RRA vs SDV RTANSAMI

# RRA vs SDV RTANSAMI

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2016-04-22 - Case/document no.: RCOMA 0156/12/CS - Collection: Supreme Court

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RWANDA REVENUE AUTHORITY v. SDV TRANSAMI RWANDA [Rwanda SUPREME COURT – RCOMA 0156/12/CS (Mukanyundo, P.J., Rugabirwa and Ngagi, J.) 22 April 2016] Interpretation of law – The contradictory versions of languages of law – It is the interests which are found in Kinyarwanda version of 51(2) of Law No 16/2005 of 18/08/2005 on direct tax on income that reflect the intention of the legislator since it is that language in which laws are adopted – The Constitution of the Republic of Rwanda of 4 June 2003, article 93. Tax law – Tax withholding – Who fails to withhold the tax on interest on income pays it on his/ her/ its own – Law No 16/2005 of 18/08/2005 on direct tax on income, articles 32, 32 and 51 and Law N° 25/2005 of 04/12/2005on tax procedure, article 48 and 53. Tax law – Non-retroactivity of tax law – The payment of tax must be done in accordance with Law which were into effect at the time of tax audit because tax law id nor retroactive Tax law – Penalties – The failure to withhold tax implies failure to make tax audit and hence not paid it, therefore such a taxpayer must be punished – Law No 16/2005 of 18/08/2005 on direct tax on income, articles 48 and 51 and Law N° 25/2005 of 04/12/2005on tax procedure, article 60. Damages – Procedural and advocate fees – The applicant cannot be denied of those damages on the mere fact that the claim has merit in part because he/ she/ it wins the case in general. Tax law – Profit on commercial activities – Land depreciation – Paved ground and the ground which is not paved are not taxed in the same way since the former depreciates, hence the tax which was imposed without taking into account the depreciation must be waived and be recomputed since in the course of computation of business profit, the depreciation is deducted from taxable income – Law No 16/2005 of 18/08/2005 on direct tax on income, article 24. Damages – Advocate and procedural fees cannot be awarded in this proceeding since each part lost the case in part. Facts: This case arose from the tax on land which was purchased by SDV TRANSAMI Rwanda in 2008 from RWANDEX. This land was comprised of a part with buildings and another part unconstructed concrete paved ground. It was purchased on 1.000.000 USD. It rose also from another tax on income for the interest on loan that SDV TRANSAMI Rwanda had paid to STANBIC Bank Kenya. On October 12, 2011 SDV TRANSAMI Rwanda was given a final audit report demonstrating that it had to pay the tax of 134.169.199 Frw which includes tax on income, value added tax PAYE and a withholding tax of 15% on the years 2008 and 2009. SDV TRANSAMI Rwanda appealed that tax to the Commissioner General but the tax was not reduced and, rather, it was responded that the imposed tax must be paid with possible fee for late payment till it will be paid.

