Nakumatt developer loses appeal against Sh644m tax demand

Corporate News

Nakumatt Thika Road store that was demolished in 2008. PHOTO | FILE 

By BRIAN WASUNA

In Summary

• Fleur Investments ordered to lodge an application before the Tax Appeals Tribunal if it intends to challenge the KRA demand for Sh644 million.
• The firm says the taxman’s demands are fictitious and that it ceased being a landlord in 2009 after its store on Thika Road was demolished.
• But the KRA insists that the developer is still a landlord and has leased out space to Tuskys and Uchumi in two separate parcels of land.

The private developer that owned the demolished Nakumatt Thika Road outlet has lost a bid to quash a Sh644 million demand from the taxman.

High Court judge George Odunga has ordered Fleur Investments to lodge an application before the Tax Appeals Tribunal if it intends to challenge the Kenya Revenue Authority’s (KRA) demand for Sh644 million in corporation tax, value added tax, penalties and interest between 2008 and 2012.

Fleur Investments says the taxman’s demands are fictitious and that it ceased being a landlord in 2009 after its store on Thika Road was demolished to pave the way for the Thika Superhighway.

But the KRA insists that the developer is still a landlord and has leased out space to Tuskys and Uchumi in two separate parcels of land.

The taxman did not specify where the mall hosting Tuskys is located, but holds that Fleur also owns the building that houses Uchumi Jogoo Road in Nairobi.

The private developer insists that it remitted taxes to the KRA through its auditors Deloitte & Touche until 2009 when it ceased being a landlord.

Fleur in 2015 objected to the taxman’s demands, but failed to proceed to the Income Tax Tribunal, instead opting to sue the KRA. The firm also furnished the taxman with a notice of appeal.

“In my considered view, the issues raised herein could have been properly dealt with by the Appellate Tribunal rather than this Court which does not deal with the merits. The tribunal would consider the same and arrive at a decision on the merits.”

“In this case, Fleur Investments has not proffered any convincing reason why it abandoned the appellate process it had initiated midstream without seeing it through to its logical conclusion.

“I hereby decline to grant the orders sought and in the circumstances of this case the appropriate order in my view would be to strike out this application which I hereby do with (legal) costs to the KRA,” Mr Justice Odunga ruled.

The KRA claimed Fleur Investments has since 2013 frustrated bid to have its books of accounts audited, and even denied its officers access to its premises.

The KRA held that it was forced to collect information from Fleur Investments’ tenants and bankers to ascertain the firm’s true indebtedness. Fleur challenged the KRA’s move to carry out an assessment using “assumed” figures from the developer’s tenants and bankers.