Civil Reference No. 7 of 2004
On 13 February 2018, Kaselele Makwim'humu Company Ltd (the applicant) and Dominic Munisi (the respondent) executed a Tenancy Agreement for one room on the respondent's premises in Mwanza, at TZS 720,000 per six months, payable in an initial advance of TZS 360,000 with the balance due at the end of the first six months. At the end of that period, the applicant paid only TZS 288,000, having unilaterally deducted TZS 72,000 which she claimed to have remitted to the Tanzania Revenue Authority (TRA) as withholding tax on the respondent's rental income. The respondent refused the reduced payment and allegedly disconnected electricity to the room to compel compliance or eviction; the applicant refused to vacate and sued in the Mwanza District Land and Housing Tribunal (DLHT), alleging breach of the Tenancy Agreement. The respondent denied disconnecting power, denied agreeing to any tax deduction, and counter-alleged that the applicant was in breach for underpayment and for using the room as a residence rather than a classroom. The DLHT found the applicant, not the respondent, in breach, ordering payment of rental arrears and vacant possession. The applicant's appeal to the High Court was dismissed on 2 July 2021. The applicant then unsuccessfully sought certification of points of law from the High Court before bringing this application to the Court of Appeal for leave to appeal.
Whether the applicant should be granted leave to appeal to the Court of Appeal against the concurrent decisions of the DLHT and the High Court, in particular: (i) whether it was correct to hold that the applicant improperly deducted and paid withholding tax to the TRA instead of paying full rent to the respondent; (ii) whether the applicant was rightly found to be in breach of the Tenancy Agreement; and (iii) whether costs were properly awarded against the applicant. The overarching question for the Court was whether the intended appeal raised issues of general importance, a novel point of law, disturbing features requiring appellate guidance, or otherwise showed a prima facie chance of success sufficient to warrant leave.
The applicant (appearing through her Managing Director) argued that she was entitled, and indeed obliged, under section 82(1)(b) of the Income Tax Act, Cap 332, to withhold 10% of the respondent's rental income and remit it to the TRA as a withholding agent, regardless of whether this was stipulated in the Tenancy Agreement. She contended this raised an important point of law and fact that the lower courts wrongly resolved against her, and that the resultant costs order was consequently unjustified; she urged the Court to grant leave so the issue could be fully argued on appeal. The respondent, through counsel, argued that the deduction was never agreed in the Tenancy Agreement and that, in any event, it was the respondent (the landlord) rather than the applicant (the tenant) who would be the proper withholding agent under the Income Tax Act. More fundamentally, counsel argued that the applicant had never proven that the TZS 72,000 was actually paid to the TRA, and accused the applicant of using the tax argument to evade her contractual rent obligations. The respondent urged dismissal of the application for want of merit.
The Court of Appeal dismissed the application for leave to appeal with costs. It held that the central factual question—whether the applicant had actually paid TZS 72,000 to the TRA—had been considered and answered in the negative by both the DLHT and the High Court based on the evidence, and the applicant had failed to adduce proof of such payment. The Court found it unnecessary to determine the legal question of whether the applicant qualified as a 'withholding agent' under the Income Tax Act, since proof of actual payment to the TRA was a prerequisite to that claim, and without such proof the claim was rendered spurious. Applying the established principles governing leave to appeal—that leave is discretionary and should be granted only where the intended appeal raises issues of general importance, a novel point of law, shows prima facie prospects of success, or where the proceedings below reveal disturbing features warranting the Court's guidance (citing Mohamed Abdalla Hamis v. Pandu Haji Hamis and Harban Haji Mosi v. Omar Hilali Seif)—the Court concluded that the intended appeal had no reasonable prospects of success and disclosed no compelling reason for the Court's intervention. The matters raised were purely evidentiary and had been sufficiently canvassed by the two lower courts.
The ruling reaffirms and applies the settled principles governing the grant of leave to appeal to the Court of Appeal of Tanzania: leave is a discretionary remedy to be exercised judiciously, and will only be granted where the intended appeal raises a point of general importance, a novel legal question, demonstrates prima facie prospects of success, or where the record reveals disturbing features requiring appellate guidance. The decision underscores that applications for leave are not a mechanism to relitigate factual findings already concurrently made by two lower courts, and that a party invoking a statutory entitlement (such as acting as a withholding tax agent) must first establish the underlying factual predicate (actual payment to the tax authority) before the legal question becomes relevant. It illustrates the high threshold applicants must meet to obtain leave, reinforcing that only meritorious appeals should proceed to the Court of Appeal.
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