Shell Petroleum Development Company Of Nigeria Limited V. Federal Board Of Inland Revenue (1996)

LAWGLOBAL HUB Lead Judgment Report

UWAIS, C.J.N. 

This case arose from the decision of the Board of Inland Revenue, the respondent herein, not to allow deductions from the Petroleum Profits Tax for 1973 payable by the appellant in respect of exchange losses, Central Bank of Nigeria commissions and scholarships expenses incurred by the appellant.

The facts of the case are not in dispute. They are as follows. The appellant was registered in Nigeria as a company. Its main object was to engage in petroleum operations. Its yearly profits therefore, became taxable by virtue of the provisions of the Petroleum Profits Tax Act, 1959 (now Cap. 354 of the Laws of the Federation of Nigeria. 1990). Section 8 of the Act provides:-

“8. There shall be levied upon the profits of each accounting period of any company engaged in petroleum operations during that period a tax to be charged, assessed and payable in accordance with the provisions of this Act.”

Pursuant to these provisions and those of Section 28 of the Act which provides in subsection (1) thereof as follows:-

“(1) Every company which is or has been engaged in petroleum operations shall for each accounting period of the company, make up accounts of its profits or losses, arising from those operations, of that period ……..”

The appellant submitted its Petroleum Profits Tax returns for the accounting period of 1st January, 1973 to 31st December, 1973 to the respondent (Exhibit 39). The returns contained the revised tax assessment which in the view of the appellant was payable by it. The respondent disallowed the following 4 items from the returns, which were incurred by the appellant, on the ground that such expenses were not deductible for the purpose of computing chargeable tax under the provisions of the Petroleum Profits Tax Act, 1959:-

1. Exchange losses on payment of Petroleum Profits Tax N3,355,091.00
2. Central Bank Commission for payment of Petroleum Profits Tax 2,915,429.00
3. Scholarships expenses 257,550.00
4. Gifts and donations 61,222.00

The appellant objected to the exclusion of these items in the computation made by the respondent for the tax payable on the adjusted profits for the period in question. They, therefore, appealed to the Federal Body of Appeal Commissioners.

At the hearing, the appeal in respect of the 4th item on “Gifts and Donations” was abandoned by the appellant. In its ruling the Federal Body of Appeal Commissioners dismissed the appellant’s appeal and confirmed the revised assessment made by the respondent

The appellant appealed further to the Federal High Court (Ayinde, J.) against the ruling of the Federal Body of Appeal Commissioners. The Federal High Court allowed the appeal in respect of exchange losses and Central Bank of Nigeria Charges, but dismissed the appeal against scholarships expenses as follows:

“In accordance with Section 35(8) of the Petroleum Profits Act (sic) 1959. I hereby annul the tax assessments on exchange losses of N3,355.091 (Sic) and Central Bank charges of N2,915,429 (Sic). I confirm the tax assessment on N257,550 (Sic) scholarship expenses.”

Both the appellant and the respondent were dissatisfied with the decision of the Federal High Court. They appealed to the Court of Appeal. The appellant, against the confirmation of the assessment on scholarship expenses and the respondent, against the annulment of the assessments on exchange losses and Central Bank of Nigeria charges.

In its judgment, the Court of Appeal (Akpata, Babalakin, JJ.C.A. as they were then, and Awogu, J.C.A.) dismissed the appeal by the appellant and allowed the appeal by the respondent and thus in effect setting aside the decision of Ayinde, J. in respect of Exchange Losses and Central Bank of Nigeria charges.

The appellant appeals to this court. As the 3 items of assessment were treated separately by the lower court and in the parties’ briefs of argument, I too propose to deal with them accordingly. But before doing so I would like to make some observations on the briefs of argument filed by the parties. It is well settled, as a rule of practice, that a well written brief of argument should be brief and concise, containing concise statement of the facts of the case which are material to the consideration of the questions presented for determination by the court. It should also contain direct, concise and succinct statement of the argument in the appeal. But what are we confronted with in this appeal The appellant’s brief consists of 70 pages while the respondent’s brief is made up of 435 pages (including the preliminaries). Surely these are, with respect, far from the ideal. Rather than assist the Court to easily follow the argument in support of the questions for determination, they helped in making the arguments complex. Had it been the circumstances herein were ordinary, we would have no difficulty in striking out the briefs for offending the rules. Be that as it may, I consider the questions raised by the appeal as important and will, therefore, endeavour to consider the argument contained in the briefs as best as I can, but not without trepidation. The worse culprit in this respect is without doubt learned counsel for the respondent.