1. Whether the cost of substantial renovations or rehabilitations of an industrial
building used for manufacture qualities for investment deduction at 100%

2. Whether payments made to persons offering professional services to
contractors should be treated as professional or contractual fees liable to
withholding tax

The Appellant has its factory which is located along Likoni Road,
Nairobi. The factory was set up for the manufacture of its products in 1958. The
Appellant conceded that this is the same factory currently in existence for
manufacture. It underwent substantial renovation in the years 2009 and 2010. The
renovations were as follows: -
1
a) The asbestos factory roof was replaced by iron sheets roof.
b) The terrazzo floor and corridor were removed and replaced by an
anchorite floor.

It is the finding of this tribunal based on the definitions above and the provisions of
the Income Tax Act in respect of the contractual arid professional fees that the
architects and other consultants were providing professional services to the appellant
and were not engaged in building, civil or engineering works. Therefore, the law
clearly stipulates that upon payment to these professionals Withholding Tax ought to
be charged at management or professional rate.
The upshot of the above is that the Appeal herein lacks merit and is hereby dismissed
with no Orders as to costs.