Tribunal orders institute to pay N2bn tax assessment

The Cement Technology Institute of Nigeria (CTIN) has been ordered to pay about N2.03 billion in Companies Income Tax (CIT) and Tertiary Education Tax (TET).

The Tax Appeal Tribunal (TAT), Abuja Zone, issued the order sequel to a dispute over tax assessments issued by the Nigeria Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).

The five-member tribunal panel, chaired by Chief Moremi Soyinka-Onijala, arrived at the decision while passing judgment in an appeal designated TAT/ABJ/332/2023, filed by CTIN against the tax authority.

Other members of the panel were Anthony Amoman, Dr Chukwudi Ezeudeka, Dr Gbenga Falana and Amina Ibrahim.

It would be recalled that CITN had initiated the appeal on September 7, 2023, questioning additional assessment notices and demand notices relating to Companies Income Tax, Education Tax and Withholding Tax for the relevant years of assessment and account.

The institute had equally queried a notice of refusal to amend the assessments issued in September 2023.

Dispute arose when CTIN contended that the assessment of Companies Income Tax and Education Tax on interest income derived from its Treasury Bills, bonds and fixed-deposit placements was unlawful, null, and void.

The institute equally posited that Withholding Tax assessed on management fees it paid to the Bank of Industry was unlawful.

Resolving the dispute, the tribunal considered four major issues, including whether the appellant’s activities constituted trade or business; the distinction between income and taxable profit; the applicability of the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011; Education Tax; and Withholding Tax.

In passing its judgment, the tribunal led by Soyinka-Onijala held that the tribunal had carefully considered the statutory duties and obligations of the parties in relation to the transactions that gave rise to the appeal.

Consequently, the tribunal recomputed the Companies Income Tax and Tertiary Education Tax payable by CTIN.

The tribunal declared that the management fees paid by CTIN to the Bank of Industry should be allowed as a deductible expense and deducted from the interest income in determining the revised assessable and total profits.

It further held that under the Companies Income Tax Act, the Bank of Industry was required to deduct Withholding Tax at the applicable rate of 10 per cent from the relevant interest income at source and remit it to the tax authority.

The tribunal ruled that appropriate credit had been given for the Withholding Tax deducted in determining CTIN’s final Companies Income Tax liability.

It consequently determined the Companies Income Tax payable by CTIN at N1,835,484,959.69, while the Tertiary Education Tax payable was fixed at N190,158,410.44.

The combined assessment amounted to N2,025,643,370.13.

The tribunal dismissed the appeal, except to the limited extent allowed in its judgment.

It directed the respondent tax authority to recompute the assessment within 30 days to give effect to the exemption of interest income specifically traceable to Federal Government Treasury Bills and Bonds under the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011.