The building products and manufacturer said that in the absence of an appeal, the Australian Tax Officer would be obliged to refund $242.4 million plus interests and some costs. 

The company said it would contribute 35 per cent of the amount to the Asbestos Injuries Compensation Fund if the refund is received before March 31, 2012.

The case related to RCI Pty Ltd, a subsidiary of James Hardie, and the amount of net capital gain arising from an internal corporate restructure carried out in 1998 to March 1999. 

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James Hardie shares are up more than four per cent after the successful appeal. 

RCI was issued with an amended tax assessment for the year in 2006, to which it objected. 

The objection was disallowed by the ATO, and a subsequent appeal to the Federal Court by RCI was also rejected.

RCI then appealed to the full Federal Court. After a hearing in May, Justice Richard Edmonds, Justice John Gilmour and Justice John Logan today found in favour of RCI.

Today's ruling overturns Federal Court Judge Margaret Stone's rejection of RCI's appeal in September last year.