The Tax Appeals Tribunal has 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 arguedthat 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 thatthere 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.