Wakilii

Uganda Revenue Authority v Kasaba Investments Ltd (Civil Appeal 86 of 2023)

High Court · [2026] UGCOMMC 210 · 2026 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Tax Appeals Tribunal decision allowing taxpayer's objection to additional income tax assessments
Decision
Appeal dismissed; Tax Appeals Tribunal decision upholding taxpayer's deductions affirmed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the appeal, upholding the Tax Appeals Tribunal's decision that the taxpayer's brokerage fee expenses were allowable deductions under Section 22(1)(a) of the Income Tax Act. The court held that the taxpayer discharged its burden of proof through internal vouchers, waybills, and audited financial statements, which constituted sufficient pertinent papers in an informal sector where brokers refuse to issue formal receipts. The Revenue Authority failed to demonstrate the mathematical basis for its additional assessments, violating the principle of certainty in taxation.

Outcome

Appeal dismissed; Tax Appeals Tribunal decision upholding taxpayer's deductions affirmed

Facts

Kasaba Investments Ltd, a bus transport company, was assessed additional income tax by the Uganda Revenue Authority for financial years 2016/2017 and 2017/2018 after URA disallowed claimed brokerage fees paid to attract passengers. URA initially assessed additional tax totaling UGX 289,723,489, later revised downward to UGX 130,271,358 after partial objection. The taxpayer appealed to the Tax Appeals Tribunal, which conducted a hearing including witness testimony and a locus visit to a transport hub. The Tribunal found that the taxpayer's brokerage expenses averaging Shs 2,800-2,900 per passenger were genuine and supported by internal vouchers, waybills, and audited financial statements. The Tribunal noted that brokers in the informal transport sector refuse to issue formal receipts. The Tribunal also found that URA failed to demonstrate the mathematical basis for its assessments. URA appealed to the High Court on four grounds.

Issues

  1. Whether the Tax Appeals Tribunal erred in law by holding that the Respondent did not overclaim its brokerage fee expenses.
  2. Whether the Tax Appeals Tribunal properly evaluated the evidence regarding the absence of receipts and the mathematical basis of the additional tax assessment.
  3. Whether the Tax Appeals Tribunal improperly shifted the burden of proof to the Appellant to disprove the Respondent's claimed expenses.
  4. Whether the Tax Appeals Tribunal erred in law by allowing the Respondent's expenses as deductions on the basis that the Respondent operated in an informal sector.

Orders

  • The Appeal is dismissed in its entirety.
  • The ruling and orders of the Tax Appeals Tribunal are upheld.
  • Costs of this Appeal and in the Tribunal are awarded to the Respondent.

Rules and key headnotes

Tax Law — Deductibility of Business Expenses — Burden of Proof — Sufficiency of Internal Records in Informal Sector
Where a taxpayer provides internal vouchers, waybills, and audited financial statements to substantiate business expenses incurred in the production of income, and the service providers in the informal sector refuse to issue formal third-party receipts, such internal records constitute sufficient pertinent papers to discharge the taxpayer's burden of proof under Section 22(1)(a) of the Income Tax Act.
Tax Law — Tax Assessments — Certainty Principle — Mathematical Basis Required
A tax assessment that lacks mathematical certainty and transparency violates the principle that the tax which each individual is bound to pay ought to be certain and not arbitrary. The Revenue Authority must demonstrate the arithmetic basis for additional assessments; failure to do so renders the assessment invalid.
Evidence — Burden of Proof in Tax Appeals — Shifting of Evidential Burden
While the ultimate burden of proof remains with the taxpayer under Section 18 of the Tax Appeals Tribunals Act to show that an assessment is excessive, an evidential burden shifts to the Revenue Authority once the taxpayer provides prima facie evidence of expenditure through credible documentation and testimony.
Tax Law — Deductibility of Expenses — Informal Sector — Benefit of Doubt
Where a court is in doubt due to a lack of clarity in a tax issue arising from the informal nature of a sector where formal documentation is commercially unavailable, the law must be interpreted in favour of the taxpayer. The informal nature of a sector is a factual context for evaluating evidence, not a legal exemption from record-keeping requirements.
Statutory Interpretation — Tax Statutes — Strictissimi Juris — No Room for Intendment
Tax statutes must be construed strictly according to their plain language. There is no room for an intendment, no equity about tax, and no presumption as to a tax. Where a statute's meaning demands an excessively intricate interpretive exercise beyond simple reasoning, it is deemed vague and must be construed in the taxpayer's favour.
Administrative Law — Tax Appeals — Scope of High Court Review — Questions of Law Only
Under Section 27(2) of the Tax Appeals Tribunal Act, an appeal to the High Court may be made on questions of law only. A point of law emerges when the tribunal misidentifies the applicable law, misapplies it to the facts, or draws a conclusion that no reasonable tribunal could reach. Grounds involving pure facts or mixed questions of fact and law cannot be entertained.
Tax Law — Deductibility of Expenses — Reasonableness — No Arbitrary Percentage Cap
The Income Tax Act does not permit a revenue officer to substitute their business judgment for that of the taxpayer by imposing an arbitrary percentage cap on legitimate income-generating expenses. Tax cases must be decided on legal principles and not on moral or emotional views regarding what constitutes a reasonable expense.

Legislation cited (6)

Cases cited (10)

  • Commissioner of Internal Revenue v. General Foods (Phils.) Inc., G.R. No. SCRA 545, 550
  • Commissioner of Internal Revenue v. Isabela Cultural Corporation, G.R. No. 172231, SCRA 556, 563
  • Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, No. L-26911, SCRA 246, 253
  • ATC Uganda Ltd v KCCA (Civil Suit No. 323 of 2018)
  • Cape Brandy Syndicate v IRC (1921) 1 KB 64
  • URA v Tembo Steel Mills (High Court Civil Appeal No. 9 of 2005)
  • Lubanga Jamada v Ddumba Edward (2016) UGCA 11
  • Celtel Uganda Limited v Karungi Susan (Court of Appeal Civil Appeal No. 73 of 2013)
  • Roche Transport and Logistics Services v Uganda Revenue Authority (High Court Civil Appeal No. 20 of 2021)
  • T.A. Quereshi v. Commissioner of Income Tax, Bhopal, Civil Appeal No.5635 of 2006

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Uganda Revenue Authority v Kasaba Investments Ltd (Civil Appeal 86 of 2023) [2026] UGCommC 210 (9 April 2026)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.