Introduction and Background
1. The Appellant is a Savings and Credit Co-operative Society registered under the Cooperative Societies Act, 2012 and licensed and regulated by the Sacco Societies Regulatory Authority (SASRA) under the Sacco Societies Act, 2008. The Respondent (“the Commissioner”), acting on its mandate of collecting and receiving revenue for and on behalf of the Government of Kenya carried out a tax compliance audit of the Appellant’s records in respect of Corporation Tax, Capital Gains Tax(CGT) Value Added Tax (VAT), Withholding Tax(WHT), Excise Duty and Pay As You Earn (PAYE) for the period between 2013 and 2016.
2. After going through the Appellant’s financial statements, trial balance, ledgers, copies of invoices and other documents to, the Commissioner communicated its preliminary findings through the letter dated 29th March 2018 where it stated that the Appellant had underpaid taxes on the aforementioned tax heads and sought various explanations from the Respondent. The Appellant made its response on 11th April 2018. On 20th June 2018, the Commissioner wrote to the Appellant informing it that the audit exercise had been completed. The Commissioner stated that its analysis had taken into consideration the explanations given by the Appellant in a meeting of the parties held on 20th April 2018 leading to a conclusion that taxes had been underpaid under the various tax heads. It accordingly issued its assessments. The Appellant objected to the assessments through its letter dated 16th August 2018.
3. After considering the Appellant’s objection, the Commissioner rendered decision by the letter of 17th September 2018 (“the Objection Decision”). Being aggrieved by the Objection Decision, the Appellant lodged an appeal with the Tax Appeals Tribunal (“the Tribunal”). The Tribunal heard the appeal and delivered its judgment on 13th May 2021. The Tribunal framed the following 12 issues for determination:
a) Whether the Commissioner erred in law and fact in its assessment of VAT on rental income for the period 2013 to 2016.
b) Whether the Commissioner erred in law and fact in its PAYE assessment for the period 2013 to 2016.
c) Whether the Commissioner erred in law and fact in its WHT assessment in its Objection Decision.
d) Whether the Commissioner erred in law and fact by charging insurance commission and risk subscription income to income chargeable to tax under section 3(2) (a) of the Income Tax Act for the years 2015 and 2016.
e) Whether the Commissioner erred in law and fact by raising an additional tax assessment on the basis that the Appellant had not brought to tax an alleged decrease in loan loss provisions in 2015 year of income.
f) Whether the Commissioner, in arriving at the Corporation income tax demand for the years 2015 and 2016 considered expenses wholly and exclusively incurred in the production of that income by the Appellant.
g) Whether the transfer of a property to a subsidiary for regulatory compliance purposes is taxable for Corporate income tax purposes.
h) Whether the Commissioner erred in law and fact in raising a Corporation income tax assessment, in 2015 year of income, for apparent off plan sale of Kisaju houses.
i) Whether the Commissioner erred in assuming an interest rate of 10% which it applied to receivables from all the related parties including MNH, MAM and Spire Bank Ltd.
j) Whether the Commissioner erred in law and fact in its Excise Duty demand with regard to other fees and commissions as well as loan bridging interest earned during the period 2013 to 2016.
k) Whether the Commissioner erred in law and fact by attempting to apply the provisions of the Finance Act, 2013 retrospectively.
l) Whether the Commissioner made casting errors in workings and if it considered the amount by the Appellant of Kshs 10,000,000.00 as tax not in dispute.
4. Although the Tribunal resolved the issues framed, the Appellant is dissatisfied with the Tribunal’s findings in respect of PAYE and Corporation Tax which two issues form the substance of its Memorandum of Appeal dated 9th July 2021. The Commissioner has responded to the appeal through its Statement of Facts dated 6th August 2021. Both parties have supplemented their arguments through written submissions which are on record.
5. From the Statement of Facts dated 9th July 2021 and its written submissions, the Commissioner is dissatisfied with the Tribunal’s findings on Excise Duty more so the Tribunal’s reliance on section 2 of the ITA defining the term “interest”. It is also dissatisfied with the Tribunal’s conclusion that CGT rather than Corporation Tax applied to the sale of the Appellant’s properties. Despite being dissatisfied with this aspect of the judgment; the Commissioner did not lodge an appeal or cross-appeal against the aspects of the decision it was dissatisfied with. It opted, instead, to raise the issues in its Statement of Facts.
