TAX IS LEVIED WHERE THE PERSON RESIDES

DEFINITION OF INCOME FOR THE PURPOSE OF TAX

See Longsdon v. Minister of Pensions and National Insurance (1956) 1 ALL E.R. 83 defining “income” inter-alia as “that which comes in.” While Lord Chetwode v. IRC (1977) 1 ALL E.R. 638 held inter-alia that “income” means gross income as reduced for the purpose of tax assessment by deductions specified in the tax code. Consequently, any contractual transaction in which something of exchangeable worth proceeding from the property, severed from the capital, is drawn by the recipient for separate use or benefit is “income” – See Goodrich v. Edwards 255 U.S. 527 referred to in the authoritative work titled Encyclopedia of Taxation Law and Practice (First Edition) page 138 by Sir T.A. Nwamara, and 7up Bottling Company (supra) on the sugar transaction between the company and third parties which was held to attract WHT liability in that case.

RESPONDENT FAILED TO ESTABLISHED EARNED TAXABLE INCOME

The power of the Board is not to be exercised by determining a company’s assessable profits according to its BOJ but rather to determine total profit to which the applicable tax rate is applied. The Respondent failed to establish that the Appellant indeed earned taxable income or turnover for the relevant periods or establish the nature and value of the taxable services rendered by the Appellant during the period in question i.e., 2010 to 2017.

— I.E. Ekwo, J. Daudu v FIRS (2023) – FHC/ABJ/TA/1/2021