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SDV TRANSAMI Rwanda filed a claim before the Commercial High Court claiming that the expertise which served as the ground to impose the tax was erroneous and it led it to being imposed to pay excessive tax. The Court held that its claim has merit in part and it ordered that the withholding tax of 13.284.299 Frw on the year 2008 and that the withholding tax of 9.938.198 Frw of the year 2009 be waived while on other taxes the decision of the Commissioner General was upheld. The Court further decided that the tax on income of the year 2009 equivalent to 109.248.480 Frw is not changed and that the depreciation on the year 2008 of 19.702.689 Frw and that of 2009 of 54.356.232 Frw are not allowed. It condemned Rwanda Revenue Authority to pay 300 000 Frw to SDV TRANSAMI Rwanda for damages. Rwanda Revenue Authority appealed to the Supreme Court claiming that the Commercial High Court disregarded the provisions of the law and held that SDV TRANSAMI Rwanda was not under obligation of withholding tax of 15% of the year 2009 and another of 9.938.198 Frw for the year 2009 because it was not an employee of STANBIC Bank Kenya. Rwanda Revenue Authority states further that the Court condemned it to pay damages of 300 000Frw while the claim of SDV TRANSAMI Rwanda had merit in part and, hence, as the trigger of the proceeding had not to be awarded damages. SDV TRANSAMI Rwanda responded that the provision of the law that is said to order them to withhold tax only a part of it was read and hence must not be based on in the proceeding because SDV TRANSAMI Rwanda is not an employee of STANIBIC Bank Kenya. It claimed further that the penalties imposed by Rwanda Revenue Authority were unlawfully inflicted. Held: 1. The fact that article 51(2) of Law No 16/2005 of 18/08/2005 on direct tax on income sow confusion in terms of drafting whereby in Kinyarwanda version reads ''inyungu irihwa ku mafaranga yabikijwe'' [interests on the deposit] while in English there only it reads ''interests'' while in French it reads ''les paiements d'intérêts sur les dépôts'' while the Constitution of the Republic of Rwanda of 4 June 2004 in line with the mode of adoption and preparation of laws it provides that all laws shall be considered and adopted in Kinyarwanda or in the language of preparation in respect of any of the official languages. In case of conflict between the three official languages, the prevailing language shall be Kinyarwanda or the language that was used in the drafting of the law implies that with regard to the withholding tax on interests of 15% on loan, the provisions of Kinyarwanda version are the exact translation of French version and hence, the intention of the legislator is found in Kinyarwanda version since it is the language in which laws are adopted. Therefore, the interest that must be understood in that article is interest paid on the deposits which is different from interests paid on loan. 2. The fact that the legislator had forgotten to incorporate interest on loan in article 51 of Law N° 16/2005 of 18/08/2005 on direct tax on income is not ground to not pay the tax that it failed to withhold since the debtor who pays interest on loan must withhold such tax on the rate of 15%. 3. In imposing tax, the Law which was into effect at the time of audit conducted for SDV TRANSAMI Rwanda and hence imposed the tax of 13.284.299 Frw which it failed to withhold on the years 2008 and 9.938.198 Frw for the year 2009 must serve as the basis because tax law is not retroactive except if it was directly specified by the legislator.

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4. The fact that SDV TRANSAMI Rwanda had not withheld the withholding tax implies that it could not even make declaration and pay tax to the tax administration; hence it must be penalized. 5. He cannot request the Court to deny damages for the plaintiff due to the fact that his requests were not all granted because, the fact that the Court found that one of his requests was founded is not could not be the cause of not awarding procedural and advocate fees since in general SDV TRANSAMI Rwanda won the case. 6. In the course of computation on business profit’s commercial activities, the depreciation for a property must be deducted from taxable income. Hence, the fact that the concrete pavement will once get old and hence necessitate rehabilitation or reconstruction implies that the tax on income of the year 2009 equivalent to 109.248.480 Frw that was imposed to SDV TRANSAMI Rwanda must be waived and be recomputed in accordance with the concrete paved part which depreciate. It must be done further after the Tax Administrators will have looked into the mode of accounting under which the depreciation thereto. 7. No procedural or advocate fees must be awarded in this proceeding because each part lost the case in part. Appeal filed by Rwanda Revenue Authority has merit in part. Cross appeal has merit in part. Appealed judgment is changed in part. Rwanda Revenue Authority is ordered to recount the tax of the year 2009 in connection the concrete paved land of SDV TRANSAMI Rwanda taking into account depreciation. Orders SDV TRANSAMI Rwanda to pay the tax that it failed to withhold but computed in accordance with the Law which was into effect at the time. The deposited money for the security of the court fees is equivalent to the cost of the work on the proceeding. Statutes and statutory instruments referred to: The Constitution of the Republic of Rwanda as amended to date, article 93. Law nº 25/2005 of 04/12/2005 on tax procedures, article 53, 48 and 60. Law nº 16/2005 of 18/08/2005 on direct tax on income, articles 24, 32, 33 and 51 No case referred to Judgment I. BRIEF BACKGROUND OF THE CASE [1] This case emanates from the tax on land that SDV TRANSAMI Rwanda purchased from RWANDEX. This land was composed of buildings and the ground for coffee drying floor. SDV TRANSAMI Rwanda purched it in 2008 on the price of 1.000.000 USD equivalent to 550.000.000 Frw. There was also another tax on interest on loan that SDV TRANSAMI Rwanda

