CTA Case No. 2346 (Decision)

1t fH�.'�If:�,, O.F 1'Uf PHil;.ll'Fi:'-IL~ GOlJ l;T OF T. X A.PJ)l�:A1..8 U.C.ZliN ClTV MARIETTA KAIAW , INC ., Petitioner , - versus - C. T.A. CASE NO . 2346 COMMISSIONER OF INTERI'ffi.L REVENUE , Respondent o x ----- - - - --- x DE C I S I 0 N This is an appeal from the decision of res- pondent Commissioner of Internal Revenue assess- ing against and demanding from petitioner the amount of �7 , 457 . 60 as deficiency income tax for the year 196lo Petitioner is a corporation duly organized and existing under the laws of the Philippines . On April 16 , 1962 , it filed its corporate income tax return for the taxable year 1961 ~~~ As shown in its income tax return, petitioner deducted, among others, from gross income contributions to the Mindoro Farm of ~110 . 00 and interest ex~ pense in the amount of �48 , 350 . 65o On June 26 , 1963 , respondent ordered the investigation of petitioner ' s books of accounts and other accounting records for 1961, including all

DECISION .... CTA CASE NO. 2346 - 2- unverified books of accounts in prior years for inc ome tax purposes . Examiner Federico G. Doria , who finally conducted the investigation , rendered a report that petitioner was not entitled to de- duct �110 . 00 contribution to the Mindoro Farm and the amount of �29 , 483 Q93 as interest , and , hence , should be made liable for deficiency income tax in the amount of �7 , 457 . 60 for the taxable year 196l o Accordingly , Acting Regional Director V. z. Lasquety , Region No . 6 of the Bureau of In- ternal Revenue , assessed against and demanded / from petitioner the amount of �7 , 457 . 60 as de- ficiency income tax for 1961, based upon the following computation: . . Net income disclosed by the �867 o03 return � o � � � � � � � Unallowable deductions & ad- ditional income: Contribution- Mindoro Farm (Operation during the year shows a net loss) � � � � � � � �110. 00 Interest expense which should be borned by Stockholders Loan Re- ceivable equal to the rate of interest on bank loan (Overdraft) in favor of the corpo- ration � � � � � � o~ 29,483 o 93 Total adjustments � � � � � � � � 29, 593o 93 Net income as per investiga- tion � � � � � � � � � � � � 28 , 726 . 90 Less: Personal and ~ddi tional exemptions � � �

DECISION ... CTA CASE NO . 2346 T - 3- . Amount subject to tax � � � � ~28 , 726 . 90 . . . . Income tax due thereon 6, 320 o00 Less: Tax due per return � previously assessed or . . . . . paid none . . . Balance� 6 , 320. 00 � � �� � � � ��� Surcharge-fifty or twenty- . five percent 0 0 � � --- . . . . . Interest � 0 - - l , l37o60 Compromise o o �� o � � � '- .... TOTAL DEFICIENCY TAX DUE AND COLLECTIBlE � � � � � � ~ 2 , 422.60 As can be seen from the above , the deficiency assessment resulted from the disallowance of (1) the contribution to the Mindoro Farm of ~llOoOO; and (2) interest in the amount of ~29 , 483 . 93 , which is allegedly a part of the interest paid on an 11 overdraft11 secured by petitioner Marietta Ka law ., Inco from the Philippine Trust Company in the amount of ~560 234 o88 , portion of which vJas granted as loans to its stockholders and employees . The amount of �29 , 483 . 93 as interest was disallowed by respondent as interest deduction , out of the total interest claimed in the sum of �48 , 350 o65, because the uoverdraft 11 of 3.?:560, 23lt . 88 was not entirely utilized by petitioner in its business, or was not wholly a business expense , but was used for the personal benefit of its stockholders and employees o

