https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/105

Njoroge v Commissioner of Domestic Taxes (Appeal E877 of 2025) [2026] KETAT 105 (KLR) (2 June 2026) (Judgment) Neutral citation: [2026] KETAT 105 (KLR) Republic of Kenya In the Tax Appeal Tribunal Appeal E877 of 2025 RM Mutuma, Chair, G Ogaga, T Vikiru & JM Malla, Members June 2, 2026 Between Regina Wanjohi Njoroge Appellant and Commissioner of Domestic Taxes Respondent Judgment Background 1.The Appellant is an individual taxpayer. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. For the performance of its function under Subsection (1), the Authority is mandated under Section 5(2) of the Act to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act to assess, collect, and account for all revenues under those laws. 3.The Respondent issued to the Appellant a default Capital Gains Tax (CGT) assessment on 27th February 2023 in respect of gains established from the transfer of a property owned by the Appellant. 4.The Appellant objected against the CGT assessment on 18th November 2024. 5.The Respondent issued its Objection decision on 14th January 2025, confirming the CGT assessment in its entirety. 6.The Appellant, being dissatisfied with the Respondent’s Objection decision, filed her Notice of Appeal dated 14th August 2025 and filed on 15th August 2025, having been granted leave by the Tribunal to file her Appeal out of time. The Appeal 7.The Appeal is premised on the Memorandum of Appeal dated 14th August 2025 and filed on 15th August 2025, having been granted leave to file its Appeal out of time. The Memorandum of Appeal raised the following grounds: -a)Misapplication of law on estate administration: That the Respondent erred in law by issuing an assessment of CGT against the Appellant for a transaction that occurred in the context of estate administration, contrary to Paragraph 36(1)(f) of the First Schedule to the Income Tax Act, which exempts such transfers from CGT liability when carried out by a personal representative within the scope of estate administration.b)Violation of the principle against double taxation: That the Respondent’s assessment subjects the same capital gain to taxation twice, in violation of Section 50(j) and Section 3(3) of the Income Tax Act, which bar the imposition of CGT where such tax has already been assessed and paid by another legally obligated party, in this case the estate's administrator.c)Failure to consider evidence of prior tax compliance: That the Respondent erred in fact and in law by failing to consider clear documentary evidence submitted during the objection process, including a CGT return and payment receipt filed by the estate administrator, evidencing that CGT was already declared and paid in relation to the subject transaction.d)Erroneous attribution of tax liability to the beneficiary: That the Respondent improperly imposed CGT liability on the Appellant individually, notwithstanding that she was neither the legal transferor nor directly involved in the sale, but a beneficiary of an estate. That the tax obligation lay with the estate administrator, who fulfilled it.e)Disregard of enhancement and incidental cost evidence: That the Respondent unreasonably dismissed substantial evidence of legal fees, adjusted cost schedules, and incidental transaction costs provided by the Appellant, and failed to apply the principle that CGT should be computed on net gain, not gross consideration.f)Breach of fair administrative action and natural justice: That the Respondent’s decision was issued without fair, impartial consideration of all materials and in breach of Article 47 of the Constitution and Section 4 of the Fair Administrative Action Act, 2015, which require tax decisions to be lawful, reasonable and procedurally fair.g)Disregard of self-assessment principles: That the Respondent’s conduct undermines the self-assessment system enshrined under Section 52B of the Income Tax Act and Section 24 of the Tax Procedures Act, wherein the taxpayer, or their legal representative, is primarily responsible for determining their correct tax position.h)Failure to meet legal threshold for justifiable assessment: That the Respondent failed to establish any evidence showing that the Appellant received additional gain or that the prior CGT paid was inaccurate, and instead issued an assessment solely based on stamp duty values, without verifying actual acquisition and enhancement costs. Appellant’s Case 8.The Appellant’s case is premised on the following documents:a)The Appellant’s Statement of Facts dated 14th August 2025 and filed on 15th August 2025, filed on 14th May 2025, and the documents attached thereto; andb)Its Written Submissions dated 13th February 2026 and filed on 16th March 2026. 