CTA Case No. 2494 (Decision)

REPUHI.IC OF THE PHILIPPI~ H~ COURT OF TAX APPEALS QUE~ON CITY THE PHILI PINE AMERICAN HAI\J"AGElvlENT COivlPANY , I NC � , Petitioner , - versus - C. T. A. CASE NO. 2~9~ THE COMlviiS IONER OF INTEHNAL HEVENUE , Respondent . X- - - - - - - - - - - - - - X DE C I S I 0 N This i s a claim for refund in the amount of 5 , 7~8 . 83 which petitioner paid as deficiency income tax and. delinquency penalties asses sed from July 1 , 1968 to December 1, 1968, based on the application e ffe c t ive July 1, 1968 of the new corporate income tax rates of 25% and 35% prescribed in Republic Act No . 5~31 , which increased the old rates provided i n Section 2~ of the Re venue Code . Petitioner is a corporation which keeps its books and re c ords on the calendar year basiso On August 15 , 1972, it paid under protest the tot al sum of ~15 , 096 . ~3 , representing alleged deficiency income tax for 1968 in the amount of ~9 , 311 . 58 res ulting from the disallowance of certain salaries paid by petitioner , and the deficiency assessment in the amount of ~5 , 78~ . 83 due to the interpret ation by the B~reau of Internal Reven ue that the new income t ax rates provided in Republic Act No . 5431 , which took ~ffe ct on July 1 , 1968, are applicable to the net

DECISION - CTA CASE NO . 2494 2 income of petitioner for the year 1968 . On December 11 , 1972 , petitioner , through counsel, claimed from respondent the refund of the sum of~5 , 784 . 83 which it paid on account of the application as aforesaid of the new corporate in- come tax rates under Republic Act No . 5431 on in- come earned beginning from July 1 , 1968 to Decem- ber 31 , 1968. Respondent, on January 3 , 1973 , withheld action on the claim for refund pending the final decision by this Court on. similar pending cases . Consequently , on March 2 , 1973 , petitioner filed its petition for review. This case is not one of first impression . In several cases , it was held that a calendar year corporation is liable to the increased rates of income tax prescribed in Republic Act No . 5431 from January 1 , 1969 and not from July 1 , 1968. Thus, the income earned from July 1 , 1968 to December 31 , 1968 of such corporation is subject to the old income tax rates prescribed in Section 24 of the National Internal Revenue Code , before its amendment by Republic Act No o 5431 . (Manila Times Publishing Co . v . Comm . of Inter nal Revenue , CoT. A. Case No . 2263 , Dec . 17 , 1973 , certiorari denied in G. R. No . L-38154 , May 10, 1974; Zamboanga

DECISION - CT CASE NO. 2494 3 ood Products , Inc . V o Comm. of Int . Rev . , C. T. A. Case No o 2053 , June 3, 1974; Colgate Palmolive Philippines , Inc . v . Comm . 9f Int . Rev ., C. T. Ao Case No . 2293 , June }0 , 1974; Philippine Aviation Corp . v . Comm . of Int ., Rev ., C. T. A. Case No . 2195 , August 5, 1974; Fir s t Insular Ban�k of �Cebu v . Comm� of Int . Re v ., C. T. A. Case No o 2262 , August 29 , 1974; Tabacalera � Inc . Co ., Inc . v . Comm . of Int . Rev ., C. T�� Case No . 2081 , Nov . 20 , 1974 . ) Petitioner i s , therefore , entitled to the refunu of the sum it paid as deficiency inc ome tax and penalties �or the period from July 1 , 1968 to December 1, 1968 . I N VIEW OF THE FOREGOING , respondent is hereby order ed to refund t o peti tioner the sum of ~5 , 784 o 83 within thirty days from the date this decision becomes final . Without pronouncement as t o costs . SO ORDERED . Quezon City , September 22 , 1975 . ~~ Presiding Judge L~SLA~ O R."'~~ LiAKB~~ As s ociate Judge / /L-- -J 4--_~ RM10N L. AVAJ.IJCENA Associate Juuge