PENTEK (PTY) LTD operates in the manufacturing sector producing and distributing health food and supplement products nationally and internationally, especially to countries on the African continent. The companys premises (factory and office building) were damages during the recent floods which resulted in the operations being disrupted for a period of eight months. During this period to company relocated its operations to premises in a Business Development area which was 30 km from its premises. The company incurred the following expenses to relocate its business operations to the rented premises: (a) Transportation cost for moving the machinery amounted to R 220 000, (b) Costs to repair the machinery that was damaged amounted to R 135 000 these costs increased the useful life of the machinery, (c) Costs incurred to modify and upgrade the machinery amounted to R 280 000, and (d) Payment to the employees to subsidies their expenses to travel to the relocated premises amounted to R 145 000 in total for the eight months. Ms. Jannette, the accountant responsible for assets, stated that the transportation costs incurred should be capitalised to the cost of the machinery because it incurred to bring the machinery to its present location. Mr. Tomus, the assistant accountant stated that the cost incurred to repair the machinery should be capitalised because it resulted in extended the useful life of the machinery. Mrs. Gambette, the senior accountant stated that none of the cost incurred because of the disruptions should be recognised because the company was fully insured and the costs, including the rental expenses for the premises, incurred will be recovered from the insurance company. The company received R 1 100 000 from the insurance company for loss of profits caused by the disruptions to its operations caused by the floods. Mr. Tomus, the accountant stated that this amount is capital in nature and should be subjected to capital gains tax instead of being included in gross income. You are required to:

(b) Discuss whether the statement made by Mr. Tomus that the insurance amount received for the loss of profits should be included in the calculation of capital gains tax.