[2025] KETAT 246 (KLR)

Cellini Holdings Limited v Commissioner of Domestic Taxes (Tax Appeal E710 of 2024) [2025] KETAT 246 (KLR) (Commercial & Admiralty) (9 May 2025) (Judgment)

Neutral citation: [2025] KETAT 246 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Admiralty

Tax Appeal E710 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

May 9, 2025

Between

Cellini Holdings Limited

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a company registered in the Republic of Kenya.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws (hereinafter “the Act”). Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws.

3. The Respondent conducted a compliance check on the tax affairs of the Appellant in relation to Capital Gains Tax (hereinafter “CGT”) on two parcels of land namely LR KJD/Kaputei North 2XX1 and Nairobi Block No. LR 14/2X4.

4. The Respondent raised default assessments amounting to Kshs. 25,739,867. 00 for the tax period October 2022 and April 2023.

5. On 27th March,2024, the Appellant lodged an objection application contesting the Respondent’s assessment on the two properties.

6. Upon review of the Appellant’s objection and the evidence adduced, the Respondent issued its objection decision dated 23rd May 2024 confirming CGT assessments amounting to Kshs. 27,150,550. 00 and allowing payments of Kshs. 791,950. 00.

7. Aggrieved by the decision of the Respondent, the Appellant having filed its Appeal late, vide its Notice of Appeal dated 25th June, 2022 applied for and was granted leave by the Tribunal to file its Appeal out of time on 31st July, 2024.

The Appeal. 8. The Appellant’s Memorandum of Appeal dated 25th June, 2024 was deemed as having been filed on 29th August, 2024 and was premised on the following grounds:a.That the Respondent erred in law and in fact in finding that all the subject property known as LR KJD/KAPUTIEI NORTH 2XX1 was not deemed to be agricultural land.b.That the Respondent erred in law and fact in finding that all the property known as LR KJD/KAPUTIEI NORTH 2XX1 is not subject to exemption under the Income Tax Act, CAP 470 of the Laws of Kenya (hereinafter “ITA”), First Schedule Paragraph 36 (d) (ii).c.That the Respondent erred in law and in fact in arriving at the conclusion that the subject property was commercial land whilst no commercial activity had been undertaken on the land and the assessed Stamp Duty at 2% was duly paid, confirming the Land’s classification as agricultural.d.That the Respondent erred in law and in fact in finding that Agricultural land of less than 50 acres outside a Municipality was subject to CGT.e.That in addition to the Respondent erring in subjecting the property which was clearly agricultural land to CGT, the Respondent further erred in fact and in law in omitting the cost of acquisition of the land which was Kshs. 46,000,000. 00 in computing the disputed assessment and other incidental costs, among them legal fees.f.That the Respondent erred in law and fact in finding that all the property known as LR KJD/KAPUTIEI NORTH 2XX1 should be liable to the assessed amount of Kshs. 3,250,000. 00. g.That the Respondent erred in law and fact in finding the Appellant was subject to pay the assessment amount of Kshs. 22,489,867. 00 in regards to Nairobi / Block 14/2X4 [Original Number IR 30XX2].h.That the Respondent erred in Law and fact when the Appellant furnished it with the Sale Agreement between Pevans EA Ltd and Gran Movimento which had all the details of the transaction including the Directors PIN, contact details, Company PIN, Registration Certificate among other important details to absolve the Appellant but this was overlooked when arriving at its decision.i.The Appellant had done all its obligatory duties and notified the Vijito Consortium Ltd and Pevans EA Ltd to resolve the matter with the Respondent which included sharing with them the demand letter from the Respondent, amount payable and the Respondent’s contact person number handling the case.j.The Respondent erred in law and fact in finding that the Appellant was liable to pay CGT for all the property title number LR 14/2X4 while sufficient documentary evidence that was adduced proved that the Appellant was neither the seller nor a beneficiary of the proceeds of the sale.k.That the Respondent erred in law and fact in finding that the Appellant was liable to pay CGT for all the property titled LR 14/2X4 whilst sufficient documentary evidence to the contrary was adduced namely PIN numbers, ID numbers, electronic mail addresses and physical addresses and proved that Pevans EA Ltd was the actual seller of the Land and the Vendor in the transaction.l.That the Respondent erred in law and fact in finding that the Appellant was liable to pay CGT for all the property titled LR 14/2X4 while land transfer instruments, copies of the Certificate of Title, i-Tax documentation and information showed that the Appellant had sold the land to Vijito Consortium Limited in the year 2018 and a demand for payment of CGT from the Respondent on the transfer was sent to it in the year 2021 and the matter was settled by the Appellant settling the CGT hence had no liability in regards to the same.m.That the Respondent erred in Law and Fact in disregarding the purchase price of Kshs. 91,000,000. 00 despite being adequately furnished with a sale agreement. The price in the sale agreement was corroborated by the evidence of the Transfer instrument of the title document and bank account statements for both the client and the advocate showing transfer of the full purchase price/consideration that is a 20% deposit amounting to Kshs. 18,200,000. 00 plus the balance of the purchase price amounting to Kshs. 72,800,000. 00. n.The Respondent erred in law and fact when the Appellant furnished it with the Sale Agreement between Pevans EA Ltd and Gran Movimiento which had all the details of the transactions including the Directors PIN, Company PIN, Registration Certificate among other important details to absolve the Appellant but this was overlooked when arriving at its decision.

