MARINA NOMINEES LIMITED VS FEDERAL BOARD OF INLAND REVENUE

CORAM

ANIAGOLU, JUSTICE SUPREME COURT

NNAMANI, JUSTICE SUPREME COURT

KAZEEM, JUSTICE SUPREME COURT

KAWU, JUSTICE SUPREME COURT

OPUTA, JUSTICE SUPREME COURT

PARTIES

MARINA NOMINEES LIMITED

APPELLANTS

FEDERAL BOARD OF INLAND REVENUE

RESPONDENTS

AREA(S) OF LAW

INCOME TAX

SUMMARY OF FACTS

A firm of Accountants was acting as Secretaries to a number of limited liability companies and according to the provisions of the Companies Act, 1968, whenever there is a change of Secretary of a limited liability company, the Company concerned is obliged to file returns with the Registrar of Companies of such change. The accountants, while acting as Secretaries to their clients, was making use of members of their staff as such Secretaries. But whenever those employees left the services of Peat Marwick, it became necessary to file returns with the Registrar of Companies to satisfy the requirement of the Companies Act. A partner of Peat Marwick who testified for the Appellant said the Secretariat work was done by Peat Marwick in the name of the Appellant and that all bills for services rendered by the Appellant were raised in favor of Peat Marwick and the latter retained all the income and accounted for them in their books. He maintained that since the Appellant did not actually run the services, it had no right to the income. The Appellant neither filed any Income tax returns nor paid any corporate tax since its inception. Subsequent appeal to both the Federal High Court and the Court of Appeal by the Appellant also failed. In both courts the Appellant contended that it acted as agents of Peat Marwick and that the income earned by it belonged to Peat Marwick which had already paid tax on such income. The appellant further appealed to the Supreme Court.

HELD

The appeal failed and was dismissed.

ISSUES

1. Whether or not the appellant, a limited liability company incorporated under the Companies Act, 1968, and which earned fees (income) within the period under review, was liable to pay corporate tax under the Companies Income Tax Act, 1961.

2. The Federal Court of Appeal erred in law in failing to observe that the substantial question for determination in this appeal is “whether (as the Appellants contend) Peat Marwick Casselton Elliot & Co. (PMCE) are merely using the name of Marina Nominees for the purpose of the business of their Secretarial Department or whether (as the Respondents contend) Marina Nominees are the persons actually performing the secretarial jobs in their own right and through their own servants and agents”.

RATIONES DECIDENDI

SEPERATION OF ENTITY FOR INCORPORATED COMPANIES

“The device of agency by using one incorporated company for the purpose of carrying on an assignment for another company or person must not overlook the fact that that incorporated company is a separate entity which must fulfill its own obligations under the law.” Per KAZEEM, J.S.C.

BY TREATING A COMPANY AS THE AGENT OF ITS CONTROLLERS, THE COURT IS NOT IN FACT LIFTING THE CORPORATE VEIL

“It is submitted that, by treating a company as the agent of its controllers, the court is not in fact lifting the corporate veil- it is not necessary to do this in order to ascribe an agency relationship. Indeed, the finding of an agency is a complete affirmation of the corporate entity principle since the relationship demands two legally recognizable parties.” Per KAZEEM, J.S.C.