Case No 11986.In the matter between the Appellant and the Commissioner for The South African Revenue Service.
The appellant noted an appeal against an assessment for income tax raised in respect of a recoupment added back to his income for a certain year of assessment.The appellant had received a distribution in specie, in the form of certain leasehold rights from one of its subsidiaries.The question was whether the recoupment lay to be taxed against the appellant or the subsidiary.
Held that the dispute related to the issue of deferred taxation.The appellant's case was that both the income and the expenditure received and incurred by its subsidiaries was reflected in appellant's accounts as income and expenditure received and accrued on behalf of the subsidiaries, and there was therefore no tax implication for the appellant.
The court accepted the appellant's argument that the allowances granted in terms of the Income Tax Act had been granted to the subsidiary and not the appellant.The appeal was upheld, and the assessment referred back to the respondent for reassessment on the basis that the allowances in question were not recouped by appellant.
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