APPELLANT’S CASE. 9. The Appellant was deemed to have filed its Statement of Facts dated 25th June, 2024 on 29th August, 2024. The Appellant also relied on the testimony of 2 of its directors, Mr. Paul Kinuthia Muchene and Mr. Moses Githinji Kinuthia whose witness statements were admitted as evidence in chief on 17th April 2025. The Appellant was granted leave to file a supplementary statement of facts and documents vide a Tribunal Ruling delivered on 10th April, 2025.

10. The genesis of the decision leading to the subject Appeal was traceable to the CGT default assessment amounting to Kshs. 25,739,867. 00 that is believed to be for the period between October 2022 and April 2023. The Appellant stated that it did not owe any of the amounts stated as submitted in its objections.

11. Through an Agreement for Sale of immovable property, the Appellant sold LR KJD/KAPUTIEI NORTH 2XX1 which was initially purchased and subsequently sold to Kikora Ltd this said parcel is 10 acres and is not within a municipality. The property was purchased in 2013 at a cost of Kshs. 46,000,000. 000 and was later sold to Kikora Ltd for the value Kshs. 65,000,000. 00. That the incidental costs that would have lowered the profit gain on the property were as follows:a.Legal fee on the Purchase in the amount of Kshs. 500,000. 00. b.Application and supply of 3 phase electricity which amounted to Kshs. 1,000,000. 00. c.Sinking of a borehole and having the farm fitted with pipes which came to Kshs. 4,000. 000. 00. d.Fencing of the property's perimeter which cost Kshs. 1,000. 000. 00. e.The Construction of Staff quarters for the caretaker and other assistants which totaled Kshs. 1,000,000. 00. f.Legal Fees on the sale which amounted to Kshs. 900,000. 00 and an agent fee on the sale which came to Kshs. 1,950,000. 00.

12. The Appellant averred that it was worth noting that apart from the aforementioned developments the property was never further developed and there were no income generating activities that occurred on the parcel up until it was sold. This is due to the fact that it was not economically viable at the time and thus the property generated zero income yearly despite all the investments put in.

13. The Appellant also stated that a default assessment was made in regards to the Transfer of Nairobi Block No. 14/2X4 that was sold to Gran Movimiento Limited. The Appellant purchased the property in 2013 at Kshs. 91,000,000. 00. In 2018, the Appellant sold the property to Vijito Consortium Limited with the Sale going on and being completed. The Transfer was completed and the Appellant paid Capital gains tax at the then rate which amounted to Kshs. 791,950. 00.

14. Subsequently, the Respondent issued the Appellant with a Default Assessment KRA202427134052 and KRA20242XXXX677 both of which were objected and an Objection Acknowledgement Receipt was generated on 27th March 2024.

15. The Appellant sought the following reliefs:a.That the Tribunal would allow the Appeal.b.That the objection decision of the Respondent issued on 23rd May, 2024 be set aside.c.Any other prayer that the Tribunal may deem fit.

Respondent’s Case. 16. The Respondent replied to the case by filing its Statement of Facts dated and filed on 29th August, 2024 was filed on 3RD September 2024. The Respondent relied on the testimony of its witness, Mr. Henry Rotich, whose witness statement was admitted in evidence on 17th April, 2025. The Respondent stated the following upon giving a review of the background of the case:

17. That the Appellant adduced the following documents for review;a.Purchase agreement and sale agreement,b.land transfers instruments,c.copies of title deed,d.I-tax records and information,e.Electronic mail correspondence from the Appellant;f.Correspondence from the lawyers Muchoki Kangata Njenga and Company Advocates and Nyachae & Ashitiva Advocates.

