b)
the phase 2 operation; and
(c)
the drying charges.
[13]
I have already alluded to some of the legislative provisions that
bear upon the issues in this appeal. For the sake of completeness,
I
record the provisions of the ITA that are directly relevant to the
adjudication of the appeal.
Section
1: ‘trading stock’
‘
(
a
)
includes -
(i)
anything produced, manufactured, constructed, assembled, purchased or
in any other manner acquired by a taxpayer for the
purposes of
manufacture, sale or exchange by the taxpayer or on behalf of the
taxpayer;
(ii)
anything the proceeds from the disposal of which forms or will form
part of the taxpayer’s gross income . . . .’
Section
11: General deductions allowed in determination of taxable income
‘
For
the purpose of determining the taxable income derived by any person
from carrying on any trade, there shall be allowed as deductions
from
the income of such person so derived ─
(
a
)
expenditure and losses actually incurred in the production of the
income, provided such
expenditure and losses are not of a capital
nature . . . .’
Section
23F: Acquisition or disposal of trading stock
‘
(1)
. . . .
(2)
Where a taxpayer has during any year of assessment disposed of any
trading stock in
the ordinary course of his or her trade for any
consideration the full amount of which will not accrue to him or her
during that
year of assessment and any expenditure incurred in
respect of the acquisition of that trading stock was allowed as a
deduction
under the provisions of section 11(
a
) during that
year or any previous year of assessment, any amount which would
otherwise be deducted must, to the extent that it
exceeds any amount
received or accrued from the disposal of that trading stock be
disregarded during that year of assessment.’
Section
24M: ‘Incurral and accrual of amounts in respect of assets
acquired or disposed of for unquantified amount
‘
(1)
If a person during any year of assessment disposes of an asset for
consideration which consists
of or includes an amount which cannot be
quantified in that year of assessment, so much of that consideration
as -
(
a
)
cannot be quantified in that year must for purposes of this Act be
deemed not to have
accrued to that person in that year; and
(
b
)
becomes quantifiable during any subsequent year of assessment must
for purposes of this
Act be deemed to have been accrued to that
person from that disposal in that subsequent year.’
[14]
As explained in
Silke
on South African Income
Tax
(Alwyn de Koker and R C Williams
Silke
on South African Income Tax vol 2
at 8-294-1), s 23F(2) is an anti-avoidance provision that caters for
the situation where a taxpayer has disposed of trading stock
in the
ordinary course of its trade during a year of assessment for a
consideration, the full amount of which will not accrue to
the
taxpayer during that year, but in respect of which expenses incurred
on the acquisition of that trading stock had, in that
year or in any
previous year of assessment been allowed as a deduction under s 11(
a
)
of the ITA. Any amount that would otherwise have been deductible
under s 11(
a
)
must, to the extent that it exceeds the amount received or accrued
from the disposal of that trading stock, be disregarded during
that
year of assessment. Therefore, the purpose and function of s 23F(2)
of the ITA is to delay the s 11(
a
)
deduction of the cost of trading stock until the income from the
disposal of that trading stock has been included in the taxpayer’s
gross income.
[15]
As emphasised by Corbett JA in
Commissioner
for Inland Revenue v Nemojim (Pty) Ltd
1983 (4) SA 935
(A) at 946F-H, taxable income is the basis on which
normal tax is levied, and is arrived at by first determining the
taxpayer’s
gross income and then deducting therefrom any
amounts exempt from normal tax in order to arrive at the taxpayer’s
income.
Taxable income is then determined by deducting from income
the various amounts which the ITA allows by way of deduction from
income,
including those deductions covered by s 11(
a
)
of the ITA. In the present case the income derived by Marula from the
sale of the concentrate (in respect of the last four months
of each
of the years of assessment) was excluded from Marula’s gross
income in terms of s 24M of the ITA, to be included
in the following
years when it became quantifiable. Therefore, if Marula’s
activities constituted the disposal of ‘trading
stock’ as
defined in s 1 of the ITA, s 23F(2) would find application and
prevent the ‘mismatch’ of the deduction
of the cost of
the trading stock with the taxation of the income from the disposal
of that trading stock, by delaying the s 11(
a
)
deduction until the year of assessment in which the corresponding
income is taxed.
[16]
The scope of the relevant part of the definition of ‘trading
stock’, quoted above, was analysed as follows by this
court in
Richards Bay Iron & Titanium (Pty) Ltd & another v
Commissioner for Inland Revenue
[1995] ZASCA 81
;
1996 (1) SA 311
(A) at 324H-325A:
‘
.
