[2024] KETAT 605 (KLR)

Frontier Haulage and Construction Ltd v Commissioner of Investigation & Enforcement (Appeal 227 of 2023) [2024] KETAT 605 (KLR) (Civ) (5 April 2024) (Judgment)

Neutral citation: [2024] KETAT 605 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Appeal 227 of 2023

CA Muga, Chair, BK Terer, D.K Ngala, GA Kashindi & SS Ololchike, Members

April 5, 2024

Between

Frontier Haulage And Construction Ltd

Appellant

and

Commissioner Of Investigation & Enforcement

Respondent

Judgment

1. The Appellant is a private limited liability company duly incorporated in Kenya. Its principal business activity is the importation and distribution of bitumen from Iran and supply to road construction companies in Kenya and the East African region.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of the laws of Kenya. Under Section 5(1) of the Act, the Respondent 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 function under subsection (1), the Respondent is mandated to administer and enforce all provisions of the Written Laws as set out in Parts 1 & 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 issued the Appellant with a notice of tax investigation vide its letter dated 7th January, 2021 which the Appellant acknowledged on 20th January, 2021.

4. Vide a letter dated 17th October, 2022 the Appellant was issued with a tax investigation finding report demand with a tax liability of Kshs 167,169,828. 00 being Kshs 111,124,134. 00 for VAT and Kshs 56, 045, 694 for Corporation tax.

5. The Appellant wrote to the Respondent on 14th and 15th December, 2022 which the Respondent responded to vide an email of 19th December, 2022.

6. The Appellant subsequently objected to the Respondent’s demand vide its letter dated 16th January, 2023.

7. The Respondent considered the Appellant’s objection and allowed it in part and issued its objection decision vide its letter dated 16th March, 2023 confirming a tax liability of Kshs 36, 197, 781. 00, being Kshs 4,060, 797. 00 for Income tax and Kshs 32, 136, 983. 49 for VAT.

8. Aggrieved by the Respondent’s decision, the Appellant filed its Notice of Appeal on 5rd April, 2023.

The Appeal 9. The Appeal is premised on the following grounds as stated in the Appellant’s Memorandum of Appeal dated 3rd April, 2023 and filed on 5th April,2023:a.That the Respondent erred in law by acting ultra-vires to the provisions of Section 23(1) of the Tax Procedures Act No.29 of 2015(hereinafter ‘TPA’), which provides as follows:“Subject to subsection (3), retain the documents for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law.”b.That the Respondent erred in fact and in law by using speculative approach in raising additional tax even after being given all the documentary evidence by the taxpayer which it ignored without prove or otherwise to the taxpayer. The tax law provides that the taxes paid must be factual and just. The Appellant therefore, treated this as a fishing expedition without proof.c.That the Respondent acted unreasonably, capriciously and is motivated by malice and extraneous considerations in issuing the various tax demands.d.That the Respondent outrightly contravened the doctrine of legitimate expectation that rests a presumption on the Respondent to follow certain procedures at arriving at the tax liability and the benefits that accrue from it.

Appellant’s Case 10. In its Statement of Facts dated 3th April 2023 and filed on 5th April 2023, the Appellant reiterated the activities leading to the objection decision dated 16th March, 2023 by averring that it raised its substantiative objection on 16th January, 2023 laying the grounds of objection as provided for under Section 51 of the TPA and also provided the calculation and supporting documents for the Respondent’s perusal and determination.

11. The Appellant stated that it wrote to the Respondent requesting for a payment plan of 12 months for the undisputed tax of Kshs 4,877,111. 00. However, the Respondent declined the request and instead agreed to a payment of three-monthly instalments.

12. It averred that the objection was not handled carefully and diligently by the Respondent because of the following reasons:a.All documents needed for the review of the case were availed.b.The Respondent’s failure to look at the objection and ask for further documents which the Appellant was more than willing to avail or give an explanation on why they are not possible.c.While the Appellant endeavours to settle the issue on the taxes speedily, the Respondent was still stuck by its calculations even though the Appellant has provided all the necessary documentation and calculation towards the same.d.It is the prayer of the Appellant that amicable solution be found to settle this.

Appellant’s Prayers 13. The Appellant made the following prayers:a.The Appeal be allowed.b.The demand for Kshs 36,197. 781. 00 together with interest and resultant penalties be set aside and, in its place thereof, the Tribunal find that no tax is payable.c.Costs be borne by the Respondent.