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paid to STANBIC Bank Kenya. After a certain time with full ownership over that land, Rwanda Revenue Authority, on October 12, 2011, issued to SDV TRANSAMI Rwanda the final audit report on tax on interests, on value added tax, on PAYE and the withholding tax of 15% and the totality is 134.169.199 Frw on the years 2008 and 2009. [2] Not satisfied of the imposed tax, SDV TRANSAMI Rwanda appealed to the Commissioner General and he/ she replied denying the reduction of the tax and that it had immediatelt to pay with possible fee for late payment. [3] SDV TRANSAMI Rwanda referred the case to the Commercial High Court claiming that the expertise that was grounded for imposing tax was containg errors and it led to overstating the due tax. The Court ruled the case and issued the judgment nº RCOM 005/12/HCC holding that the claim of SDV TRANSAMI Rwanda has merit in part and ordered the waiver of the withholding tax of 13.284.299 Frw on the year 2008 and the withholding tax of 9.938.198 Frw on the year 2009 whiole on other taxes, it held that the decision of the Commissioner General must be upheld. It decided further that the depreciation on the year 2008 of 19.702.689 Frw and that of the year 2009 on 54.356.232 Frw is not granted. It ordered Rwanda Revenue Authority to pay to SDV TRANSAMI Rwanda 300.000 Frw for damages. [4] Rwanda Revenue Authority appealed to the Supreme Court claiming that the Commercial High Court confirmed, with regard to the tax of 15% equivalent to 13.284.299 Frw on the year 2008 and another of 9.938.198 Frw on the year 2009 which SDV TRANSAMI Rwanda did not withhold, that the Court decided that SDV TRANSAMI Rwanda had no ground to withhold that tax since it was not the employer of STANBIC Bank Kenya without taking into account its defence which demonstrates that Law nº 16/2005 of 18/08/2005 on direct tax on income orders those who pay interest on loan to withhold that tax failure of which leads to defaulters to pay it in his/her or its own account Rwanda Revenue Authority states further that the Court condemned it to pay damages of 300.000 Frw while it had found out that the claim of SDV TRANSAMI Rwanda had merit in part, which means that no damages had to be awarded because it is SDV TRANSAMI Rwanda which triggered the proceeding. [5] The hearng in an open court took place in an open court on March 15, 2016. Rwanda Revenue Authority was represented by Mugire Joseph while SDV TRANSAMI Rwanda was represented by Nsengiyumva Abel. II. ANALYSIS OF LEGAL ISSUES A. APPEAL OF RWANDA REVENUE AUTHORITY 1. Whether SDV TRANSAMI Rwanda had to withhold 15% of loan interests that it paid to STANBIC Bank Kenya