. . the definition may be notionally and grammatically divided into
two parts. The first part lays emphasis upon the purpose for
which
anything may have been produced, manufactured, purchased or in any
other manner acquired by a taxpayer. The specified purposes
are
manufacture, sale or exchange by the taxpayer or on his behalf. The
second part makes no direct reference to any purpose which
the
taxpayer must have had at the time of acquisition; it postulates an
objective assessment, namely, whether, if the thing under
consideration was disposed of, the proceeds would form part of his
gross income . . . .’
[17]
In
Richards Bay
at 325B-D, the court added the following
regarding the ambit of the definition of ‘trading stock’
in s 1 of the ITA:
‘
The
first part of the definition also includes
“
anything
produced, manufactured, purchased or in any other manner acquired by
a taxpayer for purposes of manufacture . . . by him
or on his
behalf.”
Those
words are quite plain and unambiguous. It is inherent in them that,
in order to fall within the definition, what the taxpayer
produces,
manufactures, purchases or otherwise acquires need not be intended to
be disposed of in the state in which it then is.
It suffices that it
is intended to be used for the purpose of manufacturing something.
Nor does it matter whether or not that which
is intended to be used
is capable of realisation or sale in the state in which it then is.’
[18]
Therefore, for anything to qualify as ‘trading stock’
under the first part of the definition in s 1 of the ITA,
it can be
acquired by the taxpayer for the purposes of manufacture, sale or
exchange, or it can be manufactured by the taxpayer
for the purposes
of sale or exchange. It is not a prerequisite that to qualify for
trading stock that what the taxpayer acquires
is immediately saleable
or realisable. It is sufficient if that which is acquired is intended
to be used for the manufacture of
something else (see
Richards
Bay
supra at 325C-E).
[19]
In the present matter it is common cause that the mineral-bearing ore
was mined by Marula for the purpose of manufacture of
the
concentrate. Therefore, the fact that the ore was not intended to be
disposed of in the state in which it was mined, is legally
irrelevant
in view of the purpose for which it was mined, ie to manufacture the
concentrate. The finding of the Tax Court that
the ore did not
constitute trading stock as it had in itself no saleable or
realisable value, cannot be sustained. As held in
Richards
Bay
,
it suffices that the ore was intended to be used for the purpose of
manufacturing the concentrate and it accordingly constituted
‘trading
stock’ as defined in s 1 of the ITA.
[20]
As recorded earlier, the Tax Court held that the concentrate
qualified to be characterised as trading stock. This finding is
no
doubt correct, as the evidence shows that the concentrate was derived
by a process of manufacturing, as envisaged in the definition
of
‘trading stock’ in s 1 of the ITA. This involved the
conversion of the ore into mineral-bearing concentrate by crushing
and milling it to expose the minerals and then subjecting it to a
froth floatation process. This process was analogous to those
employed in
Richards
Bay
and
Commissioner
for the South African Revenue Services v Foskor
[2010]
ZASCA 45
;
[2010] 3 All SA 594
(SCA), both of which were held to be
processes of manufacture within the meaning of the definition of
‘trading stock’
in s 1 of the ITA.
[21]
In
Richards Bay
at 312I-313A, the process employed was
described as follows:
‘
The
process, in broad, consists of creating in the dunes self-contained
ponds of water into which dune sand is made to slump by
undermining
the face of the dunes; of removing the resultant slurry by suction
with the aid of a floating dredger; of separating
the heavy mineral
concentrate from the dune sand in a floating concentrator plant by
means of a gravity separation process; of
separating that heavy
mineral concentrate in a mineral separation plant . . . .’
[22]
In
Foskor
the process involved the crushing and milling of mineral-bearing ore
to liberate the mineral particles from the ore, whereafter
the pulp
containing the minerals was pumped to a floatation plant where the
minerals of economic importance were separated by means
of three
metallurgical processes. The products from these processes were
various concentrates, including phosphate concentrate
which was then
dried and stock-piled.
