The assessment is based on the failure by the Agency to deduct taxes when it was paying CMC Di Ravenna, an Italian company contracted to undertake the Itare Dam Water Supply Project and Aspen International SPRL of Belgium that was contracted to undertake the Sabor Iten Tambach Water Supply Project. KRA’s case was that the two foreign companies were not exempt from Income Tax in Kenya and the services offered in the project were in the nature of management and professional services that are subject to Withholding Tax under the Income Tax Act.

Jhulay LAL Commodities Ltd appealed the decision KRA's, contesting that the entire tax of Ksh1,456,433,604 demanded was excessive. The main grounds of the appeal was that the Commissioner determined the taxable income on the basis of its gross banking against the basic accounting principles and tax law.