SAMAX Resources Limited vs Commissioner General (TRA) (Civil Appeal No. 115 of 2022) [2026] TZCA 631 (4 June 2026)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM ( CORAM: LILA. J.A.. MWAMPASHI. J.A. And MLACHA. J.A.^ CIVIL APPEAL NO. 115 OF 2022 SAMAX RESOURCES LIMITED ......................... .............. APPELLANT VERSUS COMMISSIONER GENERAL (TRA) .................................... RESPONDENT (Appeal from the Judgment of the Tax Revenue Appeals Tribunal, at Dar es Salaam) (Miemmas - Chairman.1 ) dated the 13th day of December, 2021 in Tax Revenue Appeals Tribunal No. 7 of 2020 JUDGMENT OF THE COURT 7th November, 2025 & 4th June, 2026 MLACHA. 3.A.: The dispute giving rise to this appeal originates from the respondent's amended assessments of corporate tax for the years of income 2010 and 2011 in respect of tax affairs of the appellant. The amended assessments disallowed various items in the computation of the appellant's taxable income. The items disallowed in the adjusted i

assessments were; foreign exchange losses (USD 1,711,167 for 2010 and USD 1,931,067 for 2011), interest expenses (USD 2,202,104 for 2010 and USD 2,163,797 for 2011), expenditure on obsolete stock written off (UDS 2,226,115), capital deductions, expenditure on community projects (USD 38,308), exploration expenses outside the mining license area and expenses on earthmoving equipment's brought by the branch. The appellant was also found to have underestimated its income from shell contract termination (USD 546,600). The computation of additional capital allowance was done on simple basis, on a single year of income. In resistance thereof the appellant lodged objections to the respondent. ITie determination of the objections came up with a corporate tax demand of TZS 18,329,039,337.90 for 2011 year of income and adjusted appellant's chargeable income to - 61,723,452,463 for the year 2010. The appellant was aggrieved by the decision of the respondent and filed Tax Appeals Nos. 119 and 120 of 2016 before the Board to challenge the decision. During the hearing, the Board was called upon to make a decision on four issues, namely; one, whether the respondent was correct in law in computing additional capital allowance on simple basis; two, whether the respondent's decision of disallowing

expenses claimed by the appellant for the years of income 2010 and 2011 was correct in law; three, whether the appellant underestimated its income for the years of income 2010 and 2011 arising from shell termination of contract and; four, to what reliefs the parties were intitled to. Based on our decision in Bulyanhulu Gold Mine Limited v. Commissioner General TRA [2015] T2CA 571 the Board decided that the respondent was correct in computing additional capital expenditure on simple basis approach. It rejected the appellant's prayer to apply the compound basis approach because it was against the decision of this Court. The Board's decision on the second issue had nine subheadings: (i) expenses on foreign exchange losses - guided by section 16 (1) of the Income Tax Act and our decision in Bulyanhulu Gold Mine Limited (supra), the Board found that it was illogical for the appellant to turn the claim for delayed refund of VAT inputs converted to foreign exchange into a tax issue; (ii) interest expenses arising from the loan secured from Anglo Gold Ashanti Holding PLC - the Board found that the respondent was justified to disallow the interest expenses because deduction of interest expenses is not automatic. It has to comply with

section 16 (3) (a) of the Income Tax Act (the ITA) which demand that it should relate to the amount of interest paid during the year of income in which the deduction is claimed, should relate to the money borrowed and must have been used wholly and exclusively in the production of the income. The Board found that in the case at hand interest was not paid. Neither was there any evidence of the schedule and duration of the loan creating doubts on whether the transaction was genuine. It found the disallowance made by the respondent justified under section 16 (3) of the ITA which was upheld; (iii) expenses on absolute stock written off - the Board agreed with the respondent that the appellant had a duty to prove the conditions for deductions under section 16 of ITA which was not done. It disallowed the expenses; (iv) expenses on capital deductions - the Board found that the respondent was correct to disallow them; (v) expenses on motor vehicle expenditure - the Board found that the evidence fell short of proof that the expenditure was used wholly and exclusively in the development operations hence the respondent was correct to disallow them; (vi) expenses on depreciation expenditure - the Board found that the respondent was correct in disallowing the expenditure because the appellant failed to establish proof; (vii) expenses on earth moving equipment - the Board agreed with the appellant that earth moving equipment brought by the