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[6] Mugire Joseph, counsel for Rwanda Revenue Authority states that the Court confirmed that SDV TRANSAMI Rwanda cannot withhold the tax of 15% since it is not an emplaoyer of STANBIC Bank Kenya while this tax does not only withheld by the employees but also by the debters who pay interest on loan that they acquire from banks. It is further paid by individuals withing the country, local institutions including those which are exempted from paying taxes. [7] He explained that SDV TRANSAMI Rwanda had to withhold the tax interests that it paid on the loan it had acquired from STANBIC Bank Kenya equivalent to 13.284.299 Frw on the year 2008 and 9.938.198 Frw on the year 2009 by virtue of the provisions of article 511 of Law n° 16/2005 of 18/08/2005 on direct tax on income and after comply with the provisions of article 53 (1)2 of the aforementioned Law which provides that the taxpayer must declare and pay it to the Administration of Tax within 15 days following the end of evry month as provided in paragraph 2 of article 483 of the aforemntioned Law. The fact that SDV TRANSAMI Rwanda did not do that implies that it must do it from its own account as provided for by article 53 (1) of this Law. [8] He exp-lained further that the fact that SDV TRANSAMI Rwanda did not file tax declareation, the cause it was fined with five hundred thousand (500.000 Frw) every month in accordance with article 60 of Law nº 25/2005 of 04/12/2005 on tax procedure and he was also fined for failure to withhold the withholding tax which is provided for by article 61 of the aforementioned Law. He stressed further that that failure to withhold le dit to being fined with 10% for fee for late payment of tax in addition to the fine of understatement of tax which is provided for by article 62 and that at that time the penalties were still fixed at 100%. This means 1 Article 51 (1) of Law Nº 16/2005 of 18/08/2005 2005 on direct taxes on income at the time taxes under contention were levied provides that a withholding tax of fifteen (15%) percent is levied on the following payments made by resident individuals or resident entities including tax-exempt entities: 1° dividends, except those governed by Article 45 of this law; 2° interests; 3° royalties; 4° service fees including management and technical service fees; 5° performance payments made to an artist, a musician or an athlete irrespective of whether paid directly or through an entity that is not resident in Rwanda; 6° lottery and other gambling proceeds. 2 Article 53(1) of Law Nº 16/2005 of 18/08/2005 2005 on direct taxes on income a withholding agent who fails to withhold tax in accordance with this law is personally liable to pay to the Tax Administration, as provided for by paragraph 2, Article 48 of this law, the amount of tax which has not been withheld including penalties and interest on arrears. […] 3 Article 48 of Law Nº 16/2005 referred to above provides regarding PAYE as highlighted by the title of that article provides that the following persons are obliged to withhold and pay tax on employment income: 1° an individual or an entity that pays its employees in cash or benefits in kind; 2° an entity that pays out pensions excluding pensions paid according to procedures of the State Social Security; A person mentioned in paragraph one of this Article and paying employment income as mentioned in Article 13 of this law, bears responsibility for withholding tax and paying the tax to the Tax Administration. If he or she fails to do so, he or she is obliged to pay the tax in addition to fines and penalties thereof. Tax-exempt income is exempt from withholding. An employer that is subject to withholding tax in accordance with paragraph one of this Article must, within fifteen (15) days following the end of each month: 1° file a tax declaration through procedures specified by the Commissioner General and transmit the tax withheld to the tax administration; and 2° transmit to the employee a statement indicating his/her name, the amount and type of income and the amount of tax withheld and paid.(…).

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that he was imposed to pay the principal tax of every month and a fine for understatment which is the equivalence of the understated tax. [9] Further he made clear that the statement that the income was understated must be understidd in two aspects : to not pay the whole or part of it. Asked whether the aspect under which SDV TRANSAMI Rwanda understated it, he replied that it understated it because whoever does not file declaration at all understates the tax which must be deposited in the public fund, the reason why after it was levied he was also penalized. [10] Asked what he had to say about article 53 of Law n° 16/2005 of 18/08/2005 which is in connection with its article 48 about PAYE, he responded that these provisions do not remove the provisions of article 51, the the base for imposition. He added rather that article 48 which is bout the procedure is common to the provisions of both articl 48 and 51 and that article 51 clearly shed light to the payable tax, He explained that the inetntion of the legislator in article 48 was the procedure about the payment of tax. He argued that article 53 sets penalties but, while paying that tax, the provisions of article 48 apply. He explained that it is on this point whereby the Court committed an error by holding that SDV TRANSAMI Rwanda was not under obligation of withholding that tax because it was not an employee of STANBIC Bank Kenya instead of considering only that it was under that obligation for the mere purpose of it was paying interest on the loan that it had acquired as provided for by article 51 of the aforementioned Law. [11] On the other hand, with regard to the penalty of 500.000 Frw which is provided for by the Law which came into forcve after the case, he explained that in the year 2008 article 60 of Law nº 25/2005 of 04/12/2005 as mentioned above punishes the taxpayer who does not declare tax, but the Court would examin it while assessing whether SDV TRANSAMI Rwanda did not declare tax. Asked whether SDV TRANSAMI Rwanda had to give notice of its failure towithhold tax or it had to give notice of the tax it did not withhold, he responded that article 62 places the taxpayer under obligation of filing tax declaration, and also if it did not withhold, he had to to give notice of its failure. He asserted further that SDV TRANSAMI Rwanda committed the crime of understating tax because the fact of not filing declaration and not withholding tax led to the diminution of the tax which was supposed to be deposited in the public fund and hence must suffer punished. [12] Nsengiyumva Abel, counsel for SDV TRANSAMI Rwanda asserted that counsel for Rwanda Revenue Athority had read a part of article 53 of Law nº 16/2005 of 18/08/2005 since this article which provides that the provisions of article 48 paragraph 2 apply, only concern PAYE. Hence, it cannot be based on in this proceeding because SDV TRANSAMI Rwanda is not an employer of STANBIC Bank Kenya. He added further that a fixed fine of (500.000 Frw) which was imposed to SDV TRANSAMI Rwanda is unlawful since the Law which provides for it was enacted in 2012 while the tax in issue is of the years 2008 and 2009. [13] He continued arguing that the penalties imposed by Rwanda Revenue Authority based on article 60, 61 and 62 of Law nº 25/2005 of 04/12/2005 as mentioned above were unlawfully imposed since an a taxpayer cannot be punished for having failed to withhold the tax and the same way around for having failed to file its declaration because failure to withhold it leads to impossibility of declaration. In addition, penalties for understatement does not apply to the taxpayer who did not file declaration since it would be inoperative to understate the tax that was