6. I agree with the Appellant that raising new and separate issues in the Statement of Facts that are not in direct response to the Memorandum of Appeal is improper. It goes against Rule 9(1) (c) of the Tax Appeals Tribunal (Appeals to the High Court Rules), 2015 (“the Tax Appeal Rules’’) which provides as follows:
The statement of facts filed under rule 8 shall set out precisely the respondent’s response to the memorandum of appeal and refer specifically to documentary evidence or other evidence which the respondent proposes to adduce at the hearing of the appeal.
7. I am in further agreement with the Appellant that if it was the intention of the Commissioner to appeal against the Tribunal’s decision on the issues raised at Paragraphs. 17 to 35 of its Statement of Facts, it should have done so by lodging a Memorandum of Appeal within thirty days of its receipt of the Tribunal’s decision as required by section 32(1) of the Tax Appeals Tribunal Act, 2013 (“the TATA’’). The Appellant would then be accorded an opportunity to respond to the same. While the Tax Appeal Rules do not make provision for filing a cross-appeal, the Appellant still had an opportunity to do so as was held in York Investments East Africa Limited v Commissioner of Investigations and Enforcement ML HC COMM Misc. Appl. No. E612 of 2021[2021] eKLR.
8. To buttress its argument that a respondent need not file a cross-appeal in order for the appellate court to consider it grounds of appeal set out in the Statement of Facts, the Commissioner relies on Order 42 rule 32 of the Civil Procedure Rules which provides that:
The court to which the appeal is preferred shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents although such respondents may not have filed any appeal or cross-appeal. [Emphasis mine]
9. The Commissioner rightly points out that the Civil Procedure Rules applies to tax appeals by dint of Rule 20 of the Tax Appeal Rules which provides that:
The rules determining procedure in civil suits before the Court, to the extent to which those rules are not inconsistent with the Act or these Rules, shall apply to the tax appeal as if it were a civil suit. [Emphasis mine]
10. Rule 20 is clear that the Civil Procedure Rules are applicable only to the extent that they are not inconsistent with the TATA and Tax Appeals Rules. The Act and the Rules call for the filing of a substantive appeal if a party is dissatisfied with the decision of the Tribunal and that the Statement of Facts can only be in response to grounds raised in the Memorandum of Appeal. Rule 9(1) does not envisage the Statement of Facts as a cross-appeal. Therefore, in this instance, the Order 42 rule 37 of the Civil Procedure Rules is not applicable as it is inconsistent with Rule 9(1)(c) of the Tax Appeals Rules which is very specific on what the Statement of Facts should contain.
11. At the end of the day, the Tribunal considered very specific issues which resulted in specific findings which the Commissioner was entitled to appeal against if it so wished. It cannot ride on its response in order to agitate it appeal particularly where the issues are not even incidental to the issues raised by the Appellant. For these reasons, this court’s determination will be restricted to the grounds raised by the Appellant in its Memorandum of Appeal.
Analysis and Determination
12. The jurisdiction of this court in determining this appeal is circumscribed by section 56(2) of the Tax Procedures Act, 2015 (“the TPA”) which provides that “An appeal to the High Court or to the Court of Appeal shall be on a question of law only”. A court limited to resolving matters of law is not permitted to substitute the Subordinate Court’s decision with its own conclusions based on its own analysis and appreciation of the facts unless the findings are so perverse that no reasonable tribunal would have arrived at them (see John Munuve Mati v Returning Officer Mwingi North Constituency & 2 others [2018] eKLR).
13. The Appellant’s has framed two issues for determination in its submissions. First, whether the Appellant discharged its burden of proof in demonstrating that the PAYE amounts raised by the Commissioner’s assessment are not due and payable. Second, whether the Commissioner factored in expenses wholly and exclusively incurred in the production of the Appellant’s income in the computation of the Appellant’s 2015 and 2016 tax liabilities.
PAYE
14. On the issue of PAYE, the Commissioner stated that it carried out a reconciliation of the taxable expenses and the taxable governance accounts as per the audited accounts against the payroll and the total PAYE remitted for the subject period. It further stated that it had reviewed the supporting documents forwarded by the Appellant together with the explanations and concluded that some of the expenses were not subjected to tax as required and therefore, principal tax attributed to the said staff costs amounted to Kshs. 39,759,276.49.
