Sony Holdings Ltd completed the construction of Westgate mall in 2007. In 2016 the filed for an amended assessment for the year of income 2010 to 2015 to allow the claim Sh. 6.4 Billion Industrial Building deduction at 25% following an amended in the law effective 1 January 2010. The commissioner rejected the application which led the investor to move to the Tax appeal tribunal. The tribunal ruled in favour of the investor prompting the Commissioner to move to high court.
The bone of contention in this land mark case was the interpretation of a clause on which buildings qualify for claiming Industrial building deduction given that the rate was changing on 1 January 2010. Note commercial buildings were not qualifying for IBD prior to this date and the building in question was brought to use in 2007 way before this date. The contention was based on this statement picked from The second Schedule Paragraph 5(1)(ee) which states “buildings that were completed and put to use on or after 1st January 2010”. The commissioner’s interpretation was qualifying buildings are the ones constructed on or after 1 January 2010 while the tax payer held that this phrase covered a building in use on or after the said date.
The high court sitting on 31 March 2021 upheld the decision of the Tax appeals tribunal effectively allowing Sony Holdings Ltd to claim the Industrial building deduction.
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