SUBRU MOTORS LTD TO PAY 181M IN TAXES

SUBRU MOTORS LTD TO PAY 181M IN TAXES

By Donald Kogai

The Tax Appeals Tribunal dismissed an

application filed by Subru Motors Limited

seeking stay of collection of taxes amounting

to Kshs. 181,406,247 found due by the Tribunal.

Subru Motors Limited had sought intervention

of the Tribunal to order for stay of execution of

its judgement delivered on 10th July 2020,

which was in favour of KRA. The Taxpayer had

argued that the Tribunal has jurisdiction to

order for stay of its own judgement and relied

on principle of equity as well as Section 18 of

the Tax Appeals Tribunal Act, 2013.

KRA opposed the application and argued that

the Tribunal was rendered functus officio upon

delivery of the judgement. The Authority further

argued that there is no specific provision under

the Tax Appeals Tribunal Act, 2013 or rules

made thereunder conferring jurisdiction to the

Tribunal to order for stay of execution.

In a ruling, the Tribunal agreed with KRA and

affirmed that it is rendered functus officio upon

delivery of its judgement. The Tribunal also

affirmed that there is no specific provision of

law permitting it to stay its own orders.

Meanwhile, the High Court has allowed KRA to

collect Kshs. 41 Million tax from M/S Madison

Insurance Company Limited (the Insurer). The

Insurer will have to pay the tax together with

interest and penalties.

The Court sitting in Nairobi dismissed with

costs, the Insurer’s Appeal against the Tax

Appeals Tribunal’s Judgement dated 26th May

2017.

The dispute emanated from the repeal of

Section 19(9) and the amendment of Section

19(5) of the Income Tax Act by the Finance Act

2008, which took effect on 1st January 2009.

The Insurer in its claim purported to offset its

losses for year 2008 in the year 2009. KRA

disallowed the same and raised additional

assessments for two years.

The Insurer then filed an Appeal at the Tax

Appeals Tribunal. The Appeal was dismissed

and KRA’s assessment upheld on grounds that

the Madison Insurance, was not entitled to

offset the life insurance business tax losses

incurred prior to 1st January 2009 in its taxable

income for the year 2009.

Madison was aggrieved and moved to High

Court for Orders among others, that it was

entitled to offset the accumulated life insurance

business tax losses as at the end of the year

2008 in its taxable year of income for the year

2009.

KRA’s position was that the law could not be

applied retrospectively and that only losses

obtained from 1st January 2009 onwards could

be offset but not those before.

The High Court reaffirmed KRA’s position and

upheld the Judgement by the Tax Appeal

Tribunal as having been sound and correctly

based on the law and facts of the case.

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  1. grandpashabet
    March 18, 2024 at21:06 pm