15. In the objection decision and in response to the Appellant, the Commissioner stated it did not subject any leave provision to PAYE, rather, what was contained in its analysis was leave allowance paid to the Appellant’s employees which has been properly charged in line with the provision of section 3(2)(a)(i) of the Income Tax Act (Chapter 470 of the Laws of Kenya) (“the ITA”). The Commissioner also stated that in arriving at the tax due in respect of PAYE, it took into consideration all the payments made by the Appellant in respect to PAYE for the subject period. However, the Commissioner noted the error in the final computation that was sent to it and made the correct adjustments. In its analysis, it concluded that some of the emoluments were not subjected to tax as required and therefore, the principal tax attributed to the said staff costs amounted to Kshs 20,549,582.86.
16. The Appellant disagrees with Tribunal upholding the Commissioner’s position and submits that it provided evidence of all of its PAYE tax payments made to the Commissioner from 1st January 2013 to 31st December 2016, at Appendix 27 to its submissions before the Tribunal. It complains that the Tribunal only considered the table drawn up by the Appellant in its submissions before it as the evidence of payment of taxes by the Appellant without then looking at the supporting documentation for the information contained on the table.
17. On its part, the Commissioner stated that it took into consideration explanations and information provided by the Appellant in arriving at the final tax due and payable by the Appellant which indicated that some emoluments were not subjected to tax as required under section 3(2)(a)(ii) and section 37 of the ITA.
18. It is not in dispute that section 30 of the TATA and section 56 of the TPA impose the burden of proof on the tax payer to prove that an assessment is excessive or a tax decision is incorrect. I note that the Appellant gave explanations and information to the Commissioner on the PAYE demanded and the Commissioner, after reviewing the same, adjusted the demand accordingly and found that the Appellant still owed PAYE as some emoluments had not been subjected to tax. While the Appellant contends that the Tribunal did not consider its evidence, the Tribunal held that:
Taking into account all the circumstances herein, together with our analysis, we find that the Appellant has failed to demonstrate to the satisfaction of the Tribunal that the Respondent failed in law and fact in its PAYE assessment for the period 2013 to 2016.
19. From the above, the court can only conclude that the Tribunal made an analysis of all the material before it and came to a conclusion that the Appellant had not discharged its burden. Was this conclusion so perverse so as to form a matter of law to be determined by this court? I think not. I find that the Appellant is inviting the court to look at the evidence again and come to a different factual conclusion to that of the Tribunal and as a consequence conclude that the computation therein tallied with the payments made to the Commissioner and that the same was sufficient to absolve the Appellant of any PAYE liability. An appellate court dealing with a matter of law only cannot engage in such a factual exercise as it will be usurping the Tribunal’s jurisdiction and exceeding its own statutory jurisdiction.
20. I do not find any reason to conclude that the Tribunal misapprehended the evidence before it or that it came to a perverse conclusion on the issue of PAYE.
Corporation Tax
21. The Tribunal found that the Commissioner had taken into account all expenses incurred by Appellant in computing Corporation tax. It held that if the Appellant wished to claim further expenses which were not taken into account, then it should follow the procedure prescribed in section 90 of the ITA.
22. In the Objection Decision, the Commissioner was adamant that it had taken into account all the expenses incurred in computing the Corporation tax payable and also stated that any expense incurred but not claimed could be claimed through an application under section 90 of the ITA. In essence, both the Commissioner and the Tribunal agree that the Appellant could be entitled to claim some expenses that had been incurred but had not been claimed but that the Appellant needs to follow the procedure under section 90 of the ITA.
23. Having reviewed the record, I can only state that while the Appellant invites the court to consider the expenses it has tabulated as being what is deductible from its income, they have to be ascertained, verified and/or confirmed by the Commissioner through the presentation of primary documents (see Commissioner Investigations and Enforcement v Kidero (Income Tax Appeal E028 of 2020) [2022] KEHC 52 (KLR) (Commercial and Tax) (4 February 2022) (Judgment)). The Appellant cannot therefore avoid the procedure of going through the Commissioner and presenting evidence of the expenses it claims. As the Commissioner states, it is still open for the Appellant to follow up the expenses through the prescribed procedure. Unless this happens, I agree with the Tribunal that the Commissioner’s assessment stands.
Disposition
24. For the reasons I have set out, I find that the Appeal lacks merit. It is dismissed but with no order as to costs.
DATED and DELIVERED at NAIROBI this 27th day of JANUARY 2023.