9.The Appellant stated that the subject property was sold and transferred on 19th October 2022 to a purchaser, Mr. Peter Mwaniki Mbugua, for a consideration of Kshs. 150,000,000. That the stamp duty paid amounted to Kshs. 6,000,040. 10.The Appellant asserted that the transfer was executed by the estate’s legal administrator, Mr. Francis Ndegwa Mwaura, who filed a CGT return and paid CGT amounting to Kshs. 1,136,100 through Equity Bank on 22nd December 2021. That the Appellant was one of the listed beneficiaries in the return. 11.The Appellant averred that she did not personally sell the property, nor receive proceeds as an independent taxpayer. That she acted at all times in the understanding that the estate administrator bore the obligation to declare and pay CGT, which was duly fulfilled. 12.That on 27th February 2023, the Respondent issued an additional CGT assessment of Kshs. 22,500,000 against the Appellant on the basis of the assessment was stamp duty records reflecting the Kshs. 150 million property transfer, without regard to the prior CGT declaration. 13.That the Appellant lodged a late objection on 18th November 2024, which was accepted for review. 14.The Appellant averred that the Objection included supporting documents such as:o The CGT return filed by the administrator;o Payment receipt from Equity Bank;o Legal fees and property rate receipts;o Acknowledgment of sale and title documents;o Adjusted cost schedules for enhancement costs. 15.That despite these efforts, the Respondent issued an Objection decision on 14th January 2025 disallowing the Objection. 16.The Appellant averred that the Respondent cited alleged failure to provide sufficient evidence for enhancement costs and justification of the administrator’s role. 17.The Appellant asserted that the CGT paid by the administrator covered the transaction fully and the Respondent failed to properly apply Paragraph 36(1)(f) of the First Schedule, which exempts estate transfers from CGT. 18.The Appellant further asserted that she has cooperated with the Respondent at all times, including in face-to-face meetings and document submissions via her tax agent Mr. Stephen Ngingo. 19.That the Respondent’s Objection decision is unreasonable, excessive and based on form over substance as ignores applicable exemptions, fails to account for the prior CGT payment, and violates legal principles prohibiting double taxation. 20.That the Appellant thus brings this Appeal seeking full relief from the assessment and confirmation that no further CGT is due from her on the subject transaction. 21.The Appellant averred to have annexed to its Appeal the following documents.o RWN 1: Copy of the Capital Gains Tax return filed by Francis Ndegwa Mwaura (administrator of the estate).o RWN 2: CGT payment receipt from Equity Bank dated 22nd December 2021.o RWN 3: Grant of Letters of Administration issued to Francis Ndegwa Mwaura.o RWN 4: Sale Agreement and acknowledgment documents for LR No. 13330/439.o RWN 5: Legal fee invoice and receipts for incidental costs.o RWN 6: Adjusted schedule of enhancement costs.o RWN 7: Objection application dated 18th November 2024.o RWN 8: Objection decision issued by KRA dated 14th January 2025. 22.The Appellant submitted that the following issues arise for determination: I. Whether the property transfer occurred in the course of estate administration and is exempt from CGT. 23.The Appellant stated that she is a beneficiary of the estate of her late parents, which included Land Reference Number 13330/439. 24.The Appellant submitted that the applicable law is Paragraph 36(1)(f) of the First Schedule to the Income Tax Act, which provides that: -“Transfers of property by a personal representative to a beneficiary in the course of the administration of the estate of a deceased person shall not be treated as a transfer for purposes of capital gains tax.” 25.The Appellant submitted that the rationale behind this exemption is that estate administration involves the management and distribution of property on behalf of beneficiaries rather than a commercial transaction by the beneficiaries themselves. 26.The Appellant asserted that in the present case the property belonged to the estate of the deceased persons, the sale was executed by the duly appointed administrator and that the Appellant was merely a beneficiary of the estate. 27.The Appellant reiterated that she did not personally dispose of the property nor act as the transferor. That the Respondent therefore erred in law by treating the Appellant as the person chargeable to CGT. II. Whether CGT was already declared and paid by the estate administrator. 