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not withheld. Instead, he added, SDV TRANSAMI Rwanda must be imposed to pay the principal tax and fee for late payment only. THE VIEW OF THE COURT [14] Article 51(1) of Law n° 16/2005 of 18/08/2005 on direct tax on income which was into effect at the time of the the taxes in issue were imposed provides that A withholding tax of fifteen (15%) percent is levied on the following payments made by resident individuals or resident entities including tax-exempt entities: 1° dividends, except those governed by Article 45 of this law; 2° interests; 3° royalties; 4° service fees including management and technical service fees; 5° performance payments made to an artist, a musician or an athlete irrespective of whether paid directly or through an entity that is not resident in Rwanda; 6° lottery and other gambling proceeds. [15] The Court finds that the drafting of article 51 (2°) of Law 16/2005 of 18/08/2005 as mentioned above sows confusion for the users of this article because it is understood in the different way to the kinyarwanda version which is drafted, "inyungu irihwa ku mafaranga yabikijwe" it is [interest paid on the deposit] while in English version it is drafted, "interests" while in French version it is drafted "les paiements d’intérêts sur les dépôts" only. From here the issue about the language to pick to know the meaning that the legislator wanted to give to the law may be raised. [16] Article 93 of the Constitution of the Republic of Rwanda of 4 June 2003 as amended which was into effect till the time of tax audit conducted for SDV TRANSAMI Rwanda provides that and imposed the tax of 2008 and 2009, which is under litigation in this proceeding, in line with the adoption of Laws, provides that all laws shall be considered and adopted in Kinyarwanda or in the language of preparation in respect of any of the official languages. In case of conflict between the three official languages, the prevailing language shall be Kinyarwanda or the language that was used in the drafting of the law. [17] Based on the provisions of article 93 of the Constitution, the Court finds that with regard to the withholding tax on interest on loan of 15% Kinyarwanda version coincedes with the provisions in French version. Therefore, the fact that laws are considered and adopted in Kinyarwanda implies that it is the provisions of that language which must be considered as the intention of the legislator. Hence, interests referred to in article 51 (2º) of Law 16/2005 of 18/08/2005 mentioned above is "interest paid on the deposit" which is different from the withholding tax on interests which are paid on loan which is the bject of litigation in this case. [18] Article 33 of Law nº 16/2005 of 18/08/2005 as aforementioned provides that interest income, as mentioned in Article 32, is subject to a flat tax of fifteen percent (15%). If payment of interest was subject to reduction of withholding tax as stipulated in Article 51 of this law, the taxpayer shall not pay a tax does not pay tax on income under in Article 32 of this law. [19] Article 32 referred to in the previous paragraph provides that interest income include interest on loan, on the deposits, on securities and the money on the current account…the Court finds that as it has been incorporated in article 51 of the aforementioned law, the Legislator has forgotten to to recall the elements of income on interest as it was referred to in article 33 since it

