Crown Mines Ltd v Commissioner for Inland Revenue

• Jurisdiction: South Africa
• Judge: Innes CJ, De Villiers JA and Juta JA
• Judgment Date: 19 December 1921
• Hearing Date: 11 November 1921
• Court: Appellate Division

Innes, C.J.:

The appellant asks the Court to review the statutory decision of the respondent refusing a refund of certain payments of

Innes, C.J.

dividend tax for the years 1917 and 1918; to set aside the relative assessments for those years in so far as they related to those payments; and to compel him to authorise a refund of the amounts in question. The origin and scope of the controversy may be shortly stated. Some ten years back the company borrowed a million of money which was used for purposes of "capital expenditure" as statutorily defined. This debt was liquidated in the following year by the proceeds of debentures issued to cover the exact amount. These debentures are in course of redemption by the company at the rate of about £80,000 per annum. The company was assessed for dividend tax upon these redemptions in respect of the years 1917, 1918 and 1919. The tax now in dispute was assessed and paid for the first two years in 1919 and for the third year in 1920.

The company's claim for a refund of the tax paid oh the redemption amounts for the three years was fully debated at interviews between special representatives of the parties. It was advanced on various grounds. Two of them depended on the frame of the accounts; the third was based upon the terms of sec. 38 of Act 41 of 1917. The first two contentions were rejected in toto by the Commissioner and may for present purposes be disregarded. The third was allowed in respect of the 1919 assessment, because of the special provisions of the Income Tax Amendment Act of that year, but disallowed as regards the years 1917 and 1918. To the assessments for these years the present dispute is therefore confined the refunds claimed being £7,977 2s. and £8,316 16s. respectively.

It will be convenient at this stage to refer to the two clauses of the Income Tax Amendment Act, 191.7, upon the operation of which this appeal depends; the one relates to the merits of the alleged overpayment, the other to the machinery for obtaining a refund. Sec. 38 defines the "dividend distributed" upon which by an earlier clause (35) a tax at a specified rate is levied. Sec. 95 provides that "if it is proved to the satisfaction of the Commissioner that the amount paid by any taxpayer is in excess of the amount properly chargeable under this Act," then that official may authorise a corresponding refund. The points which arise are whether the redemption amounts for the years in question fall outside the taxable limits as defined by the Act; and if so, whether the statutory decision of the respondent to the contrary can be

Innes, C.J.

disturbed.: The definition of "dividend distributed" falls under six heads.

Of these (a) relates to money or moneys worth actually...