28.The Appellant stated that she provided evidence of the filed CGT return, bank payment receipt, sale documentation and supporting schedules. 29.She submitted that under Section 24 of the Tax Procedures Act, Kenya operates a self-assessment system, whereby taxpayers determine and declare their tax liabilities subject to verification by the Commissioner. That once a taxpayer has declared and paid tax, the Commissioner must provide reasonable grounds and evidence before disregarding the declaration. 30.The Appellant contended that the Respondent failed to demonstrate that the earlier CGT return was incorrect or fraudulent. That instead, the Respondent relied solely on stamp duty records reflecting the sale value. 31.The Appellant argued that such reliance without verification of prior compliance is unreasonable and contrary to the principles of the self-assessment system. III. Whether the Respondent erred in attributing tax liability to the Appellant as a beneficiary. 32.The Appellant submitted that tax liability must be imposed on the person legally responsible for the transaction. That under the Law of Succession Act, the property of a deceased person vests in the personal representative. 33.That Section 79 of the Act provides that: “The executor or administrator shall be the personal representative of the deceased for all purposes.” That consequently, the personal representative is the person who manages and disposes of estate property. That the beneficiaries do not hold legal title to estate property until the administration process is completed. 34.That the Respondent therefore erred by imposing tax liability on the Appellant who was neither the legal transferor nor the person responsible for the sale. 35.The Appellant averred that the Respondent’s assessment effectively taxes the same transaction twice. She maintained that the estate administrator already declared and paid CGT on the sale. That the Respondent now seeks to impose another CGT assessment on a beneficiary. 36.The Appellant referred to Section 3 of the Income Tax Act and submitted that courts have consistently held that tax statutes should not be interpreted in a manner that leads to double taxation unless the law expressly provides otherwise. 37.That in Commissioner of Domestic Taxes v Barclays Bank of Kenya Ltd, the Court held that taxation must be imposed strictly in accordance with the law and cannot be extended by administrative interpretation. 38.The Appellant asserted that the Respondent’s interpretation in the present case results in unjust enrichment of the tax authority at the expense of the taxpayer. IV. Whether the Respondent’s decision violates the law governing fair administrative action. 39.The Appellant submitted that Article 47 of the Constitution of Kenya guarantees every person the right to administrative action that is lawful, reasonable and procedurally fair. 40.That this constitutional right is implemented through the Fair Administrative Action Act. That Section 4 of the Act requires administrative bodies to consider all relevant information, provide reasons for their decisions, act fairly and reasonably. 41.The Appellant averred that the Respondent failed to properly consider documentary evidence submitted during the objection process, failed to verify the CGT return filed by the administrator, and failed to provide sufficient justification for disregarding the evidence. 42.That the decision was therefore procedurally unfair and unreasonable. 43.It was the Appellant’s submission that in Republic v Kenya Revenue Authority ex parte Shake Distributors Ltd, the Court held that administrative decisions made without proper consideration of relevant material are unlawful. V. Failure to account for cost and enhancement expenses 44.The Appellant submitted that the Respondent further erred by disregarding evidence of legal fees, incidental costs, enhancement expense. That under the Income Tax Act, CGT is calculated on the net gain, which is determined after deducting allowable costs. 