Respondent’s Case 14. In response to the Appellant’s grounds of Appeal, the Respondent addressed them through its Statement of Facts dated and filed on 2nd May, 2023.

15. The Respondent averred that it justified its decision to assess for the years of income 2015- 2020 by arguing that the tax investigation is an ongoing exercise and may take a number of years to be conducted. It stated further that the Respondent is empowered by law to make assessments beyond a period of five years from the date of assessment in cases of wilful neglect, evasion or fraud by the Appellant.

16. The Respondent argued that the five-year limitation cannot be read in isolation as Sections 29 and 31 of TPA and Section 43 of VAT Act No. 35 of 2013 (hereinafter ‘VAT Act’) ought to be read together where they address the law on keeping records. It argued further that in applying the five-year rule from the date to the letter of findings of 17th October, 2022 it was allowed to audit the Appellant up to the year 2016. However due to variances that it noted and the pattern of fraud and wilful neglect, the year of income 2015 was included and audited as well.

17. The Respondent contended that the Appellant failed to make all declarations truthfully of all the sales that it had made to local buyers. Further the Appellant’s buyers/purchaser made declarations that were higher than those made by the Appellant. The burden of proof was therefore on the Appellant to demonstrate why there were such variances; a burden it failed to discharge.

18. The Respondent countered the Appellant’s pleadings of legitimate expectation and argued that this has to arise from a representation made and reliance placed on it, and that in this case the Appellant failed to share or place the kind of representation or past practice that it placed reliance on. Its reliance of this principle was therefore unfounded.

19. The Respondent reiterated that tax administration in Kenya gives it the leeway to use any tax analysis method provided that the same is not biased, arithmetically flawed or unreasonable. As such it employed the best judgement in determining the taxes due as provided for under Section 29 of the TPA. It argued that the Appellant failed to prove or demonstrate that the Respondent was in any way biased or unreasonable.

20. The Respondent justified its use of the banking method to assess the Appellant by asserting that it noticed a fraud trend in the Appellant’s return where the Appellant failed to disclose all sales made whilst the purchasers had declared. This cast aspersion on the completeness, veracity or accuracy of the Appellant’s documents albeit incomplete, this leaving the Respondent to rely on the banking analysis method.

21. The Respondent averred that it notified the Appellant vide its letter dated 7th January, 2021 that adverse administrative action was being considered and was given a fair hearing by being requested to supply information to rebut or to explain the variances noted. It averred further that even after the assessments were issued, the Appellant was given a fair hearing at the objection stage and documents earlier not supplied were considered. It argued therefore that the Appellant failed to demonstrate with clarity how the Respondent acted unreasonably, maliciously, capriciously or was motivated by other extraneous considerations.PARA 22. The Respondent relied on the following cases to buttress its argument: -a.Maciejewski v Revenue & Customs (Income Tax/Corporation Tax Penalties (2018) UKFIT 754 (TC) (19 December 2018)b.Stubert Investments Ltd vThe Queenc.Trustee Mortgage Co. vs Canadad.Gatirau Peter Munya vs Dickson Mwenda Kithinji & 2 others, Supreme Court Petition No.26 of 2014 [2014] Eklre.South African Revenue Services v Spur Group Limited [2021] ZASCA 145 (15 October 2021)f.Communications Commission of Kenya & 5 others v Royal Media Services & 5 others SC Petition Nos.14, 14A, 14B &14C of 2014. g.Canada (Attorney General) v Mavi, [2011] 25 CR 504.

23. The Respondent made the following prayers:a.That the Appeal be dismissed for lack of merit.b.That its decision as contained in its letter dated 16th March, 2023 be upheld.c.That it be awarded the costs of the Appeal.

Parties Submissions 24. The Appellant in its written submissions filed on 6th November 2023 identified a single issue for determination which it analysed as follows:

SUBDIVISION - Whether the Respondent acted ultra-vires contrary to Section 23 (1) (c) of TPA in its assessment of the Appellant. 25. The Appellant submitted that despite the provisions of the law, and the various correspondence thereafter and the provisions of all the documents requested by the Respondent, it went ahead and issued an assessment of income for the period 2015 to 2020 of Kshs 167, 169, 828. 00 on 17th October, 2022 contrary to the statute.

