NST Ferrochrome (Pty) Limited v Commissioner for Inland Revenue

NST Ferrochrome (Pty) Ltd, a company jointly controlled by Samancor Ltd and Dippon Denko Co Ltd, purchased a ferrochrome furnace and related assets from Samancor for approximately R89.6 million. The furnace had previously been used by Samancor, and its tax value at the effective date of sale was nil, with an original cost of R48 million. NST Ferrochrome claimed a deduction under section 12C of the Income Tax Act 58 of 1962 based on the purchase price. The Commissioner for Inland Revenue disallowed the deduction to the extent it exceeded R48 million, contending that Samancor was a 'connected person' to NST Ferrochrome, triggering the limitation in section 12C(4).

The appeal was dismissed with costs, and the assessment issued by the Commissioner limiting the section 12C deduction to R48 million was upheld.

The case is significant for South African tax law as it clarifies that the term 'person' in the Income Tax Act generally includes companies unless the context indicates otherwise. It affirms principles of statutory interpretation in tax legislation and limits reliance on the contra fiscum rule where contextual interpretation resolves ambiguity.