18. That it confirmed CGT assessments amounting to Kshs. 27,150,550. 00 and allowing payments of Kshs. 791,950. 00 paid in relation to property no. LR 14/2X4 upon making the finding in relation to Property No. LR KJD/KAPUTEI NORTH 2XX1 sold to Kikora Ltd that:a.The Appellant did not demonstrate that the land is agricultural land and solely used for farming.b.The review of income tax returns shows that the Appellant had never reported farming income.c.Whereas the Appellant argued that the land is exempt based on the provisions of the ITA first schedule paragraph 36 (d)(ii), there was no further relevant document availed to support the said claim.d.The fact that the stamp duty paid at the 2% rate does not prevent the transfer of land to attract a CGT as it can be utilized for commercial purposese.While the Appellant argued to have incurred incidental costs prior to the sale, no documents were provided to support the same and from all the foregoing the ground of objection was not successful.

19. With regard to property No. LR NAIROBI BLOCK NO. LR 14/2X4 sold to Gran Movimiento limited It was noted that the agreement for sale was dated 23rd May 2013 between Christopher Mwangi Chege (vendor) and Cellini Holdings Limited (the purchase) to transfer the property LR. No. 330/720 Naivasha Road at the value of Kshs. 91,000,000. 00. The Appellant however had not fully supported the cost of acquisition to be factored in computing CGT.

20. Review of the Appellant’s income tax returns for the period never indicated the existence of the parcel of land acquired as an asset.

21. The Company filed the self-assessment return and paid CGT amounting to Kshs. 791,950 and 18th March 2021. The interim payment of CGT on property Nairobi Block LR. 14/2X4 has been considered in computing revised CGT payable. The Respondent also noted that the Appellant included incidental expenses amounting to Kshs. 13,161,000. 00 however this was not supported by relevant documents.

22. The Transaction between the Appellant and other parties prior to the transfer by the registrar of land are private and beyond the scope of the Respondent. The Appellant was then advised to address the same privately amongst themselves.

23. The Transfer of property to Gran Moviemiento Limited was effected on April 2023 hence applicable CGT rate was 15% and not 5% as determined by the Assessing Commissioner. The sale agreement provided established that the parties entered in to an agreement for sale of property LR. No. 30XX2 on 25th August 2022, however, the transfer date was 18th April 2023 as per the stamp duty payment of Kshs. 6,000,000. 00 made by the purchaser, the value of the land being Kshs. 150,000,000. 00

24. The tax point for CGT is upon registration of the transfer instrument in favour of transferee. The transfer of ownership took place in 2013 when effective rate for CGT was 15% therefore the Appellant’s notice of objection was partially accepted. In calculating the CGT, the Respondent factored in the payment of Kshs. 791,950. 00 and the tax liability was then reviewed.

25. The Respondent reiterated the grounds of the Appeal and responded by stating that Section 24 of the TPA allows a taxpayer to submit tax returns in the approved form and manner prescribed by the Respondent but the Respondent is not bound by the information provided therein and can assess for additional taxes based on any other available information.

26. That contrary to the Appellant’s argument that LR KJD/KAPUTEI NORTH 2XX1 was agricultural property, the Respondent averred that from the review of the documents adduced by the Appellant, the documents did not demonstrate that the land is an agricultural land and solely used in farming activities. The Respondent stated that it also reviewed the Appellant’s income tax returns and found no evidence that the Appellant reported any farming income.

27. The Respondent identified and analysed two issues for determination as follows:I. Whether the Respondent was proper in finding that all the property known as LR KJD/KAPUTIEI NORTH 2XX1 is not subject to exemption under the Income Tax Act First Schedule Paragraph 36 (d) (ii).

28. The Appellant argued that the property LR KJD/KAPUTIEI NORTH 2XX1 was exempted from paying CGT subject to the provision of the ITA First Schedule paragraph 36 (d) (ii), in Response the Respondent states that the Appellant did not avail any supporting document to support its assertion.