26. It submitted that it filed its objection to the demand as provided for in the law and stated its grounds of objection and that the Respondent had acted ultra vires by assessing beyond the provision of documents retention of more than 5 years pursuant to Section 51 (3) (6) of TPA covering the period 2015 and 2016 years of income.

27. Whereas the Respondent had invoked the provisions of Section 29 of the TPA which empowers it to raise default assessment where a taxpayer has not filed tax returns for a particular period, Section 29(5) of TPA limits the period within which the Respondent can issue such an assessment. It provides as follows: -“Subject to subsection (6), an assessment under subsection (1) shall not be made after five years immediately following the last date of the reporting period to which the assessment relates.” 28. It argued that though the investigations allegedly began sometimes in January, 2021 the assessment was issued on 17th October ,2022 covering the period 2015- 2022. Therefore the 5-year period contemplated under the Section 29 of the TPA could only be up to the year 2017. Reasons whereof the Respondent acted ultra- vires in issuing an assessment for the years of income 2015 and 2016. It averred therefore that the assessment relating to these years ought to be vacated.

29. The Appellant submitted that Section 29(6) of TPA empowers the Respondent to carry out an assessment beyond the five-year period in cases of wilful neglect or fraud. However, it is trite law that fraud must be both specifically alleged and proved hence the Respondent should not be allowed to assess tax by merely stating that there was fraud or wilful neglect on the part of the Appellant without providing sufficient proof. The burden of proving any wilful neglect or fraud is on the Respondent who in this case failed to discharge it. It therefore submitted that the assessment in respect of years of income 2015 and 2016 should be vacated as they are without basis in law.

30. In refuting the Respondent’s justification of relying on Section 29 of TPA to allege wilful neglect and fraud, the Appellant submitted that neither itself nor its directors have ever been tried and convicted for a criminal offence in relation to fraud. It therefore asserted that the Respondent cannot purport to rely on the provisions of Section 29(6) of TPA to assess the Appellant outside the five-year statutory period as any attempt to do so can only be termed ultra vires to the clear provisions of the law. To buttress its case, the Appellant relied on the case of Kenya Revenue Authority v Jimmy Mutuku Kiamba [2015] eKLR.

31. In conclusion, the Appellant submitted that a party can only discharge its burden of proof upon adducing evidence and that merely making pleadings is not sufficient. It cited Section 107(1) of the Evidence Act, CAP 80 of Kenya’s Laws (hereinafter ‘Evidence Act’) to support its case. It further relied on the following cases:a.Alfred Kioko Muteti v Timothy Miheso & Another [2015] eKLR.b.Miller v Minister of Pensions [1947] 2 ALL ER 372-373.

32. The Respondent, in its written submissions dated 27th November, 2023 and filed on 28th November, 2023 identified four (4) issues for determination which it proceeded to analyse as follows:(a)Whether the Respondent was correct in issuing additional assessments for the years 2015 and 2016.

33. The Respondent submitted that the calculation of time is from the time the Appellant filed the self-assessment and not simply checking the years 2015 and 2016 and subtracting from the date of the issuance of the assessment. It relied on Section 31 of TPA which guides on the five-year limit. The said Section provides as follows: -“The Commissioner may amend an assessment –a.In the case of gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer, at any time; orb.In any other case, within five years of -i.For a self –assessment, the date that the self –assessment taxpayer submitted the self –assessment return to which the self-assessment relates; orii.For any other assessment, the date the Commissioner notified the taxpayer of the assessment.”1. The Respondent submitted that the Appellant did not provide any evidence to show when the self-assessment was filed to enable the calculation of time to ascertain whether the same is beyond five years from the time the self-assessment was issued. The Respondent submitted that averments in pleadings are not evidence and relied on the case of Francis Otile vs Uganda Motors Kampala HCCS No.210 of 1989 where it was held that the court cannot be guided by pleadings since pleadings are not evidence and that they cannot be substituted. It therefore argued that where a defendant in a court of law does not adduce evidence, the plaintiff’s evidence is to be believed as allegations by the defence is not evidence as was held in the case of Edward Muriga through Stanley Muiga vs Nathaniel D Schulter Civil Appeal No.23 of 1997. 2.The Respondent submitted that Section 31 (4)(a) of the TPA provides that in the case of wilful neglect, the Commissioner can amend an assessment at any time. Further that the Appellant did not contest this finding and the accuracy or correctness of the finding that their actions amounted to neglect. It therefore argued that the Tribunal has not been provided with necessary information by the Appellant to establish that the assessment for 2015 and 2016 are out of time.