DECISION .... ~ CTA CASE NO . 2346 ,... 4 - This amount of ~29 , 483 o 93 was arrived at by the respondent ' s Examiner Doria first finding out how much of the amount of ~560,234.88 acquired by petitioner as 11 overdraft 11 from the Philippine Trust Company vJas loaned individually to said stock- holders and employees 9 As sho-vm by his worksheets used during his investigation, Examiner Doria re- corded all the monthly balances of the loans granted individually to the stockholders and employees for the period from Janua �y to December , 1961 , inclusive, and applied on each individual monthly balances an 8% interest, arriving at the interest of ~29 , 483.93 , as follows: � Amount Comnuteg Stockholqers with lqan Per monthly Re ceivable and from em- Balances ployee . 1~~ Heirs of M. Kalaw 2 . Marietta T. Kalaw 3~ Augusto Kalaw 4.. Lydia Kalaw 5. Erlinda Illusorio 6. Potenciano Illusorio ? .. Edgardo Kalaw 8. Maximo Kalaw Jr . 9. Macaria Manguiat To t a 1 This amount of ~29 , 483 . 93 was later considered by Examiner Doria as uarnterest expense xThich ..s.h.ru.J,.J.Q ge borned by Stockholqer 1 s Loan Re~able e~ual tq the rate of interest qn bank lqan (overdraft)

DECISION - CTA CASE NO , 2346 - 5- in favor of the corporation . 11 In other words , the amount of ~ 29 , 483 . 93 represents the interest com- puted by BIR Examiner Doria on the amount of loans granted individually to petitionerfs stockholders and employees , and vlhich he claims to properly ap- pertain to said stockholders and employees , and should not be claimed by, or allm-Jed to , petitioner as interest deduction, In a letter dated March 3, 1967 , received by respondent � s BIR Regional District No~ 6 on March 6, 1967, petitioner protested the deficiency in- come tax assessment of �:7 , 457 o60 and requested for cancellation and withdrawal thereof on the ground that the interest in the computed amount of ~29 , 483 o93 should be allowed as deduction because all the requisites necessary for its allowance are presen~, namely: (1) that there was in indebted- ness; (2) that the interest claimed as deduction was paid or accrued within the taxable year ; and (3) that the indebtedness is its own indebtedness , and cited as authority the case of Carlos Palanca Jro vs o Commissioner of Internal Revenue , CTA Case No o 571 , December 2, 1959o In a letter dated April 4, 1967 , the Acting Regional Director , VoZ. Lasquety , requested peti~

DECISION - CTA CASE NO. 2346 tioner, through its counsel, to submit evidence shovring that the interest claimed are business expenses in connection with the production~ or earning of petitioner ' s income . The Acting Revenue Director, in a letter dated August 22, 1967, reiterated his previous request for the petitioner to present evidence to show that the interest claimed by it as deduction is a business expense, otherwise he will be cons- trained to enforce the collection of the de- ficiency income tax through remedies provided by law and without further notice. In a letter dated August 5, 1968, peti- tioner requested for reinvestigation and pre- sented a waiver of the statute of limitations which was accepted by respondent ' s Acting . Regional Director v. Zo Lasquety . The request of petitioner for a reinvestigation was granted in a memorandum of the Acting Assistant Regional Director dated October 10, 1968 . On November 18 , 1968, after counsel for petitioner had failed to produce the latter ' s records, or produce evidence against the assessment , Examiner A. B. Vergara recommended the collection of the assess- ment in the total amount of f7 , 457 . 60 . On December 17, 1968 , the Acting Regional Director

'-. DECISION - CTA CASE NO . 2346 - 7- v . z~ fasquety wrote a letter to petitioner , the pertinent portion of which states: Apparently , your counsel thru Attorney Erezo , has been notified and informed in or~ der to produce the records or any other evi~ dence to counteract the said assessment but which up to nowW9 have not been favored with a reply. In effect , it is also understood that you admit the correctness of the find~ ings and assessment which has been made for the said year ~ Therefore , this Office , has no other alternative but to concur with the previous findings and recommendation of our examiner, and accordingly proceed and enforce the collection thereof through the legal re- medies provided for by lawQ On account thereof , it is requested that you pay the sum of !l7 , 457 . 60 plus increments incident to late payment , within ten (lO) days upon receipt hereof in order that yo~ case may be considered closed and terminatedollnder- scor ing ours . ) On August 27 , 1971 , ~cting Regional Director Lasquety requested for the payment of the deficiency tax assessmento Finally, in a letter dated October 12, 1971 , Acting Regional Director Lasquety , for- mally denied petitionerfs protest and urged it 11 for the last time 11 to settle its deficiency in- come tax liability in the amount of ~7 9 457 o 60 with- in ten (10) days from receipt 11 in order that t hi s case may be closed11 and threatened to enforce the same by judicial action without further notice in . case of its failure to do so~ Pertinent portion of said letter reads as follows:

DECISION - CTA CASE NO . 2346 - 8- In view thereof , it is requeated for the last time that you settle your above- mentioned tax l iability, plus the incre- ment penal ty incident to late payment within ten (10) days from your receipt hereof , ill_Qrder that this case may be closed; otherwise , this Office will be constrained to enforce t he collection thereof through the wa~rant of distraint and l evy and/or jvdicial action wi t h~ out f~th�r notic eo (~mphasis ours o) Consequently , on November 11 , 1971, peti~ tioner appealed to this Court . The issues submitted for resolution to this Court are: (1 ) vlhether or not this Court has juri s ict ion to take cognizance of the instant appeal ; and (2) llhether or not the amounts of ~29 , 457960 and ~llO Q OO as interest and contribution deductions , respectively, claimed by petitioner are legal and jus- tified .. vii th respect to the first issue of juris-. diction, respondent maintains that this Court cannot take cognizance of the ins tant case be- cause the appeal was filed more than 30 days from receipt of alleged decision of December 17 , 1968 , signed by Ac ting Regiohal Director v.z. Lasquety , a duly authorized su~ordinate official . On the other hand , petitioner con- tends that it has not received the alleged letter- dec i$mnn dated December 17 , 1968 and ,

DECISION - CTA CASE NO . 23lt6 ' - 9 ... therefore , there is still no decision to speak of o I-t urged us that the final decision is that letter dated October 12 , 1971 and that having received the same on October 28 , 1971, the pe~ tition for review was filed on time . We agree with petitioner that this Court has jurisdiction over the appeal . There is nothing in the records which will show how , where and when the alleged letter- decision of Acting Director VoZo Lasquety dated December 17 , 1968 was sent to petitionero Inasmuch as it was respondent Commissioner of Internal Revenue who raised the question of jurisdiction, it is , therefore , incumbent upon him to show that alleged letter- decision was signed, duly dated and sent by mail . In the absence of an evidence showing that it was sent by mail and received by peti~ tioner , we are inclined to hold that it was neither -sent,, to1 nor received by the latter . Hence, the alleged decision of Acting Regional Director Lasquety dated December 17, 1968 cannot be considered as the final decision for purposes of this appealo But even assuming that said let- ter was sent and received by petitioner , a scrutiny

DECISION _ CTA CASE NO . 2346 - 10 - of the said l etter shows that it is not the final decision contemplated in Section 7 of Republic Act NoQ 1125 because it does not have the charac- teristic of finality . It has been held that a decision to be appealable must contain the element 1 of finality . In this case , said letter of Dec- ember 17, 1968 does not possess the element of finality because the last paragraph of said letter requested petitioner to pay within ten (10) days in order that the 11 case may--"l:2.e. considered closed and temminated . 11 This letter conveys the idea that P.cting Director Lasquety still holds the case open and may still reconsicer upon further reque st the tax asses sment against petitioner . And we are more inclined to believe that the appealable decision from which petitioner could appeal , and from which it did appeal to this Court , is that letter of f eting Director Lasquety dated October 12 , 1~71 because it is this letter that 1 Gibbs vs . Comm . of Int . Rev . , CTA Case s Nos . 1718 and 171~ , December 27 , 1~69 , unappealed , St . Stephen ' s Association , ~t al . vs . Coll . of Int $ Rev ., 104 Phi}. 314- , 317 .