[23]
It has to be stressed that, before Marula extracted the concentrate,
the ore was not saleable, but the end product (the concentrate)
was a
valuable commodity available in a commercially acceptable and
disposable form. As in the case of
Richards Bay
and
Foskor
,
one cannot ignore the processes to which the mineral-bearing ore was
subjected, with the result that an end product that was significantly
different from the raw ore was derived. In this regard reference can
be made to
Secretary for Inland Revenue v Safranmark (Pty) Ltd
1982 (1) SA 113
(A) at 122H, where the following statement by Miller
J in
ITC
1247 38 SATC at 32 was quoted with approval:
‘
Invariably,
in cases in which plant or machinery has been found to have been used
in a process of manufacture, the result of such
process has been the
creation of a substance or an article which, although it might have
contained all the various components from
which it evolved in the
process of manufacture, became upon completion an essentially
different entity in its own right.’
What
the evidence shows is that the concentrate was not only significantly
different from the raw ore, but upon completion constituted
an
essentially different entity in its own right.
[24]
In my view, the process of manufacture followed in the instant matter
cannot be materially distinguished from those employed
in
Richards
Bay
and
Foskor.
Counsel for Marula sought to distinguish
Richards
Bay
on the basis that the taxpayer in that case conceded that the
relevant stockpiles had been manufactured within the meaning of the
definition of ‘trading stock’. However, as appears from
the dictum in
Richards
Bay
at 328J, the court, distinct from the concession that had been made
independently, held that the evidence established that the
relevant
stockpiles had been produced or manufactured within the meaning of
the definition of ‘trading-stock’.
[25]
I therefore conclude that, not only was the mineral-bearing ore
extracted by Marula for the purpose of manufacture of the
concentrate, but the concentrate itself was derived by a process of
manufacturing, as envisaged in the first part of the definition
of
‘trading stock’ in s 1 of the ITA. I should add that the
concentrate also qualified as trading stock in terms of
the second
part of the definition in s 1 of the ITA, as the proceeds from
its disposal formed part of Marula’s gross
income.
[26]
From this it follows that Marula’s activities constituted the
disposal of trading stock, as a result of which the Commissioner
was
entitled to invoke s 23F(2) of the ITA, by delaying the
deduction of s 11(
a
)
expenses by Marula until the year of assessment in which the
corresponding income was to be taxed.
[27]
Marula raised several grounds for resisting the relief sought by the
Commissioner in this appeal. These included a procedural
ground as
well as substantive grounds. With regard to the former, counsel for
Marula submitted that the Commissioner was not entitled
to raise the
issue that the phase 2 operation constituted a manufacturing process.
He contended that the issue was not covered
by the pleadings, and
that the Commissioner was therefore precluded from raising it by rule
12 of the ITA, which states that ‘the
issues in any appeal to
the court will be those defined in the statement of the grounds of
assessment read with the statement of
the grounds of appeal’.
[28]
A perusal of the pleadings shows that there is no merit in this
submission. In the Commissioner’s statement of the grounds
of
assessment (para 45) it is alleged that ‘[b]oth the ore and the
concentrate constitute “trading stock” as
defined and
accordingly the provisions of section 23F of the Act apply to the
cost of acquiring of the ore and the cost of producing
the
concentrate’. In its statement of the grounds of
appeal Marula took issue with these allegations by, inter
alia,
denying that the ore was acquired for purposes of manufacture, sale
or exchange as contemplated in the definition of trading
stock. The
manufacturing issue was accordingly pertinently raised and formed an
integral part of the
lis
between the parties. To this I should add that, even before the
pleading stage, this issue was expressly raised by the Commissioner
in the SARS letter of assessment dated 18 January 2012. The document
explained that the term ‘manufactured’ in s 1
of the ITA
is interpreted broadly to extend beyond the conventional meaning of
the word. It was emphasised that the concept of
trading stock is
thereby broadened so as to cover not only finished goods ready for
sale or exchange, but also raw materials and
work in progress.
Express reference was also made to the principles laid down in the
decisions of
Richards
Bay
and
Foskor
.
Therefore, the parties were even at this early stage alive to the
manufacturing issue.
[29]
This brings me to the substantive grounds upon which Marula relied.
These grounds were premised on the submission that the
processes
involved were not that of manufacturing, but constituted mining as
defined in s 1 of the ITA. Whilst the ITA does not
define
manufacturing, mining is defined as including ‘every method or
process by which any mineral is won from the soil or
from any
substance or constituent thereof’. In my view this submission
fails to take proper account of the fact that Marula
extracted the
ore from the land for the purpose of utilising it to render an end
product in the form of a concentrate. The ore
was not intended to be
disposed of in its original state, and was subjected to an intricate
process, described above, which rendered
an end product that was not
only significantly different from the raw ore, but was a highly
valuable commodity saleable on the
open market. Seen in this context,
the processes utilised by Marula to derive the concentrate from the
raw ore, did not constitute
the ‘mining’ of the
concentrate, but its manufacture as was held in analogous
circumstances in
Richards
Bay
and
Foskor
.
