Court Of Appeal Holds That A Company Limited by Shares That Is Engaged In Educational Activities Is Not Exempted From Income Tax Under Section 23(1)(c) OF CITA

1. Introduction

On 11th of December 2018, the Court of Appeal affirming the decision of the Federal High Court, in Best Children International Schools Ltd v. Federal Inland Revenue Services (Appeal No. CA/A/393/2016), held that an educational institution that is not registered as a company limited by guarantee but as a company limited by shares is not necessarily entitled to enjoy the exemption from income tax under Section 23(1)(c) of the Companies Income Tax Act (CITA)

The Appellant, a company limited by shares is an academic institution duly registered under the Companies and Allied Matters Act (CAMA). The Appellant had commenced the action at Federal High Court (trial court) seeking to prohibit/restrain Federal Inland Revenue Service (FIRS) from imposing income tax on the Appellant on the ground that the Appellant is an educational institution and is therefore exempted from income tax and related taxes under Section 23(1)(c) of CITA. The trial court ruled in favour of FIRS. The trial court held that the Appellant is registered as business venture as a company limited by shares and therefore cannot be exempted under Section 23(1)(c) of CITA. Dissatisfied the Appellant filed this appeal at the Court of Appeal, sitting in Abuja.

2. Issues for Determination

The Court of Appeal distilled two issues for determination:

i. Whether the trial court erred in the construction of Section 23(1) of CITA.

ii. Whether the trial court misdirected itself, when it relied on the fact of registration of the appellant as a private company limited by shares in determining whether it falls under Section 23(1)(c) of CITA.

For more information, contact:

Maxwell Ukpebor +234 803 960 0520
Samuel Akpologun +234 803 689 9189
Samuel Esuga +234 803 740 3389

Adebiyi Tax & Legal
House 20 Wema Terrace
Udi Street Ikoyi

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This Legal Alert contains information on tax /legal issues. It does not constitute legal or professional advice on such issues. Where specific legal advice is needed, the services of a solicitor/tax adviser should be sought.

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