branch was correctly classified and was allowable under paragraph 17 and 18 of part III of the second schedule of ITA; (viii) expenses on expenditure related to development of boreholes for Geita Hills - the Board found that it was used wholly and exclusive in mining operations hence it was allowable under paragraph 17 and 18 of part III of the second schedule to the ITA and; (ix) expenses on exploration outside the mining lease - the Board found that they are disqualified under paragraph 17 of Part III of the second schedule of the ITA and thus properly disallowed, On the third issue the Board agreed with the respondent that there was no proper account in the profit and loss account so the respondent was justified to hold that the appellant underestimated her income for the year of income 2010 and 2011. As to the reliefs, the appeal was dismissed save for items (vii) and (viii) which were allowed as intimated above. The appellant was aggrieved by the decision of the Board and filed Appeal No. 7 of 2020 before the Tax Appeals Tribunal (the tribunal). The tribunal made the following decision. One, the decision of the Board on computing additional capital allowance on simple basis was upheld; two, the decision of the Board on expenses on absolute

stock written off and development capital expenditure were set aside while the decision on other items was upheld and; three, the decision of the Board that the appellant underestimated its income for the years of income 2010 and 2011 from shell termination was upheld. Undaunted, the appellant lodged the appeal before the Court on three grounds of complaint which can be presented as follows: One, the tribunal erred in law in holding that, paragraph 18 of part III of the second schedule to the Income Tax Act allowed computation of additional capital allowance on simple basis; two, the tribunal erred in law in holding that section 16 (1) of the Income Tax Act had provision for disallowing foreign exchange losses, interest expenses and expenses on exploration outside the mining lease area and; three, the tribunal erred in failing to re - evaluate the evidence on record leading to a wrong finding that the appellant underestimated its income for the years of income 2010 and 2011 from shell termination. Mr. Norbert Mwaifwani, learned advocate, appeared for the appellant whereas the respondent was represented by Ms. Gloria Achimpota, learned Principal State Attorney who teamed up with Hospis Maswanyia, learned Principal State Attorney and Baraka Mwakyalabwe, learned State Attorney.

When invited to address the Court on the grounds of complaint, Mr. Mwaifwani adopted the contents of his written submissions filed earlier on in terms of rule 106 (1) of the Tanzania Court of Appeal Rules 2009 (the Rules) and had nothing to add. In his written submissions in ground one, he admitted that both the Board and tribunal followed the decision of this Court in Bulyanhulu Gold Mine Ltd (Supra) which held that calculations on additional capital expenditure in terms of paragraph 18 of part III of the second schedule to the ITA are made on simple basis and not compound basis, but argued that the decision was erroneous. He thereafter spent some time trying to establish why he thinks the decision was erroneous and urged the Court to depart from it. That was also his prayer on foreign exchange losses which form the basis of the first item of ground two. He also admitted that foreign exchange loss was dealt fully by the Court in Bulyahulu Gold Mine Limited case (supra) but argued that the decision was erroneous on reason stated in his written submissions and asked the Court to depart from it. He spent some time in showing what he thought could be the correct position of the law. In reply to both ground one and item number one of ground two, Ms. Achimpota submitted, among other things that, the decision of the

Court in Bulyanhulu Gold Mine Ltd (Supra) which was followed by both the Board and tribunal was binding to the tribunal under principles of precedent because it is a decision of a higher court. There was no way in which they could have a different view. Further, in terms of section 4 A of the Appellate Jurisdictions Act, the Court sitting in a panel of three justices cannot depart from its earlier decision. That entails the calling of the full bench. She urged the court to dismiss the complaints. We had time to examine the record and consider the submissions of the parties on the complaint on ground one and item number one of the second ground of complaint. We have the view that they should not detain us much. It goes without saying that a decision of this Court binds the lower courts and tribunals exercising jurisdiction over similar matters. That is clear under principles of precedent. See our decisions in Jumuiya ya Wafanyakazi Tanzania v. Kiwanda cha Uchapishaji Taifa [1988] TLR 146 and Arcopar (O. M) S. A. v. Harbert Marwa and Family Investiments Co. Limited and Others [2015] TZCA 554. Further, as correctly pointed out by counsel for the respondent, when need arises for departing from its previous decision, the Court have to be moved properly under section 4A of the Appellate Jurisdiction Act which states: 8