45.That by ignoring these costs, the Respondent inflated the taxable gain and arrived at an arbitrary assessment. Appellant’s Prayers 46.The Appellant prayed for the following reliefs from the Tribunal:a)That the Honourable Tribunal sets aside in entirety the CGT assessment of Kshs. 22,500,000 issued against the Appellant for the period of October 2022.b)That the Tribunal finds that the subject transaction was conducted by the legal administrator of an estate and is therefore exempt from CGT under Paragraph 36(1)(f) of the First Schedule to the Income Tax Act.c)That the Tribunal finds that CGT was duly declared and paid by the administrator and that any additional assessment amounts to prohibited double taxation.d)That the Tribunal directs the Respondent to cancel the assessment and expunge the liability from the Appellant's ledger.e)That the Respondent bears the costs of this Appeal.f0Any other orders or relief that the Honourable Tribunal may deem just and appropriate. Respondent’s Case 47.The Respondent’s case is premised on the following documents filed before the Tribunal:a)The Respondent’s Statement of Facts dated 14th October 2025 and filed on the same date; andb)Its Written Submissions dated and filed on 30th March 2026. 48.The Respondent stated that Capital Gains Tax (CGT) was calculated and paid using PIN A003222548J of Francis Ndegwa Mwaura who was the administrator of the estate of the deceased. 49.The Respondent further stated that it raised the assessment based on stamp duty paid on 19th October 2022 by Peter Mwaniki Mbugua amounting to Kshs. 6,000,040 for the land LR No. 13330/439, reflecting a purchase of property worth Kshs. 150,000,000, and that there was no proportionate declaration of CGT within the same period. 50.The Respondent averred that it invited the Appellant for an elaborate engagement whereby documents, records and other information were requested from the Appellant for purposes of verifying the correct tax due. 51.The Respondent asserted that the Appellant did not provide the requested documents and therefore the Respondent used its best judgement to raise the respective assessment and demanded the taxes therein. 52.The Respondent stated that the Appellant in their contention letter states that the Respondent’s figures are incorrect and this has led to demand of taxes that are not due since the CGT from the proceeds was paid using estate administrator’s PIN. 53.The Respondent noted that the property was transferred on 19th October 2022 and CGT charged at the rate of 15% of Kshs. 150,000,000 (Kshs. 22,500,000). 54.The Respondent asserted that it had confirmed that Francis Ndegwa Mwaura- A003222548J filed the CGT return on 22nd December 2021 whereby the Appellant is listed as one of the land owners and a CGT of Kshs. 1,136,100 was paid as per the Equity Bank receipt filed on folio 14 which is also visible in his iTax ledger. 55.The Respondent stated that it also reviewed the acknowledgement receipt for the transactions declared and established that indeed CGT for land referenced LR 133330/439 was paid. 56.The Respondent stated that its main concern in reviewing the objection was to verify the correctness of the enhancement costs and the incidental costs to establish the correct capital gain and subsequently, to amend the assessment to the right share of CGT. 57.The Respondent averred that it had working meetings with the Appellant tax representative Mr. Stephen Ngingo on diverse dates and via telephone conversations. The Respondent stated that the Parties agreed that the Appellant should provide sufficient evidence and reconciliations thereof to support the Objection. 58.The Respondent confirmed that the Appellant proceeded to provide it with the property rates payment, legal fees payment, adjusted costs schedule, acknowledgement receipts for transactions declared, CGT payment receipt from Equity Bank, and certificate of title. 59.The Respondent stated that it had also requested for all the records supporting enhancement cost of Kshs. 125,915,590.00, incidental cost on acquisition Kshs. 1,180,000 and other incidental costs of Kshs. 182,500.00 which the Appellant failed to provide. 60.The Respondent averred that due to records insufficiency, it was limited in reviewing the matter and confirmed the assessments as appropriate. 61.The Respondent submitted that there is only one issue for determination by this Honourable Tribunal which issues is identified and analysed as follows: Whether the Appellant has discharged her burden of proof 62.The Respondent relied on the provisions of the Evidence Act, Section 107 which states as follows:“ 107.(1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. (2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.” 63.The Respondent submitted that in any tax court, the taxpayer must show the Commissioner’s determination to be incorrect. That if he succeeds, then the Commissioner must go forward and prove the correct tax liability by a preponderance of the evidence. That this is frequently expressed as a presumption of the correctness of the Commissioner’s determination, with the taxpayer having the burden of proving it incorrect, and if the taxpayer sustains this burden, then the burden of proving the correct amount of tax due shifts to the Commissioner, however, the initial burden on the taxpayer operates separately as to each item making up the deficiency. 