29. The Respondent stated that paragraph 36(d)(ii) of the First Schedule of the ITA stipulates that agricultural property with an area of less than fifty acres, located outside a municipality, gazetted township, or any area declared by the Minister in the Gazette as an urban area, is exempt from paying CGT.

30. The Respondent states that despite the exemption provided by the ITA the Appellant failed to provide supporting documents to prove that the property was less than 50 acres. The Respondent stated that at the time of transfer of property to Gran Moviemiento Limited which was effected in April 2023, the Applicable CGT rate was 15%.

31. Additionally, the Appellant claimed to have incurred incidental cost prior to the sale of this property but the Appellant failed to adduce documents to support these costs. On whether the Respondent was proper in arriving at the conclusion that the subject property LR KJD/KAPUTIEI NORTH 2XX1 is commercial land whilst no commercial activity had been undertaken on the land, the Respondent stated that the Appellant failed to provide supporting documents to support its position that the property was not meant for commercial purposes. The Respondent stated that, upon reviewing the document submitted by the Appellant requesting for consent from the Land Control Board, the contents of the application form did not indicate that the land was used for agricultural purposes.

32. On whether the Respondent was wrong in determining those agricultural lands of less than 50 Acres outside a Municipality is subject to CGT, the Respondent stated that while the Appellant insisted that its parcel of land was 10 acres and situated outside the municipality, no evidence was tendered to support this position.

33. The Respondent also stated that it is guided by paragraph 36(d) (ii) of the First Schedule to the ITA and does not hold the position that agricultural land of less than fifty acres outside a municipality is subject to CGT.Whereas the Appellant argued that the Respondent omitted the cost of acquisition of the land which was 46,000,000. 00 in computing the disputed assessment and other incidental costs among them the legal fees, the Respondent states that the Appellant failed to provide sufficient documents to support its position.

34. The Respondent indicated that while the Appellant claimed that it had incurred incidental costs prior the sale, the Appellant did not adduce any documents to support these costs. The Respondent also stated that it was justified in issuing an assessment amounting to Kshs 22,489,867. 00 in regards to Nairobi Block 14/2X4 and Kshs. 3,250,000. 00 in regards LR KJD/Kaputiei North 2XX1 on the following grounds:a.That in determining the capital gains tax payable, it relied on Paragraph 4 of the Eighth Schedule to the ITA which provides that capital gains tax is calculated by deducting the adjusted cost of the property, which includes the acquisition cost plus incidental costs or any enhancement costs incurred during acquisition of the property from the relevant transfer value. The provision states as follows:“(1)The gain which accrues to a person on the transfer of any property is the amount by which the transfer value of the property exceeds the adjusted cost of the property. 2. Where, in computing the gain accruing to a person on the transfer of any property, it is found that the adjusted cost of the property exceeds the transfer value of the property, the amount of the excess is the loss realized by the person on the transfer of the property. Any gain or loss realized by a person on the transfer of property shall be deemed to be realized by the person at the time of the transfer, whether or not the consideration is payable by instalments but a payment by way of interest on any part of the consideration not immediately payable shall not be treated as part of the transfer value of the property.”

35. The Respondent stated that the Kenyan tax system applies a self-assessment system where the taxpayer assesses itself in the approved form. However, despite it being a self-assessment system, the Respondent is not bound by the taxpayer’s self-assessment. Section 24(2) of the TPA in providing for this states as follows:“The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer's tax liability using any information available to the Commissioner.”

36. The Respondent stated that it raised the assessments upon verification of the self-assessment returns filed by the transferee and that of the Appellant and informed the Appellant of the variances and amount assessed following the provisions of Section 29 of the TPA which states as follows:“(1)Where a taxpayer has failed to submit a tax return for a reporting period in accordance with the provisions of a tax law, the Commissioner may, based on such information as may be available and to the best of his or her judgement, make an assessment (referred to as a "default assessment") of—a.the amount of the deficit in the case of a deficit carried forward under the Income Tax Act (Cap. 470) for the period;b.the amount of the excess in the case of an excess of input tax carried forward under the Value Added Tax Act, 2013 (No. 35 of 2013), for the period; orc.the tax (including a nil amount) payable by the taxpayer for theperiod in any other case.2. The Commissioner shall notify in writing a taxpayer assessed under subsection (1) of the assessment and the Commissioner shall specify—

a.the amount assessed as tax or the amount of a deficit or excess of input tax carried forward, as the case may be;b.the amount assessed as late submission penalty and any late payment penalty payable in respect of the tax, deficit or excess input tax assessed;

