CTA Case No. 2095 (Decision)

I REPUHf,fC OF THE PHIIfTPPlNES COURT OF TAX .t PPEAL8 QtiEZON CX'l'Y � GOODYEAR TI RE & RUBBER CO ., OF THE PHILIPPINES , LTD ., Petitioner , - versus - C. T. A. CASE NO. 2095 THE CmfrHSSI ONER OF INTERNAL REVENUE , Respondent . X~ ~- - - - - - - - - - - X Petitioner , a corpor at i cn filing its inc ome t ax returns on the calendar year basis , was re- quired by res pondent to pay the sum of �2 60. 10 and ~413 , 033 . 10 as defi ciency income tax and de l inquency penal ty for the � year 1968. The basis of the assessment in the amount of ~413 , 033 . 1 0 was the applica t ion , effective July 1, 1968 , of the new corporate income tax rates provided in Section 24 of the Tax Code , as amended by Republic Act No . 5431 . ~-- ith res pe ct to t he asse s sment in the sum of 1-2�60 . 10 , this vias brout,; ht abo ut by the disallowance of petitioner ' s cl aimed deduction for patent charges in the sum of ~10 , 556 . 50 . Petitioner has appeal ed only from that por- tion of the decision dated Februar y 20 , 1970 as regards the' slim of f:-413, 033 . 10. Petitioner con- tends that under Section 10 of Republic �Act No . 5431 , whi ch pr ovides that said Act nshall apply

DECISION - C. T. A. CASE NO . 2095 2 t o income for taxable years beginning after Jwne 30 , 1968 , ' the increased rates provided therein are applicable only to its income beginning January 1 , 1969 , and not July 1 , 1968 , since its taxable year , -vrhich is the calendar year , begins on January 1st and ends on December 31st of each yearo Respondent on the other hand contends that the new rates are applicable to income earned beginning July 1 , 1968, regardle ss of whether a corporation is on the calendar or fiscal year basis . The i ss ue raised is not of f irst impre ss iono In several cases , it was held that the increased rates prescribed in Republic Act No. 5431 are applicable to income of calendar year corpora- tions , beginning January 1 , 1969 and not July 1 , 1968 , as interpreted by respondent . (The Hanil a Times Publishing Co ., Inc . vs . Comm . of Int . Re v. , C. T. A. Case No . 2263 , December 17 , 1973 , certio- rari denied in G. R. Noo L-38154 , May 10 , 1974; Pepsico , Inc . vs . The Co~nissioner of Int . Re v . , C. T�� Case No . 2245 , Feb . 19 , 1975 , and cases cited therein. ) Consequently , the income of petitioner from July 1 , 1968 to December 31 , 1968 i s still subject to the old rates pres- cribed in Section 24 of the Revenue Code , be- fore its amendment by Republic Act No . 543l o

DEC I 8 I 01'-7 r- C. T. A. CASE NO . 2095 3 \�lHEREFORE , the decision appealed from in so far a s petitioner i s require d to pay the s um of �413, 033 . 10 as deficiency income tax and penalty is hereby r eversed . Without pronounce- ment as t o costs . SO ORDERED . uezon City , October 9, 1975 . -~ . ROHAN Ivi. ~ Ul'iALI Presiding Judge � \iE'. CONCUR : ~t~~av. i I \TISLAO R. ALV ARifJ;:- Associate Judge ~ _ f2-- i~< RA1'10N L . AVANCENA Associate Judge �