(b) Whether the Respondent was correct in applying the banking analysis method in assessing tax 36. The Respondent submitted that the Appellant’s assertion that the Respondent had applied speculative approach in ascertaining the correctness of the Appellant’s financial statement is unfounded as the Appellant had not maintained records to ascertain its correct tax liability forcing the Respondent to apply indirect methods.

37. The Respondent submitted that the Appellant conceded from its objection to the other elements with regard to the other methods and the only taxes contested are those that the Respondent had applied the banking analysis method. It argued that pursuant to Section31 (4) of the TPA, it applied the use of the information in its possession and the best judgement principle.

38. It was the Respondent’s submission that bank deposits method is based on the premise that money received must either be deposited or spent and that this approach is particularly useful if an analysis of bank accounts and the taxpayer’s regular payments into bank accounts appear to be from a taxable source. It averred that a detailed analysis of all bank deposits from the customers of the Appellant and payments to the suppliers were indicative of a person in trade.

39. The Respondent submitted that a review of the assessment and objection decision clearly demonstrated the following: -i.Having established all the deposits in the accounts, and adjusted for all non-sales deposits including contra entries, related party transfers, amounts received subject to the letter of credit, internal transfers, reversals, unpaid cheques to arrive at the net deposits.ii.The net deposit was further adjusted with VAT and debtors to arrive at expected sales.iii.The expected sales were thereafter compared with the Income tax returns and VAT3 declaration to arrive at the undeclared sales.iv.As the Appellant had not availed any documentation to support expenses, the Respondent finally used the construction industries average margin of 4. 54% to establish the taxable income as the Appellant belonged to this industry. It averred that the Appellant has not shown a single adjustment which was supported and was not adjusted for. The Appellant’s request was that since it did not have any documents it be allowed a 40% rate adjustment on expenses.

40. The Respondent submitted that all three tests were met before issuing the additional assessment and that there were no arithmetic errors or bias pointed out by the Appellant. It submitted that even at the Appeal stage, the Appellant has reproduced same bank statements and no documents have been availed to support the variances. The Appellant only produced an unsupported schedule at the objection stage which cannot be used to base any decision.

(c) Whether the Respondent correctly considered the documents provided by the Appellant. 41. The Respondent submitted that contrary to the Appellant’s assertion that it had availed documents, the Appellant availed some bank statements at the objection stage which were considered then. However, it has reproduced the same statements during the Appeal stage. It submitted further that the Appellant acknowledged that it had the burden to prove that the assessment was not proper. However, since no documentation was availed, it only proposed that it be allowed 40% as expenses. The Appellant’s averment that they provided all documentary evidence is just a mere averment which has not been supported by evidence.

42. It was the Respondent’s submissions that Section 56(1) of TPA places the burden of proof on the Appellant who in this case failed to discharge it having failed to provide any documents in support of its objection or the instant Appeal. The Respondent therefore posited that the Appellant also bears the burden of proving that the legitimacy of the deposits in its bank deposit to be from a non-sales source or already taxed source. It submitted therefore that the Appellant failed to discharge its burden of proof both at the objection stage and Appeal stage.

(d) Whether the Respondent violated the Principle of Legitimate Expectation 43. The Respondent submitted that the Appellant raised the issue of breach of legitimate expectation as its fourth ground of appeal. However, it stated nothing in its Statement of Facts to link or clarify the statement. The Appellant had averred in its Memorandum of Appeal that the Respondent violated the principle of legitimate expectation in following certain procedures while determining tax liability. The Respondent submitted therefore that the Appellant misguided itself in this issue as the only legitimate expectation that the Respondent has is to collect the taxes based on information availed.

44. It was the Respondent’s submission that the Appellant failed to show any statement the Respondent made that raised any legitimate expectation. It stated that in the absence of a statement or conduct to which an expectation can arise, the breach of the doctrine of legitimate expectation as alleged by the Appellant does not arise.