D. S. MAJANJA
JUDGE
1. The Appellant is a Savings and Credit Co-operative Society registered under the Cooperative Societies Act, 2012 and licensed and regulated by the Sacco Societies Regulatory Authority (SASRA) under the Sacco Societies Act, 2008. The Respondent (“the Commissioner”), acting on its mandate of collecting and receiving revenue for and on behalf of the Government of Kenya carried out a tax compliance audit of the Appellant’s records in respect of Corporation Tax, Capital Gains Tax(CGT) Value Added Tax (VAT), Withholding Tax(WHT), Excise Duty and Pay As You Earn (PAYE) for the period between 2013 and 2016.
2. After going through the Appellant’s financial statements, trial balance, ledgers, copies of invoices and other documents to, the Commissioner communicated its preliminary findings through the letter dated 29th March 2018 where it stated that the Appellant had underpaid taxes on the aforementioned tax heads and sought various explanations from the Respondent. The Appellant made its response on 11th April 2018. On 20th June 2018, the Commissioner wrote to the Appellant informing it that the audit exercise had been completed. The Commissioner stated that its analysis had taken into consideration the explanations given by the Appellant in a meeting of the parties held on 20th April 2018 leading to a conclusion that taxes had been underpaid under the various tax heads. It accordingly issued its assessments. The Appellant objected to the assessments through its letter dated 16th August 2018.
3. After considering the Appellant’s objection, the Commissioner rendered decision by the letter of 17th September 2018 (“the Objection Decision”). Being aggrieved by the Objection Decision, the Appellant lodged an appeal with the Tax Appeals Tribunal (“the Tribunal”). The Tribunal heard the appeal and delivered its judgment on 13th May 2021. The Tribunal framed the following 12 issues for determination:
a) Whether the Commissioner erred in law and fact in its assessment of VAT on rental income for the period 2013 to 2016.
b) Whether the Commissioner erred in law and fact in its PAYE assessment for the period 2013 to 2016.
c) Whether the Commissioner erred in law and fact in its WHT assessment in its Objection Decision.
d) Whether the Commissioner erred in law and fact by charging insurance commission and risk subscription income to income chargeable to tax under section 3(2) (a) of the Income Tax Act for the years 2015 and 2016.
e) Whether the Commissioner erred in law and fact by raising an additional tax assessment on the basis that the Appellant had not brought to tax an alleged decrease in loan loss provisions in 2015 year of income.
f) Whether the Commissioner, in arriving at the Corporation income tax demand for the years 2015 and 2016 considered expenses wholly and exclusively incurred in the production of that income by the Appellant.
g) Whether the transfer of a property to a subsidiary for regulatory compliance purposes is taxable for Corporate income tax purposes.
h) Whether the Commissioner erred in law and fact in raising a Corporation income tax assessment, in 2015 year of income, for apparent off plan sale of Kisaju houses.
i) Whether the Commissioner erred in assuming an interest rate of 10% which it applied to receivables from all the related parties including MNH, MAM and Spire Bank Ltd.
j) Whether the Commissioner erred in law and fact in its Excise Duty demand with regard to other fees and commissions as well as loan bridging interest earned during the period 2013 to 2016.
k) Whether the Commissioner erred in law and fact by attempting to apply the provisions of the Finance Act, 2013 retrospectively.
l) Whether the Commissioner made casting errors in workings and if it considered the amount by the Appellant of Kshs 10,000,000.00 as tax not in dispute.
4. Although the Tribunal resolved the issues framed, the Appellant is dissatisfied with the Tribunal’s findings in respect of PAYE and Corporation Tax which two issues form the substance of its Memorandum of Appeal dated 9th July 2021. The Commissioner has responded to the appeal through its Statement of Facts dated 6th August 2021. Both parties have supplemented their arguments through written submissions which are on record.
5. From the Statement of Facts dated 9th July 2021 and its written submissions, the Commissioner is dissatisfied with the Tribunal’s findings on Excise Duty more so the Tribunal’s reliance on section 2 of the ITA defining the term “interest”. It is also dissatisfied with the Tribunal’s conclusion that CGT rather than Corporation Tax applied to the sale of the Appellant’s properties. Despite being dissatisfied with this aspect of the judgment; the Commissioner did not lodge an appeal or cross-appeal against the aspects of the decision it was dissatisfied with. It opted, instead, to raise the issues in its Statement of Facts.
