ARBICO LIMITED V. F.B.I R

• Pages: 210-217

210



NIGERIAN SUPREME COURT CASES

[1968] N.S.C.C.

In the result, we conclude that the judge on appeal erred in holding that des-

pite the non-compliance complained about, the appeal of the defendants was

properly before the Chief Magistrate. It was not. This appeal will be allowed and

it is hereby ordered accordingly. The judgment of the High Court, Asaba, includ-

ing the order for cost in suit No. A/6A/65 dated the 17th September, 1965, is here-



5

by set aside and the order of the Chief Magistrate dated the 2nd July, 1964, striking

out the appeal in suit No. CMA/2A/64 including the order for costs of 15 guineas

to the plaintiff is hereby reinstated so that the judgment of the Aniocha Grade 'B'

Customary Court stands. Then defendants shall pay to the plaintiff costs fixed at

67 guineas in this court and 35 guineas in the High Court.



10

Appeal allowed.

ARBICO LIMITED V. F.B.I.R.



15

ARBICO LIMITED



APPELLANTS

V



20

FEDERAL BOARD OF INLAND REVENUE



RESPONDENTS

SUIT NO. SC 28

7

/

1

967

SUPREME COURT OF NIGERIA

COKER,



J.S.C.

LEWIS,



J.S.C.



25

MADARIKAN,



J.S.C.

25th October, 1968.

Company Law - Companies Income Tax - Sale of property by company - One

single transaction - Whether sale was realisation of capital or a trading activity



30

- Companies Income Tax Act, 1961, S.17(a)

- Words and Phrases - "Trade".

ISSUES:



35

1.

Where a taxpayer embarks on an adventure which has all the characteristics

of trading, can his purpose of object alone, prevail over what he in fact does.

2.

Whether a single sale transaction can also be a transaction by way of trade.

FACTS:

Arbico Limited were assessed for tax for the year ending 31st of March, 1964,



40

inter alia,

for the sum of £7,211:12s10d, after deducting capital allowances arising

out of the sale of £87,500 of 213A lgbosere Road, Lagos, to the Federal Govern-

ment of Nigeria. Against that assessment the company appealed to the body of

Appeal Commissioners contending that they were not liable to pay any of such

sum assessed, as the transaction did not fall within the provisions of S.17(a) of the



45

Companies Income Tax Act, 1961. The Appeal Commissioners held that the trans-

action was a profit by way of trade within the meaning of that section, rejected the

appeal and confirmed the assessment. The company appealed to the Lagos High

Court, where the judge dismissed the appeal with costs. The company appealed

against that decision to the Supreme Court. The issue throughout the case was



50

whether the sale of the property was a realisation of capital or whether it was a

trading activity. The company was empowered by its Memorandum of Associ-

ation to sell or otherwise deal with its property.