DECISION _ CTA CASE NO . 23~6 - 11 - had the element of finality , which we quote in part once more for emphasis : In view thereof , it E requested for the last time tnat you settle vour above- mentioned tax liabili-cy , plus the incre- ment penalty inciden-c to late payment ~in ten (10 ) days from vour receipt hereof , in order that this case may be closed; otherwise, this office will be constrained to enforce the collection thereof through the warrant of distraint and le,vy and/or � icial action w;i, thoy~ fyrther notice * Unde r lining supplied o In essence , and as can be gathered from the con- text of this letter , when respondent ' s BIR Acting Regional Director Lasquety said in the last portion thereof that he will enforce the collecti0n of the assessment by warrant of distraint and levy and/ or judicial action lvithout further notice , he definitely advised petitioner that this deci~ sion is final and that he will not entertain any more delay in the payment of the deficiency taxo vle note , however , that petitioner was not able to show when the aforesaid letter was actually received by itQ Assuming that the said letter was se~ by ordinary mail in Manila where the offices of the Acting BIR Director is located , on the same day it was prepared or dated on October 12 , 1971 , pe~ ti tioner is deemed to have received the decision on October 18 , 1971, which is after the expira~ tion of five (5) days from the date of mailing ,

\ DECISION CTA CASE NO . 2346 - 12 - in accordance with the pr ovisions of Section 8, Rule 13 of the Rules of Court . From the presumed r eceipt on October 18 , 1971 of the decision to the date of filing of the peti- tion for review on November 11, 1971 , only 25 days was consumed out. of the 30- day period of appeal provided in Section 11 of Republic ~t No . 1125. Obviously, the petition for r eview was, therefore , seasonably filed . Having di sposed of the jurisdictional question, we will now consider the issue as to whether or not the claimed deductions are legal o With respect to the amount of P29 , 483 o93 , which is actually part of that interest which petitioner had paid to the Philippine Trust Company on an "overdraft" acquired, portion of which was subsequently loaned to its stock- holders and employees, petitioner strongly urged its deductibility on the~ asis of the decision in the case of Carlos Palanca, Jr. vs . Comm . of Int . Rev . , CTA Case No . 571 , December 2 , 1959 , affirmed i n G. R. No . L-1 6626 , promulgated on October 29 , 1966, wherein it was held that the int er est expens e is deducti- ble from the gross income when the following requisites are present , namely: (1) that there was an indebtedness; (2) that the interest claimed for deduction have been paid or accrued within the year; (3) that the

DECISION ,... CTA CASE NO . 2346 - 13 - indebtedness is that of the taxpayer o Petitioner claims that these requisites required for the interest ' s deductibility being present in the instant case , it is legal and justifiedo We find this claim to be meritorious and vle find the case of Carlos Palanca vs . Comra . of Int . Rev . , sunr~ , ~ applicable in the instant case . Under paragraph 1 of the "Agreement for credit in Current Account," entered into bet- ween petitioner and the Philippine Trust Com- pany dated ~Y 27 , 1960 , the latter granted to petitioner "a loan by way of credit in current account" in the amount of only Six Hundred Thousand ( ~600 , 000 ~ 00) , out of which the amount of �560, 234. 88 was actually and undisputedly withdrawn, credited and carried in the Philippine Trust Coo books as an noverdraft or credit to current account" of petitioner with interest at 8% payable monthly, computed upon the daily debit balances of petitioner as will be shown in the bank f s books � This. arrangement bet�ween peti- tioner and the said bat"..k vJas what is normally and strictly understood as a 11 line of credit.u A 11 line of credit 11 is actually and generally

DECISION - CTA CASE NO . 2346 � understood, in banking as v1ell as in commer- cial practice, as a loan, without a collate- ral , upon which a businessman is allowed to borrow in periodic amounts to meet short- term obligations and is charged a normal interest for the period for which the money is actually borrowed. 2 The arrangement between petitioner and the Philippine Trust Co . was also denominated by them as "overdraft, 11 and was so understood by respondent. In the true sense of the term , an "overdraft" is a truly loan to a depositor. But strictly speaking, an noverdraft" results from the drawing by a depositor by check for more than the balance on deposit in his account with the bank, in 1.vhich the bank may elect to render its customer a service and pays the check, and the amount to the extent overdrawn, is con- sidered a forced loan to the depositor for which 2carl A. Dauten etc . , Principles ~ F1nance, 3rd Ed . (Cincinnati, USA: South-Western Publishing � Co.), pp . 167 , 170- 171; Gregorio s . Miranda , Ph . D. , Essentjals ~Maney, Credit and Bank1ng, Rev . En- larged Ed . (ManilaS L & G Business House, 1973), pp. 296-297.