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was only legislated the interest deriving from the deposits and it is very clear that he had forgotten the interest on loan, on securities and the money on the current accounts while the drafting of article 33 had referred to article 51. [20] The Court however finds that, the fact that the legislator had forgotten to incorporate the interests on loan in article 51 is not the justification for the taxpayer who must withhold that tax not to pay it in case he/ she/ it failed to do that because article 33 as referred to above and the precedent ones demonstrate clearly that the debtor who pay the interest on loan must withhold that amount of 15%. Therefore, the fact that article 53 of Law nº 25/2005 on tax procedure refers to article 48 (2) has no relationship with the merit of the tax, instead, the legislator wanted to those under obligation of withholding tax on source either employers or the debtors who pay interests on loan and so other individuals he/ she listed, while withholding, they must comply with the provisions of rticle 48. [21] The Court finds that SDV TRANSAMI Rwanda must pay pay the imposed tax based on the provisions of article 53 which is referred to above which provides that an individual under obligation of withholding tax who did not do so in accordance with this Law he is individually liable of paying it to the Tax Administratot in addition to the penalties and fee for late payment. The demand of the payment referred to in this article is considered as all other taxes in connection to article which permits the taxpayers to accept tax imposed or to be refunded the excess withhold tax and paid. [22] With regard to the quantum of the tax that they have to pay, the Court finds that the Law which was into effect at the time of audit conducted against SDV TRANSAMI Rwanda and thenn be imposed to pay the tax of 13.284.299 Frw which it failed to withhold on the year 2008 and 9.938.198 Frw which also failed to withhold on the year 2009 since in principle tax law does not retroact (non retroactivity of tax law) except if the legislator had indirectly legislated it. [23] The Court finds that the fact that SDV TRANSAMI Rwanda did not withhold the tax implies that it could neither declare it nor it paid the Tax Administration as provided for by article 48 and 53 of Law nº 16/2005 of 18/08/2005 referred to above, Hence, it must be penalized in accordance with the provisions of article 60 of Law nº 25/2005 of 04/12/2005 which was into effect at the time it had to do it. 2. Whether Rwanda Revenue Authority had not to be ordered to pay damages as the case was win-win. [24] Mugire Joseph, counsel for Rwanda Revenue Authority states that the Court condemned Rwanda Revenue Authority to pay damages of 300.000 Frw while it found out that the claim filed by SDV TRANSAMI Rwanda has merit in part. He added that the fact it was not awarded all of its requests, had to be then no damages had to be awarded since it played a role in triggering the proceeding. [25] Nsengiyumva Abel, counsel for SDV TRANSAMI Rwanda states that this ground of appeal has no merit because if Rwanda Revenue Authority had complied with the Law, SDV TRANSAMI Rwanda could not have referred the case to the Court and hence hire an advocate. Threfore, the money that Rwanda Revenue was condemned to pay matches with the ground on which SDV TRANSAMI Rwanda won, which is the reason why it was awarded a little money.

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THE VIEW OF THECOURT [26] The Court finds that in the judgment nº RCOM 0005/12/HCC as appealed, SDV TRANSAMI Rwanda was the plaintiff requesting the waiver of the tax that was imposed to pay and the Court found after assessment that its claim had merit apart from one ground in connection with the admission of depreciation of the year 2008 and 2009. It order therefore that it be awarded procedural and advocate fees because it referred the case to the court due to the decision of the Commissioner General who had denied to waive the tax while now it is waived. However, the fact that it does not give evidence of the damages it requests, they awere awarded in the discretion of the Court. [27] The Court finds that the arguiments of Rwanda Revenue Authority that SDV TRANSAMI Rwanda should not be awarded because all its requests were not granted because it triggered the proceeding cannot be considered because the fact that all requests of SDV TRANSAMI Rwanda were assessed by the Court and found that only one was not founded could not stopping it to award procedural and advocate fees since in general it won the case. B. CROSS APPEAL FILED BY SDV TRANSAMI RWANDA [28] Nsengiyumva Abel, counsel for SDV TRANSAMI Rwanda states that cross appeal they filed about the waiver of the income tax of the year 2009 of 109.248.480 Frw since it was computed based on regardless of depreciation allowance and hence is not in accordance with the Law since the loss of the year 2008 was carried out on the year 2009 and hence increased the imposable tax of the year 2009. [29] He explained further that on the issue of whether the ground in issue depreciable ground since the report of expert specify the value of the cemented ground coffee cemented drying floor. The report specifies that it is not a land as such. Aske whether the built land is the same as the unbuilt land, he replied that in accounting, they are two different things since the built land is subject to depreciation while the unbuilt land is never get old and hence not subject to depreciation whis means that a part of built land and a cemented ground cannot be considered as unbuilt land since the former is it gets older and be rebuilt or mended. In its appeal agains, SDV TRANSAMI Rwanda requests advocate fees equivalent to 1.000.000 Frw. [30] Mugire Joseph, counsel for Rwanda Revenue Authority states that SDV TRANSAMI Rwanda contadict himself with regard to the issue of the case since on the first instance SDV TRANSAMI Rwanda states that there was error which occured in the determination of the value of the land because it was valued on the price other than unitary one as demonstrated by expertise report on page 5. He added that the fact that that land is a concrete pavement does not remove its aspect of being a and that their agruiments of value added to that land are not supported by evidence. [31] With regard to cross appeal filed by SDV TRANSAMI Rwanda requesting damages, counsel Mugire Joseph states that SDV TRANSAMI Rwanda is not worthy of being awarded of them since it is it [SDV TRANSAMI Rwanda] which involved itself in unjustifiable proceedings since Rwanda Revenue Authority infrenged no Law when it imposed the tax. Instead, they