64.The Respondent averred that the Appellant did not provide proof to defray the tax liability nor has she provided any proof before this Honourable Tribunal that the assessment is wrong. The Respondent referred to the holding in TAT 101 of 2016 Bemarc Limited vs Commissioner Domestic Taxes, where it was held that: -“ 24.The Appellant in its Statement of Facts at paragraph 14 claims that it provided records for the Commissioner's examination. Again, no evidence of this was availed before the Tribunal. In fact, we find it interest telling that for an individual facing a hefty assessment of Kshs.. 31,489,319.89, the Appellant does not substantively dispute the specific tax issues raised in the additional assessment or the objection decision. This, coupled with the burden placed on the taxpayer by the provision of Section 56 (1) of the Tax Procedures Act, 2015 only serves to buttress our position that the Appellant failed in its responsibility to provide its records and documents for examination by the Respondent.” 65.It was the Respondent’s position that when the Appellant objected to the assessments, the Appellant was under a duty to disprove the workings of the Respondent and to show how the Objection is anchored vis-à-vis how it intertwines with her documentation supplied or relied on. 66.The Respondent concluded that in this case, it is incorrect to say that the Respondent erred in fact and law by disregarding the documentation, explanations and information provided since the documentation and or information provided was not sufficient to warrant all the adjustments sought by the Appellant. Respondent’s Prayers 67.The Respondent prayed that the Tribunal:a)Dismisses the Appeal in its entirety;b)Upholds the VAT claim rejection orders dated 23rd September 2025; andc)Orders the Appellant to pay the costs of the appeal. Issue For Determination 68.The Tribunal has considered the pleadings and the submissions made by the Parties, and considers the issue for determination as follows:Whether the Respondent was justified in issuing an additional CGT assessment. Analysis And Findings 69.The Tribunal proceeds to analyse the issue for determination as hereunder.Whether the Respondent was justified in issuing an additional CGT assessment. 70.The Tribunal delved into whether the Appellant discharged its burden of proving that the Respondent’s assessment was incorrect. 71.The Tribunal preliminarily observes that both Parties had consensus that Francis Ndegwa Mwaura of PIN A003222548J was the administrator of the estate of the deceased which included the land referenced LR 133330/439. It is also not in dispute that upon the transfer of the said property, Capital Gains Tax (CGT) was self-assessed declared and paid on 22nd December 2021 under the PIN of Francis Ndegwa Mwaura on behalf of the five (5) co-owners of the property, one of which is the Appellant. The Respondent subsequently issued the impugned additional CGT assessment against the Appellant. 72.The Tribunal will organise its analysis under the following four limbs:a)Whether the transaction is exempt from CGT;b)Whether the Respondent was justified in demanding the CGT additional assessment from the Appellant;c)Whether the Appellant proved that the assessment was incorrect; andd)Whether the Respondent’s final CGT payable was correct. Whether the transaction is exempt from CGT 73.The Appellant contended that the Respondent erred in law by issuing an assessment of CGT against the Appellant for a transaction that occurred in the context of estate administration, contrary to Paragraph 36(1)(f) of the First Schedule to the Income Tax Act, which exempts such transfers from CGT liability when carried out by a personal representative within the scope of estate administration. The Appellant stated that she is a beneficiary of the estate of her late parents, which included Land Reference Number 13330/439 and that she was not the transferor. 74.Paragraph 36(1)(f) of Part I of the First Schedule to the Income Tax Act draws from Section 13(1) of the Income Tax Act which provides that: -“ 13.(1)Notwithstanding anything in Part II, the income specified in Part I of the First Schedule which accrued in or was derived from Kenya shall be exempt from tax to the extent so specified.” 