The Supreme Court of Appeal last week ruled that unused land that was developed and on-sold should be taxed.

Speaking on Summit TV, AECI chief Executive, Graham Edwards said his company was not given the right to test the court’s ruling.

"It’s in the tax text books and has been covered widely up until now," said Mr Edwards.

"They denied us access to a fair trial because we weren’t given an opportunity to present our reasoning behind why the realisation company was put in place."

Although the amount at stake in the ruling is relatively small at just R1million - which would probably be less than mounting litigation fees - there was a lot more at stake.

"There are three other AECI companies where the facts are similar where the tax amounts to something like R40million," he told Summit TV.

Mr Edwards said the appeal was in the interest of all property developers who would require a proper answer from the Constitutional Court.

"For the first five years or so it was accepted by Sars the land we sold was of a capital nature," said AECI chief executive Graham Edwards, "in other words disposing of a capital asset."

AECI formed wholly owned property subsidiary Founders Hill the 1990s to realise unwanted land capital assets.

"Their job was to sell that land at best advantage inside the rules of capital asset accounting. At a point in the process around 2000 Sars was of the view that Capital Hill started trading in land - in other words it was adding value to the land, and it had a profit motive that was over and above simply realising the value of the land," said Mr Edwards.

Sars objected to their assessment as capital in nature, and said being of a revenue nature they should be subjected to income tax. At the Tax Court in October 2009 Judge Joffe ruled in favour of AECI that tax was not payable but Sars got that ruling overturned at the Supreme Court.

"They went to the Supreme Court of Appeal. They attacked the concept of the "realisation company" put in place to realise a capital asset."

Mr Edwards said the concept of a realisation company has been around in SA tax law since 1918. "They said from day one Founders Hill had acquired the land in order to make a profit and should have been subject to income tax."