37. The Respondent further referred the Tribunal to the provisions of Section 51 of the TPA which provide for a taxpayer’s objection to a tax decision by the Respondent. The Respondent averred that the Appellant herein failed to validly lodge the objection by providing documents to reconcile the variances contrary to Section 51(3)(c) of the TPA and consequently, the Respondent confirmed the assessments raised against the Appellant. The Section states as follows:“A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—a.the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments;b.In relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute.”c.All the relevant documents relating to the objection have been submitted.”II. Whether the Respondent erred by disregarding the evidence provided by the Appellant

38. The Respondent averred that the burden of proof according to Section 30 of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “ TATA”) and Section 56 of the TPA, is on the Appellant to produce the evidence challenging the Respondent’s decision to confirm the assessments. Section 56(1) of the TPA provides as follows:“The burden shall be on the taxpayer to prove that a tax decision is wrong/incorrect.”

39. In this Appeal, the Respondent stated that whereas the Appellant provided some documents for its review, the said documents did not support the Appellant’s arguments as provided for in its notice of objection and as such, the Appellant failed to discharge the burden of proof that was upon it. The document presents a witness statement regarding a tax appeal involving Cellini Holding Limited and the Respondent.

40. The Respondent’s witness statement outlined the fact that the compliance check revealed that the Appellant did not prove the land was agricultural or exempt from CGT and that no evidence was provided to support claims of farming income or incidental costs incurred prior to the sale. The applicable CGT rate was 15% at the time of property transfer in April 2023 and the Appellant's claims regarding costs of acquisition and incidental expenses were not substantiated with relevant documents. ​Mr. Rotich stated that the total CGT computed for both properties amounted to Kshs 27,150,550. 00 including penalties and interest.

41. Accordingly the witness averred that the Respondent’s assessment was deemed valid as the Appellant failed to provide sufficient evidence to support its claims. ​

42. The Respondent sought the following reliefs:a.That the Respondent’s objection decision dated 23rd May 2024 demanding Kshs. 27,150,550. 00 being CGT be found to be merited and hereby be upheld.b.That the Appeal be dismissed with costs to the Respondent as the same lacks merit.

Parties’ Submissions. 43. The Appellant complied with the directions of the Tribunal and filed its written submissions as directed, by 2nd May, 2025 whilst the Respondent, appealed against a Ruling of the Tribunal at the High Court and did not file its submissions.

44. In its submissions the Appellant outlined a background of the case and raised 4 issues for determination, namely whether the Tribunal has jurisdiction to determine the matter, whether the tax assessment was erroneous and the standard of proof required for the Appeal and submitted on the potential prejudice to it if the Appeal is not allowed. It submitted that the Tribunal has Jurisdiction to hear appeals from tax assessment and stated that the Kajiado property is agricultural land exempt from capital gains due to its size.

45. The Appellant submitted that NAIROBI/BLOCK 14/ 294 (the Nairobi Property) was sold Vijito Consortium, which failed to register the transfer, leading to erroneous tax assessments. The Appellant submitted that it paid capital gains in the amount of Kshs. 791,950. 00 for the Nairobi property and further claimed that this was a case of double taxation supported by legal definitions and prior payments made by the Appellant.

46. The Appellant submitted that it had all necessary information to support its case and that the assessments were erroneous and not supported by facts.

Issues For Determination. 47. The Tribunal having carefully considered parties’ pleadings, documents and Appellant’s submissions is of the view that the following two issues call for its determination:a.Whether the Appellant’s property known as Kajiado/Kaputiei North 2XX1 was exempt from CGT.b.Whether the CGT tax point for the property known as NAIROBI/BLOCK 14/2X4 was during the registration of the Transfer in favour of Gran Movimiento Limited.c.Whether CGT was due and payable by the Appellant on the transfer of NAIROBI/BLOCK 14/2X4 to Vijito Consortium.

Analysis And Findings. 48. The Tribunal will proceed to analyse the issues as hereinunder:a.Whether the Appellant’s property known as Kajiado/Kaputiei North 2XX1 was exempt from CGT.1. The genesis of this dispute was the objection by the Appellant to the assessment issued by the Respondent on the transfer of immovable property on the basis that it was exempt from CGT since the land was agricultural. The Respondent was of the contrary opinion and stated that CGT was payable because the land was not agricultural in view of the fact that the Appellant did not, in its books of accounts indicate that it had earned income from agricultural activities and therefore the land was one which was of a commercial nature.

