FHC Overturns TAT Judgment On The Basis For Computing Balancing Charge On Petroleum Assets

The Federal High Court (FHC or "the Court") Lagos Division, on Monday 28 September 2020, overturned the judgment of the Tax Appeal Tribunal (TAT or "the Tribunal) in the appeal between the Federal Inland Revenue Service (FIRS or "the Appellant") and Total E&P Nigeria Limited (Total or "the Respondent") by ruling that petroleum investment allowance (PIA) should be included in the computation of balancing charge on disposal of assets used for petroleum operations.

Specifically, the FHC held that PIA granted by Paragraph 5 of the Second Schedule to the Petroleum Profit Tax Act Cap P13, Laws of the Federation of Nigeria (LFN), 2004 (as amended) (PPTA) should be added to annual allowance claimed on the assets for the purpose of computing balancing charge for disposed assets.