[30]
The finding that the activities of Marula constituted manufacturing
and not mining, effectively puts paid to Marula’s
substantive
grounds of opposition. However, counsel for Marula had a further
string to his bow. He submitted that, upon a proper
construction of s
23F(2) of the ITA, the expenses incurred by Marula to extract the ore
and produce the concentrate, may not be
recouped, as the phrase ‘any
amount which would otherwise be deducted’ in s 23F(2), excludes
deductions claimed under
s 11(
a
)
of the ITA. However, this submission falters on the plain
wording of s 23F(2). When this phrase is read within the context
of s
23F(2), it is clear that ‘any amount which would otherwise be
deducted’ refers to s 11(
a
)
expenses that would be deductible had the full income of the disposal
of the trading stock accrued to the taxpayer during that
year of
assessment. That s 23F(2) refers to deductions claimed under s 11(
a
)
and not to any other deductions, is also made clear by
Silke
on South African Income Tax
(supra,
para 14).
[31]
During argument on appeal, counsel for Marula raised the concern that
were this court to find that these activities of Marula
constituted
manufacturing, it may give rise to the recoupment by the Commissioner
of a much wider range of deductions than those
falling within the
purview of s 23F(2) of the ITA. I do not believe that this concern is
justified. This appeal deals solely with
the deductions covered
by s 23F(2), ie deductions under the provisions of s 11(a).
This judgment is not concerned with
any other deductions.
[32]
I conclude that the Commissioner was entitled in terms of s 23F(2) of
the ITA to recoup the relevant portion of the deductions
relating to
phases 1 and 2, ie the on-mine operation costs and the concentrating
and smelting operation costs. I have already recorded
Marula’s
concession that the Commissioner was entitled to recoup the
expenditure in respect of royalty fees, therefore the
remaining issue
is that of the drying charges.
[33]
It was submitted on behalf of Marula that the drying charges should
not be added-back as they were not incurred to acquire
the
concentrate. This is so, it was argued, because IRS charged drying
fees after Marula had acquired the concentrate. I do not
agree with
this submission. What the evidence shows is that the nature and
purpose of the drying of the concentrate by IRS was
to bring it into
the appropriate condition, namely, to comply with the moisture levels
prescribed in the contract. It therefore
represented an additional
cost to Marula as envisaged by s 22(3) of the ITA, which provides
that the cost of trading stock includes
‘any further costs
incurred by such person . . . in getting such trading stock into its
then existing condition and location’.
I therefore find that
the Commissioner was entitled in terms of s 23F(2) to recoup the
relevant portion of these drying charges.
[34]
In the result the appeal should succeed while the cross-appeal should
be dismissed. The Commissioner as the successful party
is entitled to
the costs of appeal, including the costs of two counsel.
[35]
The following order is made:
1
The appeal is upheld and the cross-appeal is dismissed.
2
The respondent is ordered to pay the appellant’s costs of
appeal and cross-appeal, including the costs of two counsel.
3
The order of the Tax Court is set aside and replaced with an order in
the following terms:
‘
(a)
The appeal is dismissed.
(b)
The assessments for the years 2007, 2008 and 2009 are
referred back to the Commissioner for the South African Revenue
Service to calculate the amounts added back in terms of s 23 F(2) of
the Income Tax Act 58 of 1962 so as to exclude
overheads, but to include on-mine operation costs, concentrating and
smelting operation costs, royalty fees and drying
charges.
(c)
The appellant is ordered to pay the respondent’s
costs of appeal.’
______________________
P
B Fourie
Acting
Judge of Appeal
Appearances:
For
the Appellant:
D M Fine SC (with him NK Nxumalo)
Instructed
by:
Mothle Jooma
and Sabdia Inc, Brooklyn, Pretoria
Matsepes Inc,
Bloemfontein
For
the Respondent: J Truter
Instructed
by:
Fairbridges Wertheim
Becker Attorneys, Johannesburg
McIntyre and
Van der Post, Bloemfontein
[1]
Both of which are wholly owned subsidiaries of
Impala Platinum Holdings Ltd.