50. The Tribunal notes that pursuant to the following provisions of Section 2 of the ITA, gains or profits from the sale of immovable property is chargeable to tax:“(2)Subject to this Act, income upon which tax is chargeable under this Act is income in respect of–(a)gains or profits from–(i……………….…………….(f)gains accruing in the circumstances prescribed in, and computed in accordance with, the Eighth Schedule;”

51. The Tribunal finds that the following provisions of paragraph 1 of the Eight Schedule to the ITA are relevant in the instant appeal:“property"–(a)in the case of a company has the meaning assigned thereto in the Interpretation and General Provisions Act (Cap. 2), and includes property acquired or held for investment purposes but does not include a road vehicle;(b)in the case of an individual means–(i)land situated in Kenya and any right or interest in or over that land; and(ii)a marketable security situated in Kenya, other than an investment share as defined in Part II of this Schedule;"transfer" has the meaning assigned thereto in paragraph 6 of this Schedule;

52. The Tribunal cites the following provisions of Paragraph 36 (d) of the First Schedule to the ITA:“property (being land) transferred by an individual where–(i)the transfer value is not more than three million shillings; or(ii)agricultural property having an area of less than fifty acres where such property is situated outside a municipality, gazetted township or an area that is declared by the Cabinet Secretary, by notice in the Gazette, to be an urban area for the purposes of this Act;”

53. The Tribunal notes that the Respondent’s main argument was that the property was not agricultural because the Appellant never showed in its books that it was earning Agricultural income. It further went to state that the fact that the stamp duty was 2% was not an indication that the land was agricultural. The Tribunal is of a different view in that the fact that the Appellant obtained Land Board Control Consent which was an indicator that the land is an agricultural property, or agricultural land. The payment of 2% stamp duty is merely an indicator that the land is not within a municipality. The Appellant provided documentation indicating that the land was agricultural but failed to adduce in evidence a stamped Transfer indicating that the endorsement and payment of stamp duty was based on 2% of the value determined by the Government Valuer. The agreement for sale dated 10th April 2013 indicates that the land was 4. 05 hectares (10acres).

54. The Tribunal however finds that in order for a gain from the sale of an immovable property to qualify for exemption pursuant to the provisions of Paragraph 36 (d) (ii) of the First Schedule to the ITA all the following conditions must be met:a.The Transfer of the Land must be by an individual.b.The immovable property should be agricultural land.c.The acreage of the land must be less than 50 acres.d.The immovable property should be situated outside a municipality, gazetted township or an area that is declared by the Minister by notice in the gazette to be an urban area.

55. The view of the Tribunal is that only an individual qualifies for exemption under Paragraph 36 (d) (ii) of the First Schedule to the ITA. Section 2 of the ITA provides that an individual means a natural person. The Appellant did not therefore qualify for this exemption.

56. Accordingly, the Tribunal finds that the Appellant’s property known as Kajiado/Kaputiei North 2XX1 was not exempt from CGT.

b.Whether the CGT tax point for the property known as NAIROBI/BLOCK 14/2X4 was during the registration of the Transfer in favour of Gran Movimiento Limited. 57. The Tribunal notes that the Appellant averred that it purchased NAIROBI/BLOCK 14/2X4 on 23rd May, 2013 from an individual. It purchasedNAIROBI/BLOCK 14/2X4 for Kshs. 91,000,000. 00 in cash with the transaction being completed after registration of the Transfer in favour of the Appellant. This was completed and NAIROBI/BLOCK 14/2X4 was then registered in the name of the Appellant. The Appellant then sold NAIROBI/BLOCK 14/2X4 Vijito Consortium on 8th February, 2018 for Kshs. 120,000,000. 00. According to the said Agreement for sale dated 8th February, 2018, the Sale would be complete upon submission of the Vendor of all the Completion documents and receipt of the Vendor of the entire purchase price.