"4A "Where the Chief Justice is o f the opinion that there are grounds for the Court to consider its conflicting decisions, departing from its previous decisions, or that an appeal or application before the Court be heard and determined by a full bench o f the Court, he may constitute a fuii bench o f the Court of not iess than five justices for the purpose o f considering whether to depart from the pre vious decision or resolving the conflicting decisions o f the Court or otherwise , or determining an appeal or application ; as the case may be" [Emphasis supplied] This provision has been interpreted by several decisions of the Court including our recent decision in NMB BANK PLC v. EMMANUEL DAVID ALLUTE, Civil Appeal No. 619 of 2024 where it was stated thus: "The follow up question now is whether, the Court sitting in a panel o f three justices can depart from its previous decision. Mr, Mwantembe wants us to believe that it can. With respect, we have the view that it cannot This is rather a work o f the full bench o f the Court which, if properly moved, and where need arises, can depart from a previous decision o f the Court."

See also Lengawo Moisari Kitesho Lekeni Others v. Republic [2024] TZCA 1177 and First Assurance Company Limited v. Heritage Insurance Company Tanzania Limited [2025] TZCA 184 where the need for forming the full bench was emphasized in considering whether to vacate an earlier decision of the Court or otherwise. The complaints based on ground one and the first item of the second ground of complaint are thus found to be baseless and are dismissed. We will now move to examine the remaining complaints. Submitting on disallowed interest expenses, Mr. Mwaifwani submitted that the finding of the Board which was upheld by the tribunal was that there was no evidence to prove that the appellant paid interest on the loan adding that the finding that the loan was converted to equity was flawed. He submitted that the loan was used in funding mining operations of the appellant meaning that it was incurred wholly and exclusively in the production of income of the appellant. He submitted further that, interest expenses qualified for deduction under section 16 (1) of the Income Tax Act 1977 (the ITA). He challenged the finding of the tribunal that for interest expenses to be allowed, they should have been paid and employed in production of income under section 16 (3) (a) of ITA. He submitted further, that section 16 (1) prevails over 10

section 16 (3) (a) meaning that all expenditure which is wholly and exclusively incurred in the production of income was deductible. In conclusion he submitted that since the incurrence of interest expense is not in dispute and the fact that the nature of the loan was not the area of dispute, the expenditure was fully deductible under section 16 (1) of ITA. In reply, Ms. Achimpota submitted that, the interest in question related to reported loans from associate entities located outside the United Republic of Tanzania and mainly payable to Anglo-Gold Ashanti Holdings PLC (a company incorporated and resident in South Africa) based on loans which had no specific duration of repayment. She submitted further that, disallowance was done as a legal requirement under section 16 (3) (a) of the ITA based on the fact that the loans were questionabie. Amplifying, she submitted that, during the audit the appellant was required to submit a number of things including correspondences with her related companies, circumstances which led the loan to be converted to equity and annual audited accounts related to the companies but could not do so. She went on to submit that given the fact that the companies were associates of the appellant it was important that the information be availed to eliminate the chances of ii

there having a tax avoidance schemes. She contended that the loan transactions lacked real business loan features such as repayment schedules and payment of interests for the entire duration which was converted to equity in the end. She submitted that what was exhibited by the appellant in the loan transaction and the interest seeking to be disallowed was nothing but a tax avoidance scheme. She went ahead and cautioned the Court to refrain from determining the complaint because its determination cannot be done without touching the evidence something which is outside its jurisdiction in terms of section 26(2) of Tax Revenue Appeals Act which gives the Court mandate to deal with issues of law only. In rejoinder, Mr. Mwaifwani submitted that the claim for interest expenses is pegged on the ground that the tribunal used section 16 (3) (a) instead of section 16 (1) of ITA and not on evidence. We have considered the parties' respective positions. Both the Board and the tribunal disallowed interest expenses arising from the loan secured from Anglo Gold Ashanti Holding PLC because there was no evidence that interest was paid. Neither was there any evidence of the schedule and duration of the loan creating doubts on whether the transaction was genuine or not. The disallowance was made under 12