6. I agree with the Appellant that raising new and separate issues in the Statement of Facts that are not in direct response to the Memorandum of Appeal is improper. It goes against Rule 9(1) (c) of the Tax Appeals Tribunal (Appeals to the High Court Rules), 2015 (“the Tax Appeal Rules’’) which provides as follows:
The statement of facts filed under rule 8 shall set out precisely the respondent’s response to the memorandum of appeal and refer specifically to documentary evidence or other evidence which the respondent proposes to adduce at the hearing of the appeal.
7. I am in further agreement with the Appellant that if it was the intention of the Commissioner to appeal against the Tribunal’s decision on the issues raised at Paragraphs. 17 to 35 of its Statement of Facts, it should have done so by lodging a Memorandum of Appeal within thirty days of its receipt of the Tribunal’s decision as required by section 32(1) of the Tax Appeals Tribunal Act, 2013 (“the TATA’’). The Appellant would then be accorded an opportunity to respond to the same. While the Tax Appeal Rules do not make provision for filing a cross-appeal, the Appellant still had an opportunity to do so as was held in York Investments East Africa Limited v Commissioner of Investigations and Enforcement ML HC COMM Misc. Appl. No. E612 of 2021[2021] eKLR.
8. To buttress its argument that a respondent need not file a cross-appeal in order for the appellate court to consider it grounds of appeal set out in the Statement of Facts, the Commissioner relies on Order 42 rule 32 of the Civil Procedure Rules which provides that:
The court to which the appeal is preferred shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents although such respondents may not have filed any appeal or cross-appeal. [Emphasis mine]
9. The Commissioner rightly points out that the Civil Procedure Rules applies to tax appeals by dint of Rule 20 of the Tax Appeal Rules which provides that:
The rules determining procedure in civil suits before the Court, to the extent to which those rules are not inconsistent with the Act or these Rules, shall apply to the tax appeal as if it were a civil suit. [Emphasis mine]
10. Rule 20 is clear that the Civil Procedure Rules are applicable only to the extent that they are not inconsistent with the TATA and Tax Appeals Rules. The Act and the Rules call for the filing of a substantive appeal if a party is dissatisfied with the decision of the Tribunal and that the Statement of Facts can only be in response to grounds raised in the Memorandum of Appeal. Rule 9(1) does not envisage the Statement of Facts as a cross-appeal. Therefore, in this instance, the Order 42 rule 37 of the Civil Procedure Rules is not applicable as it is inconsistent with Rule 9(1)(c) of the Tax Appeals Rules which is very specific on what the Statement of Facts should contain.
11. At the end of the day, the Tribunal considered very specific issues which resulted in specific findings which the Commissioner was entitled to appeal against if it so wished. It cannot ride on its response in order to agitate it appeal particularly where the issues are not even incidental to the issues raised by the Appellant. For these reasons, this court’s determination will be restricted to the grounds raised by the Appellant in its Memorandum of Appeal.
Analysis and Determination
12. The jurisdiction of this court in determining this appeal is circumscribed by section 56(2) of the Tax Procedures Act, 2015 (“the TPA”) which provides that “An appeal to the High Court or to the Court of Appeal shall be on a question of law only”. A court limited to resolving matters of law is not permitted to substitute the Subordinate Court’s decision with its own conclusions based on its own analysis and appreciation of the facts unless the findings are so perverse that no reasonable tribunal would have arrived at them (see John Munuve Mati v Returning Officer Mwingi North Constituency & 2 others [2018] eKLR).
13. The Appellant’s has framed two issues for determination in its submissions. First, whether the Appellant discharged its burden of proof in demonstrating that the PAYE amounts raised by the Commissioner’s assessment are not due and payable. Second, whether the Commissioner factored in expenses wholly and exclusively incurred in the production of the Appellant’s income in the computation of the Appellant’s 2015 and 2016 tax liabilities.
PAYE
14. On the issue of PAYE, the Commissioner stated that it carried out a reconciliation of the taxable expenses and the taxable governance accounts as per the audited accounts against the payroll and the total PAYE remitted for the subject period. It further stated that it had reviewed the supporting documents forwarded by the Appellant together with the explanations and concluded that some of the expenses were not subjected to tax as required and therefore, principal tax attributed to the said staff costs amounted to Kshs. 39,759,276.49.