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request SDV TRANSAMI Rwanda to pay damages amounting to 1.500.000 Frw because it made Rwanda Revenue Authority squander its time when it was dragged into unjustified proceedings. THE VIEW OF THE COURT [32] In the determination of business profit, depreciation for business assets is deducted from taxable profits by the owner of those assets. Land, fine arts, antiquities, jewellery and any other assets that is not subject to wear and tear or obsolescence are not depreciated. The cost of acquisition or construction and the cost of refining, rehabilitation, reconstruction of buildings(…) equipment and plants are depreciated annually each on its own, on the basis of the rate of depreciation which is equivalent to five per cent (5%) of the cost price. [33] The Court notes that both parties agree on the fact that the ground under contention is concrete pavement and the disagreement comes on the allegations of Rwanda Revenue Authority that all lands are the same either concrete pavement or not paved. To it, all lands are the same, and there is no difference between the two in the matter of taxation as land cannot depreciate. To SDV TRANSAMI Rwanda, the land with no activity thereon cannot be considered as lad with concrete pavement because at given period, it depreciates and needs rehabilitation or rebuilt and it lose its value as the time elapses. Hence the ground with concrete pavement must be allowed depreciaion during taxation. [34] As it is embodied in article 24 of Law nº 16/2005 of 18/08/2005 above mentioned, the Court finds that the land with no with no activity being carried thereon cannot depreciate in reality, however this article in its other lines states that the price for rehabilitation, reconstruction depreciate anually. In line with this case, the Court finds that the ground with conrete pavement that SDV TRANSAMI Rwanda purchased from RWANDEX must be allowed depreciaition because, in ccordance with its nature, as time elapses, the pavement will get older and i twill necessitate rehabilitation or reconstruction. Therefore, tax on income on the year 2009 equivalent to 109.248.480 Frw that SDV TRANSAMI Rwanda is imposed must be quashed and be recomputed on the ground that a part with pavement depreciates and this must be done after Tax Administrators will have taken into account the mode of determination of depreciation by accountants. [35] With regard to theunitary price in determination of the value of the land per square meter, the Court finds that, as found by the Commercial High Court, in determination of the value of that land, the price margin is 20.000 Frw/m2 which was reapetedly identified in fancial status of SDV TRANSAMI Rwanda as well as in the expertise report that it has itself conducted. [36] With regard to the advocate and procdural fees, counsel Nsengiyumva Abel requests on behalf of SDV TRANSAMI Rwanda, the Court finds that none of the parties may be awarded it to this instance because each part lost the case in part. III. THE DECISION OF THE COURT [37] Decides that appeal of Rwanda Revenue Authority has no merit.

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[38] Cross appeal filed by SDV TRANSAMI Rwanda has merit in part. [39] The judgment nº RCOM 0005/12/HCC rendered by the Commercial High Court on September 14, 2012 is upheld. [40] Condemns Rwanda Revenue Authority to recompute the tax of the year 2009 which is in connection with the land of SDV TRANSAMI Rwanda which is conrete paved taking into account that it is depreciable. [41] Orders SDV TRANSAMI Rwanda to pay the tax of 15% that failed to withhold on the year 2008 and 2009 but after the recomputation in accordance with the laws which were into force at the time. [42] Orders that the deposited amount of money for the court fees security is equivalent of the cost of the proceeding.