section 16 (3) (a) of ITA. The appellant is now arguing that they were supposed to apply section 16 (1) of ITA and denies the possibility of touching evidence in the course of the deliberations. Having read the two provisions carefully, we have the view that in whatever situation, the Court cannot reach its decision in the matter at hand without examining the evidence to establish the relations between the appellant and its associate companies and establish if the interest expenses were actually paid or not. This is necessarily so because of the argument that there is a likelihood that the interest expenses were not paid given the close relations between the appellant and its associate companies who were the source of the interest expenses. Further, there is an allegation that what is exhibited is nothing but a tax avoidance scheme which also cannot be resolved without examining the evidence a move which is barred under section 25 (2) of the Tax Revenue Appeals Act. The complaint on interest expenses is thus baseless and dismissed. Next is the complaint on disallowance of exploration expenses outside the mining leased area. This issue is rather straight forward and should not detain us. Mr. Mwaifwani made an extensive submission in his written submissions seeking to justify his position that the tribunal did not re-evaluate the evidence properly and that if it had done so, it 13

could not uphold the decision of the Board. But shortly later, after hearing a submission from Ms, Achimpota, he made a rejoinder and agreed with Ms. Achimpola that a deliberation on the raised issues cannot be done without touching evidence something which is outside the jurisdiction of the Court as intimated above. The complaint is thus baseless and dismissed. We will finally move to the complaint that the tribunal did not re evaluate the evidence properly leading to a wrong finding that the appellant underestimated its income arising from shell contract termination for the years of income 2010 and 2011. The respondent's case before the Board and the tribunal was that the appellant underestimated its income for the year of income 2010 and 2011 in respect of its recoveries from shell contract termination. The parties were at one that the appellant made an income from its contract with shell. The question is whether it was underestimated. It was submitted for the appellant that the assertion that Geita Gold Mine Limited did not record the recoveries was wrong because the appellant and the respondent used different ways of recording income. Counsel for the appellant submitted that if the evidence had been re-evaluated properly, it could be found that there was no underestimation of 14

income. The court was invited to step into the shoes of the Tribunal and make an evaluation of exhibit A2 or direct the Tribunal to make a fresh evaluation of the evidence. The submission of Ms. Achimpota which we fully subscribe was that the Court has no jurisdiction to evaluate evidence in terms of section 25 (2) of the Tax Revenue Appeals Act. Going to evaluate the evidence will take us to examine issues of facts which are outside the jurisdiction of the Court as intimated above. Issues of facts are the domain of the Board and the Tribunal and must end there. On whether the Court can direct the Tribunal to make a fresh finding on the matter, we have the view that this cannot be done without an examination of the evidence on record, an area which is outside our jurisdiction. See our decision in Bank of Africa (T) Ltd v. Commissioner General Tanzania Revenue Authority [2025] TZCA1320 where it was stated: "... the appellate jurisdiction o f the Court in Tax matters is restricted by section 25 (2) o f the TRAA under which it is provided that: Appeal to the court o fAppeal shall be on matters involving questions o f law only."

See also Serengeti Breweries Limited V. Commissioner General of Tanzania Revenue Authority [2025] TZCA 685. Ground three is thus baseless and dismissed. That said and done, the decision of the Tax Revenue Appeals Tribunal in Appeal No. 7 of 2020 is upheld. The appeal is dismissed with costs. •...... ,. DATED at DODOMA this 3rd day of June, 2026. S. A. LILA L. M. MLACHA JUSTICE OF APPEAL The Judgment delivered virtually this 4th day of June 2026 in the presence of Mr. Noe! Adam, learned Counsel for the Appellant, Mr. Richard Gida, learned State Attorney for the Respondent and Mr. Elias Nkwabi, Court clerk, is hereby certified as a true copy of the original. JUSTICE OF APPEAL A. M. MWAMPASHI JUSTICE OF APPEAL R. W. CHAUNGU )ffiPUTY REGISTRAR /.£/COURT OF APPEAL / / 16