15. In the objection decision and in response to the Appellant, the Commissioner stated it did not subject any leave provision to PAYE, rather, what was contained in its analysis was leave allowance paid to the Appellant’s employees which has been properly charged in line with the provision of section 3(2)(a)(i) of the Income Tax Act (Chapter 470 of the Laws of Kenya) (“the ITA”). The Commissioner also stated that in arriving at the tax due in respect of PAYE, it took into consideration all the payments made by the Appellant in respect to PAYE for the subject period. However, the Commissioner noted the error in the final computation that was sent to it and made the correct adjustments. In its analysis, it concluded that some of the emoluments were not subjected to tax as required and therefore, the principal tax attributed to the said staff costs amounted to Kshs 20,549,582.86.
16. The Appellant disagrees with Tribunal upholding the Commissioner’s position and submits that it provided evidence of all of its PAYE tax payments made to the Commissioner from 1st January 2013 to 31st December 2016, at Appendix 27 to its submissions before the Tribunal. It complains that the Tribunal only considered the table drawn up by the Appellant in its submissions before it as the evidence of payment of taxes by the Appellant without then looking at the supporting documentation for the information contained on the table.
17. On its part, the Commissioner stated that it took into consideration explanations and information provided by the Appellant in arriving at the final tax due and payable by the Appellant which indicated that some emoluments were not subjected to tax as required under section 3(2)(a)(ii) and section 37 of the ITA.
18. It is not in dispute that section 30 of the TATA and section 56 of the TPA impose the burden of proof on the tax payer to prove that an assessment is excessive or a tax decision is incorrect. I note that the Appellant gave explanations and information to the Commissioner on the PAYE demanded and the Commissioner, after reviewing the same, adjusted the demand accordingly and found that the Appellant still owed PAYE as some emoluments had not been subjected to tax. While the Appellant contends that the Tribunal did not consider its evidence, the Tribunal held that:
Taking into account all the circumstances herein, together with our analysis, we find that the Appellant has failed to demonstrate to the satisfaction of the Tribunal that the Respondent failed in law and fact in its PAYE assessment for the period 2013 to 2016.
19. From the above, the court can only conclude that the Tribunal made an analysis of all the material before it and came to a conclusion that the Appellant had not discharged its burden. Was this conclusion so perverse so as to form a matter of law to be determined by this court? I think not. I find that the Appellant is inviting the court to look at the evidence again and come to a different factual conclusion to that of the Tribunal and as a consequence conclude that the computation therein tallied with the payments made to the Commissioner and that the same was sufficient to absolve the Appellant of any PAYE liability. An appellate court dealing with a matter of law only cannot engage in such a factual exercise as it will be usurping the Tribunal’s jurisdiction and exceeding its own statutory jurisdiction.
20. I do not find any reason to conclude that the Tribunal misapprehended the evidence before it or that it came to a perverse conclusion on the issue of PAYE.
Corporation Tax
21. The Tribunal found that the Commissioner had taken into account all expenses incurred by Appellant in computing Corporation tax. It held that if the Appellant wished to claim further expenses which were not taken into account, then it should follow the procedure prescribed in section 90 of the ITA.
22. In the Objection Decision, the Commissioner was adamant that it had taken into account all the expenses incurred in computing the Corporation tax payable and also stated that any expense incurred but not claimed could be claimed through an application under section 90 of the ITA. In essence, both the Commissioner and the Tribunal agree that the Appellant could be entitled to claim some expenses that had been incurred but had not been claimed but that the Appellant needs to follow the procedure under section 90 of the ITA.
23. Having reviewed the record, I can only state that while the Appellant invites the court to consider the expenses it has tabulated as being what is deductible from its income, they have to be ascertained, verified and/or confirmed by the Commissioner through the presentation of primary documents (see Commissioner Investigations and Enforcement v Kidero (Income Tax Appeal E028 of 2020) [2022] KEHC 52 (KLR) (Commercial and Tax) (4 February 2022) (Judgment)). The Appellant cannot therefore avoid the procedure of going through the Commissioner and presenting evidence of the expenses it claims. As the Commissioner states, it is still open for the Appellant to follow up the expenses through the prescribed procedure. Unless this happens, I agree with the Tribunal that the Commissioner’s assessment stands.
Disposition
24. For the reasons I have set out, I find that the Appeal lacks merit. It is dismissed but with no order as to costs.
DATED and DELIVERED at NAIROBI this 27th day of JANUARY 2023.
D. S. MAJANJA
JUDGE