58. The Tribunal notes the following provisions of Paragraph 1 and 6 of the Eighth Schedule to the ITA:“transfer" has the meaning assigned thereto in paragraph 6 of this Schedule;“Paragraph 6:Meaning of transfer(1)Subject to this Schedule there is a transfer of property for the purposes of this Schedule–(a)where property is sold, [emphasis ours] exchanged, conveyed or otherwise disposed of in [emphasis ours] any manner whatever (including by way of gift), whether or not for consideration [emphasis ours]; or…”

59. The view of the Tribunal is that the Sale by the Appellant to Vijito Consortium was completed in 2018 and the tax point for CGT was upon completion of the sale. Even if the registration of the Transfer was effected in 2023, the Agreement dated 8th February, 2018 clearly stated that Completion of the sale was upon exchange of completion documents and payment of the full purchase price. The transfer for purposes of the ITA was completed on the said date. However, since the transaction took place in 2018, the issue would be whether the Respondent went beyond the statutory time limit of 5 years. The self-assessment return by the Appellant was filed on 18th March, 2021. However, the sale had taken place in 2018. The Tribunal is of the view that the Respondent did not violate the statutory time limits pursuant to Section 31 (4) of the TPA in assessing the Appellant since the Appellant filed its self-assessment return in 2021. However, the gains from the sale to Vojito Consortium could not be subjected to a CGT rate of 15% since for purposes of CGT, the transfer took place upon completion of the sale in 2018.

60. Having found that the transfer to Vijito Consortium as envisioned by provisions of Paragraph 6 to the Eight Schedule of the ITA took place in 2018 upon completion of the sale, the finding of the Tribunal is that the CGT tax point for the property known as NAIROBI/BLOCK 14/2X4 was not during the registration of the Transfer in favour of Gran Movimiento Limited.

(c)Whether the CGT was due and payable by the Appellant on the transfer of NAIROBI/BLOCK 14/2X4 to Vijito Consortium. 61. The Tribunal notes that the Appellant did not adduce in evidence, together with its pleadings, the evidentiary documentation that the Respondent sought to support the incidental expenses claimed of Kshs. 13,161,000. 00. This was in spite of the fact that the Appellant was granted leave by the Tribunal to do so. The Appellant therefore made unsupported claims of incidental costs amounting to Kshs. 13,161,000. 00.

62. When granted leave by the Tribunal to adduce additional evidentiary documentation, the Appellant adduced in evidence the following documents: Confirmation Letter from the County Government of Kajiado, Department of Lands, Physical Planning and Urban Development; Physical Planning Section;

Form LRA 49 Registered and Sealed on 26th April 2023 evidencing Transfer of Title Nairobi/Block14/2X4 from Cellini Holdings to Gran Movimiento Limited;

Duly executed Transfer Deed form LRA 49 evidencing transfer of Nairobi/Block 14/ 2X4 from Gran Movimiento to Thatcham Limited;

Certificate of Title for Nairobi/Block 14/2X4 in favour of Gran Movimiento Limited.

Gran Movimiento Limited CR 12 as at 16th February 2023;

Certificate of Title for IR 30455/4 (Nairobi/Block 14/ 2X4);

Domestic RTGS Transfers for the purchase price for Nairobi/Block 14/ 2X4 from Gran Movimiento to Pevans; and

Pevans East Africa Limited Board Resolution resolving to sell Nairobi/Block 14/ 2X4 to Gran Movimiento.

63. The Tribunal notes that none of the documents adduced in evidence by the Appellant proved that the incidental costs amounting to Kshs. 13,161,000. 00 were justified. The Appellant therefore failed to discharge its burden of proving that the decision of the Respondent dated 23rd May, 2024 was incorrect pursuant to the provisions of Sections 56 (1) of the TPA. The Tribunal finds that additional CGT at the rate of 5% was due and payable by the Appellant on the transfer of NAIROBI/BLOCK 14/2X4 to Vijito Consortium.

Final Decision. 64. In view of the foregoing analysis the Orders that lend themselves are as follows:a.The Respondent’s objection decision dated 23rd May, 2024 be and is hereby varied in the following terms:i.The assessment in relation to the sale of LR NO. KJD/KAPUTIEI NORTH 2XX1 sold by the Appellant be and is hereby upheld; andii.The assessment issued and confirmed in relation to the CGT due on the sale of NAIROBI/BLOCK 14/2X4 is referred back for appropriate re-assessment and application of the CGT rate of 5%.b.Each party to bear its own cost.

It is so Ordered.DATED AND DELIVERED AT NAIROBI ON THIS 9THDAY OF MAY, 2025. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER - MEMBER