75.The Tribunal referred to Paragraph 36(1)(f) of Part I of the First Schedule to the Income Tax Act which provides as follows: -“ 36.Such part of the income of an individual, chargeable to tax under section 3(2)(f) as consists of a gain derived from the transfer of– (f)property (including investment shares) which is transferred or sold for the purpose of administering the estate of a deceased person where the transfer or sale is completed within two years of the death of the deceased or within such extended time as the Commissioner may allow in writing:Provided that where there is a court case regarding such estate the period of transfer or sale under this paragraph shall be two years from the date of the finalization of such court case.” 76.The Tribunal notes that the exemption under Paragraph 36(1)(f) of Part I of the First Schedule to the Income Tax Act is not absolute. It is subject to a fundamental timeline condition: the transfer or sale of the estate property must be completed within two (2) years of the death of the deceased, or within such extended period as the Commissioner may allow in writing. The Tribunal, thus considered whether this condition was satisfied. 77.According to Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, the Appellant bore the burden of proving that the transaction was exempted from tax. 78.The Tribunal perused the documents adduced by the Appellant and observes that the Appellant did not present any documentary evidence establishing the death of the deceased, which is the anchor from which the two-year timeline under Paragraph 36(1)(f) of Part I of the First Schedule to the Income Tax Act. In the absence of this evidence, the Tribunal cannot establish whether the transfer of the property on 19th October 2022 was completed within the prescribed two-year period, or whether the Commissioner granted any written extension of time. 79.The Tribunal thus finds that the Appellant did not discharge her burden of proof, and therefore, failed to demonstrate that the transaction was exempt from CGT Paragraph 36(1)(f) of Part I of the First Schedule to the Income Tax Act. Whether the respondent was justified in demanding the CGT additional assessment from the appellant 80.The Appellant further disputed the assessment arguing that the Respondent erred by imposing tax liability on the Appellant who was neither the legal transferor nor the person responsible for the sale. The Appellant contended that tax liability should properly have been attributed to the administrator. 81.The Tribunal refers to Section 11 of the Income Tax Act which specifies in whose hands income chargeable to tax should be taxed. It provides as follows: -“ 11.(1) Any income chargeable to tax under this Act and received by any person in his capacity as a trustee, executor or administrator, shall be deemed to be income of that trustee, executor or administrator as the case may be.” 82.Having established that the CGT gain is taxable income, it follows that since Mr. Francis Ndegwa Mwaura of KRA PIN A003222548J is indisputably the administrator of the estate of the deceased, which estate included the transferred land referenced LR 133330/439, the Tribunal finds that the CGT gain was properly attributable to, and ought to have been demanded from the administrator in accordance with Paragraph 11 of the Income Tax Act. 83.The Respondent therefore erred in directing the additional CGT assessment at the Appellant in her individual capacity. Whether the appellant proved that the costs it deducted were supported. 84.The Respondent confirmed the CGT assessment on the Appellant on the basis that there was records insufficiency which limited it in reviewing the matter. The Respondent stated that its main concern in reviewing the objection was to verify the correctness of the enhancement costs and the incidental costs to establish the correct capital gain and subsequently to amend the assessment to the right share of CGT. 85.The Respondent confirmed that the Appellant provided it with the property rates payment, legal fees payment, adjusted costs schedule, acknowledgement receipts for transactions declared, CGT payment receipt from Equity Bank, and certificate of title. The Respondent stated that it had requested for all the records supporting enhancement cost of Kshs. 125,915,590.00, incidental cost on acquisition Kshs. 1,180,000 and other incidental costs of Kshs. 182,500.00 which the Appellant failed to provide. 86.The Appellant, on the other hand, averred that the Respondent failed to properly consider documentary evidence of legal fees, incidental costs, enhancement expense submitted during the objection process, failed to verify the CGT return filed by the administrator, and failed to provide sufficient justification for disregarding the evidence. That by ignoring these costs, the Respondent inflated the taxable gain and arrived at an arbitrary assessment. 