45. The Respondent therefore averred that:i.It correctly assessed for the years 2015 and 2016 and that nothing had been placed before the Tribunal to show that the two are outside the five years from the time of the self-assessment. Further that having established negligence on the part of the Appellant, it could assess any period.ii.It correctly applied the banking method and made all necessary adjustments in arriving at the expected sales and further applied the industrial margin to arrive at the expected taxable income.iii.The Appellant failed even at the Appeal stage to provide documents to support its case.iv.There is no representation to warrant any legitimate expectation.

46. To buttress its case, the Respondent relied on the following cases;a.CMC Aviation Ltd v Cruiser Ltd (No. 1) KLR 103 [1976-80]b.Saima Khalid v Commissioner for Her Majesty Revenue and Customs Appeal No TC/2017/02292c.Commissioner Investigations and Enforcement vs Kidero (Income Tax Appeal E02 OF 2020) [2022] KEHC 52 (KLB) (Commercial and Tax) (4 February 2022) Judgementd.Digital Box Limited v Commissioner of Domestic Taxese.Desert star Transporters Ltd vs Commissioner Investigations & Enforcement TAT No.304 of 2020. f.Leah Njeri Njiru v Commissioner of Investigations and Enforcement Kenya Revenue Authority & another [2021] eKLRg.Tumaini Distributors Company (K) Ltd v Commissioner of Domestic Taxes [2020] eKLR.h.Kenya Revenue Authority & Commissioner of Domestic Taxes v Republic (Ex-Parte) Kenya Nut Company Ltdi.Kenya Revenue Authority & 2 others v Darasa Investments Ltd [2018] eKLRj.Pharmaceutical Manufacturing (K) Co Ltd & others v Commissioner General Kenya Revenue Authority & 2 others [2017] eKLR.

Issues for Determination 47. The Tribunal has considered the parties pleadings, documentation and submissions and is of the view that this Appeal raises two issues for determination;a.Whether the objection decision dated 16th March, 2023 was justified.b.Whether the Respondent complied with Section 31(4)(a) and(b) of the TPA.

Analysis And Findings 48. Having established the issues for determination, the Tribunal will proceed to analyse them as hereinunder:

(a) Whether the objection decision dated 16th March, 2023 was justified. 49. The Respondent raised additional tax demand on the Appellant contending that there were discrepancies between the Appellant’s and its buyers where the Appellant failed to make all declarations of all the sales while the Appellant’s buyers/ purchasers made declarations higher than those made by the Appellant.

50. The Tribunal notes that in its defence, the Appellant stated that it prepared a tabulation of the various transactions challenging the decision of the Respondent. A further analysis of the Appellant’s bank accounts established that some incomes had not been declared.

51. The Tribunal observes that other than the bank statements which the Respondent states that are the same ones considered during the objection stage, the Appellant has not availed any other documents to support its case. The Tribunal has also noted the Appellant’s admission at paragraph 10 of its Statement of Facts where its states “Without proper support documents, the Appellant did the tabulation and presented the same on 14th February, 2023. ”

52. Section 23(1) of the TPA provides for the importance of keeping and maintaining documents for tax purposes. It provides as follows:“(1)A person shall –SUBPARA (a)Maintain any document required under a tax law, in either of the official languages(b)Maintain any document required under a tax law so as to enable the persons tax liability to be readily ascertained; and(c)Subject to subsection (3), retain the document for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law.”

53. The Tribunal will rely on its decision in TAT No. 55 of 2018 Boleyn International Limited v Commissioner of Investigations & Enforcement, where it was held as follows:“The Appellant failed to provide documents and the Tribunal held that there was no conceivable way the Respondent would have considered the objection as the same did not place itself within the parameters of section 51(3) of the Tax Procedures Act”

54. The Tribunal notes that the Appellant’s first ground of Appeal was that the Respondent had used speculative approach in raising the additional assessment. The Respondent on its part justified the use of the banking analysis method due to the failure by the Appellant to provide the requisite information and documentation.

55. It is worth noting that the Appellant has not assisted this Tribunal to appreciate the evidence or records it has contended to have submitted to the Respondent, apart from the bank statements which the Respondent had contended that were the same that had been availed during the objection stage and which were considered hence the confirmation of a lower demand at the objection stage. It is also worth noting that the Appellant has not controverted the Respondent’s contention.

