2.The appellant taxpayer is A which is the holding company for the B.In the determination of its taxable income for the year under assessment ended 31 December 2001, the taxpayer had submitted its return of income together with a supporting set of financial statements.
3.The Commissioner has disallowed an assessed loss in the sum of R1,282,117 which was carried forward by the taxpayer from 2000 on the grounds both that "the company did not trade” and had not derived any income during the year of assessment.The Commissioner has also disallowed claimed expenditure of R84, 262 for the 2001 year on the basis that such expenditure had not been incurred in the course of trade.The total sum disallowed is R1,366,379. 2
4.The original financial statements showed that the appellant had derived no income during the 2001 year of assessment.However, after the aforesaid disallowance by the Commissioner, the taxpayer revealed that interest earned from loans made by the taxpayer to subsidiary companies had been omitted from these particular financial statements and this income tax return.Revised financial statements and tax return were then prepared disclosing interest income in the amount of R 230 000 for the year of assessment.The taxpayer performed the appropriate arithmetical calculation and requested a revised assessment to reflect the assessed loss to be R1 132 237.
5.The taxpayer has objected to the Commissioner’s assessment mainly on the basis that it has indeed traded during the year of assessment under review.On disallowance of the objection, the taxpayer lodged an appeal to the Tax Court.