87.The Tribunal observes that the Respondent in its Objection decision acknowledged receipt of property rates payment, legal fees payment, adjusted costs schedule, acknowledgement receipts for transactions declared, CGT payment receipt from Equity Bank, and certificate of title. The Respondent, however, stated that it had requested for all the records supporting enhancement cost of Kshs. 125,915,590.00, incidental cost on acquisition Kshs. 1,180,000 and other incidental costs of Kshs. 182,500.00 which the Appellant failed to provide resulting in the Respondent confirming the assessment as issued. 88.The burden of proof lies on the taxpayer to prove that a tax decision is incorrect or excessive under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act which provide as follows: -Section 56(1) of the Tax Procedures Act“ 56.(1)In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”Section 30 of the Tax Appeals Tribunal Act: “ 30.In a proceeding before the Tribunal, the appellant has the burden of proving—(a)where an appeal relates to an assessment, that the assessment is excessive; or(b)in any other case, that the tax decision should not have been made or should have been made differently.” 89.Paragraph 4 of the Eighth Schedule to the Income Tax Act provides as follows regarding the computation of capital gains: -“ 4.(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.” 90.It was thus the onus of the Appellant to prove with substantive documentation that the costs queried by the Respondent were actually incurred and supported. The burden of proof further lied on the Appellant to prove that it had provided the documents and information it alluded to in its pleadings and alleged to have provided to the Respondent at the Objection stage which the Respondent allegedly ignored in arriving at the Objection decision. 91.The Tribunal perused the Appellant’s record of appeal and notes that the Appellant attached only the following documents in support of its appeal:a)Land rates receipts amounting to Kshs. 195,220;b)Monthly residential rental income tax payment slips and bank receipts for August 2020 and September 2020;c)Certificate of title of land referenced LR 13330/439;d)CGT return dated 22nd December 2021;e)Equity Bank payment receipt for payment of CGT of Kshs. 1,136,100 on 22nd December 2021; andf)The Objection decision dated 14th January 2025. 92.The Tribunal notes that the Appellant stated in her pleadings that she had annexed to its Appeal, the Grant of Letters of Administration issued to Francis Ndegwa Mwaura, Sale Agreement and acknowledgment documents for LR No. 13330/439, Legal fee invoice and receipts for incidental costs, Adjusted schedule of enhancement costs and Objection application dated 18th November 2024, however these documents were not provided to the Tribunal. 93.For the above reasons, the Tribunal was not able to correlate the land rate receipts to the costs that the Appellant’s administrator claimed in the CGT return as no correlation was expressly drawn between the documents adduced and the costs claimed. Further, the Tribunal did not find the relevance of the monthly residential rental income tax payment slips and bank receipts for August 2020 and September 2020 to the impugned assessment. 94.The Tribunal is guided by the case of CMC Aviation Ltd V Cruisair Ltd (1) [1978] KLR 103 where Madan J. held that: -“Pleadings contain the averments of the parties concerned. Until they are proved or disproved, or there is an admission of them or any of them, by the parties, they are not evidence and no decision could be founded upon them. Proof is the foundation of evidence. Evidence denotes the means by which an alleged matter of fact, the truth of which is submitted for investigation. Until their truth has been established or otherwise, they remain un-proven. Averments in no way satisfy, for example, the definition of “evidence” as anything that makes clear or obvious; ground for knowledge, indication or testimony; that which makes truth evident, or renders evident to the mind that it is truth.” 95.The Tribunal observes that the Appellant failed to present substantive documents to the Tribunal to prove that the costs it deducted were supported, as such, the Appellant did not discharge her burden of proof. Whether the respondent’s final cgt payable was incorrect. 96.The Appellant submitted that the Objection decision is unreasonable and excessive and fails to account for the prior CGT payment. 