Summary of ruling

• The Applicant provides educational services and was granted an income tax exemption for 2016 to 2020.
• In 2016 – 2020, the Applicant earned interest of Ushs. 1,053,010,485 from fixed deposits accounts with Stanbic Bank.
• Hence the Respondent issued assessments of Ushs. 315,903,143 on ground that WHT on interest from fixed deposits is not a final tax.
• The Applicant objected on ground that WHT on interest paid to exempt organizations should be treated as final tax.
• The objection was disallowed.
• Section 139 (a) of the Income Tax Act provides that tax withheld by a financial institution on interest paid to an exempt organization is a final tax. Hence, since the Applicant was exempt, the tax was final.
• The assessment was not grounded in law since no further tax liability ought to be imposed as per Section 139 (d).
• Application allowed with costs.