56. In the case of Primarosa Flowers Ltd v Commissioner of Domestic Taxes HCITA No 19 of 2017, the learned judge cited with approval the case of Mulherin v Commissioner of Taxation [2012] FCAFC 115, where the court held as thus: -“….In tax disputes, the taxpayer must satisfy the burden of proof to successfully challenge income tax assessments. The onus is on the taxpayer in proving that an assessment was excessive by adducing positive evidence which demonstrates the taxable income on which tax ought to have been levied.”

57. It is the Tribunal’s considered view that the Appellant failed to discharge this burden and the Respondent cannot therefore be faulted for using the banking analysis method.

58. The Tribunal notes that in the Appellant’s letters of 16th January, 2023 and 13th February, 2023 it had admitted to undisputed tax of Kshs 4,877,111. 00 which it had applied to pay in 12 monthly instalments to which the Respondent agreed to 3 months payment plan. The Tribunal has not sighted any evidence by the Appellant, of any attempts to pay the undisputed tax.

59. Section 52 (2) of the TPA prescribes the conditions which an appealable decision to the Tribunal ought to satisfy. It provides as follows: -“A notice of appeal to the Tribunal relating to an assessment shall be valid if the taxpayer has paid the tax not in dispute or entered into an arrangement with the Commissioner to pay the tax not in dispute under the assessment at the time of lodging the notice.”

60. It is worth noting here that the Tribunal is not challenging the validity of the Appeal, rather to point out that even when the Appellant admits to undisputed tax, it has not made any effort to demonstrate that it’s able to meet its part of the bargain.

61. In view of the foregoing, the Tribunal finds that the tax as demanded is due and payable and that the objection decision dated 16th March, 2023 was justified.

(b) Whether the Respondent complied with Section 31(4)(a) and (b) of the TPA. 62. The Appellant had contended that the Respondent acted ultra-vires in its assessment beyond the provision of documents retention of more than 5 years. It had submitted that while the investigations began in January, 2021 the assessment was issued on 17th October 2022 covering the period 2015- 2022. It argued therefore that by the time of issuance of the assessment, the 5- year period contemplated under the Tax Procedures Act could only be up to the year 2017 for Corporation taxes whilst for the VAT that is payable monthly by the 20th day of the subsequent month upon the supply the VAT assessments for the months prior to September, 2017 are to be excluded from the tax payable.

63. The Respondent in response had submitted that there was wilful neglect on the part of the Appellant for failing to provide evidence to show when the self-assessments were filed to enable the tabulation of time to ascertain whether the same is beyond five years from the time the self-assessment was made. It had contended that the Appellant did not contest the Respondent’s findings and that it neither contested the accuracy nor the correctness of the finding that its actions amounts to neglect. The Respondent also relied on Section 31(4) of the TPA and asserted that it is empowered to amend an assessment any time in the case of wilful neglect.

64. The Tribunal notes that while it is not in doubt that the Appellant failed to discharge its burden of proof in most part, the Respondent had failed to prove the wilful neglect on the part of the Appellant to the satisfaction of the Tribunal. Section 107 of the Evidence Act states that:-“whoever desires any court to give judgement as to any legal right or liability dependent on the existence of facts which he asserts must prove that these facts exist.”

65. In view of the foregoing the Tribunal is of the considered view that the Respondent has not proven beyond reasonable doubt that indeed there was fraud or wilful neglect on the part of the Appellant. It is therefore the finding of the Tribunal that the Respondent was not justified in raising an assessment beyond the 5-year statutory timeline and in this instant did not comply with Section 31(4) (a)and (b) of the TPA.

Final Decision 66. The upshot of the foregoing is that the Appeal partially succeeds and the Tribunal will proceed to issue the following final Orders;a.The Appeal partially succeedsb.The Respondent’s objection decision dated 16th March, 2023 is hereby varied in the following terms:-i.The Respondent to exclude from the Corporation tax assessment the taxes in respect of the 2015 and 2016 years of income.ii.The Respondent to exclude from the VAT tax assessment the taxes assessed in respect of the months prior to September, 2017. c.The Respondent to undertake an appropriate computation of the taxes payable on the basis of the Orders in (b) above.d.Each party to bear its own costs.

67. It is so ordered.

DATED and DELIVERED at NAIROBI this 5th day of April, 2024CHRISTINE A. MUGACHAIRPERSONBONIFACE K. TERER DELILAH K. NGALAMEMBER MEMBERGEORGE KASHINDI SPENCER S. OLOLCHIKEMEMBER MEMBER