97.The Tribunal is of the view that the correctness of the CGT assessment amount is fundamental to determination of this dispute. Therefore, the Tribunal examined whether the Respondent applied the correct CGT rate in computing the additional assessment, and whether the Respondent considered the CGT payment made on 22nd December 2021 in its demand for additional CGT. 98.It is not in dispute that the date of the transfer of the property that is the basis of the CGT assessment was 19th October 2022. 99.The Respondent disallowed the entire incidental costs to transferor on the transfer of Kshs. 182,500 and adjusted costs of Kshs. 127,095,590 that were deducted by the Appellant to arrive at the self-assessed capital gain and corresponding CGT in respect of the transfer of the property. The transfer value of the property was Kshs. 150,000,000, therefore the Respondent’s computed capital gain was Kshs. 150,000,000. The Respondent then computed the CGT assessment at the rate of 15% of Kshs. 150,000,000 to arrive at the principal CGT additional assessment of Kshs. 22,500,000. 100.The Tribunal, however, notes that the Respondent applied an incorrect CGT rate. At the time of transfer on 19th October 2022, the applicable CGT rate was 5%, not 15%. Section 34(1)(j) of the Income Tax Act until 31st December 2022 read: -“ 34.(1)… (j)tax upon the capital gains of a person charged under section 3(2)(f) shall be charged at the rate of five percent and shall not be subject to further taxation.” 101.The CGT rate of 15% of the capital gain only became effective from 1st January 2023 following the operationalization of Section 15(a) of the Finance Act, 2022 which amended Section 34(1)(j) of the Income Tax Act as follows:“ 15.(a)in subsection (1), by deleting the expression “five per cent” appearing in paragraph (j ) and substituting therefor the expression “fifteen per cent” 102.The Tribunal additionally notes that the Respondent’s default assessment order dated 27th February 2023, which the Respondent annexed to its Statement of Facts, contains an obvious internal inconsistency. The assessment order form records the CGT rate as 5%, which is consistent with the date of transfer of 19th October 2022 that the Respondent correctly input, yet the assessment amount of Kshs. 22,500,000 is only explainable if the rate applied is 15% of Kshs. 150,000,000, or if a capital gain of Kshs. 450,000,000 was incorrectly put as the Respondent did in this case. The internal inconsistency further reinforces the Tribunal’s finding that the Respondent misapplied the CGT rate. 103.Further, the Respondent acknowledged in its pleadings that Francis Ndegwa Mwaura- A003222548J had filed a CGT return on 22nd December 2021 and paid CGT of Kshs. 1,136,100 for land referenced LR 133330/439 as per the Equity Bank receipt on record. Notwithstanding this acknowledgment, the Respondent’s Objection decision did not credit the CGT demand with this prior payment of Kshs. 1,136,100. 104.Based on the foregoing, the Tribunal finds that the Respondent’s CGT demand was incorrect and excessive on two grounds: first, the assessment was computed at the wrong CGT rate, and second, the CGT demand did not credit the CGT of Kshs. 1,136,100 already paid in respect of the gain from the same transfer of property. 105.Drawing from the above analysis, the Tribunal finds that while the Respondent was in principle justified in issuing an additional CGT assessment, the assessment as issued and confirmed was incorrect and excessive, and is accordingly subject to the necessary adjustments identified above. Final Decision 106.The upshot of the above analysis is that the Tribunal finds that the Appeal is partly merited. The Tribunal accordingly proceeds to issue the following Orders:a)The Appeal be and is hereby partially allowed.b)The Respondent’s Objection decision dated 14th January 2025 be and is hereby varied in the following terms:i.The Respondent be and is hereby ordered to revise the CGT assessment on the gain on the transfer of the property by applying the CGT rate of 5%.ii.The Respondent be and is hereby ordered to revise the CGT payable by deducting the CGT of Kshs. 1,136,100 already paid on 22nd December 2021.iii.The Respondent be and is hereby ordered to demand the revised CGT payable on the transfer of land referenced LR 133330/439 on 19th October 2022 from the CGT declarant, being Mr. Francis Ndegwa Mwaura of KRA PIN A003222548J, who is the administrator of the estate of the deceased persons.c)The Respondent be and is hereby ordered to comply with Order b) above within sixty (60) days of the date of delivery of this judgment.d)Each party to bear its own costs. 107.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 2ND DAY OF JUNE 2026.……………………………ROBERT M. MUTUMACHAIRMAN……………………………… ……GLORIA A. OGAGAMEMBER……………………………..….DR. TIMOTHY B. VIKIRUMEMBER……………………………..….JIMMY M. MALLAMEMBER