DECISION - CT.A CaSE NO " 2346 - 15 - 3 an interest is then charged Definitely, based upon the above authorities , the borrowing of the sum of �560 , 238 . 88 by peti~ tioner is rightly classified as a uline of credit" , and not an "'over draft" as shovm by their agreement for credit. But whether it was on a line of ere- dit or an overdraft , the amount of -560 , 234n88 acquired was nonetheless a loan and the interest charged and received by the Philippine Trust Cop as interest thereon , of which the amount of ~29 , 483 a93 disallowed by respondent is definitely only a portion of the interest paid upon that en- tire loan obligationv There is no dispute that after petitioner had secured the said "overdraft" or "credit line" from the Philippine Trust Coo in the actual amount of ~560 , 234~88 , upon which an interest of 8% was paid thereon to the bank, petitioner had later loaned a portion of this amount to its stockholders and employees at a lovJer rate of 6~ inte~est , there- by losing in the process 2% interest which vJas b rne by it,. 3 Gregorio Miranda , ibid; Jerome B. Cohen, etc ., ~nal Fina~ Principl�s and ~ Problees 3rd Ed o (Illinois , U , Richard E . Ino~in , ]nc ., 196 ) , Plh 184-185; Carl Ao Dauten, ~� cit. , p. 167 .

DECISION - CTA CASE NO. 2346 - ,16 - The lending by petitioner of a portion of the amount of 560,234.88 to its stockhol- ders and employees for which it earned only 6% interest in the transactions, does not pre- clude the deductibility of the 8% interest in the amount of f29 , 483 . 93 , already paid or in- curred by petitioner , equivalent to the interest charged by the bank on the loan (line of credit or overdraft) under the provisions of Section 30 (b)(1) of the National Internal Revenue Code, which reads, as far as material, as follows: Seco 30 . Deduction from ~ross income. - In computing net income there shall be allowed as deduction - XXXXXXXXX XX (b) Interest (1) In general.- The amount of interest paid within the taxable year on indebtedness , x x x. Section 30 (b)(1) of the Tax Code allowing a deduction of interest from gross income of a taxpayer, is a provision practically lifted from Section 23 of the Revenue Acts of 1932 and 1934 of the United States , lt and this 11 sta- ~dward C. Kohlsaat v . Comm. of Int . Rev . , ltO BTA 528 o53f2thecitui.nsg. ,Swech.ic2h3p(bro) voidfeRs eivnenpueart, Act of 1934 as follows: x x x x . In computing net income there shall be allowed as deductions XXXX (b) Interest .- All interest paid or accrued within the taxable year on indebted- ness. is a provision substantially similar to Sec . 30 (b)(1) of the NIRC, cited above .

DECISION - CTA CASE NO . 2346 - 17 - tutory provision allowing deduction of interest on indebtedness means interest on an obligation 5 o:f the taxpayer claiming it o11 In plain \wrds , under this provision, the interest paid or incurred on a loan obligation can definitely be claimed as deduction from gross income by the taxpayer . It is as simple as that . The interest in question is doubtless one that was paid or incurred on a principal and personal loan liability of peti- tioner to the Philippine Trust Company on "~:Jha t may be considered either as a uline of credit" or 11 overdraft" and , therefore , can be claimed by 6 it as allowable deduction from its gross income ; and the obligation of petitioner to said bank on such loan is not the personal and principal loan obligation or liability of the stockholders and employees to the said bank, as respondent would want t o appea ~ in effect , before us. 5 Edward Co Kohlsaat v . Comm . of Int . Rev 9, .Ql2.a. cit .� Chester J;. o Sheppard Vo Comm . of Int o Rev ., 37 B1A 279 , 281 , applying Sec . 23(b) of the Revenue Act of 1932 of the U.S o, which provisions allovJs as deduction uj.nterest1,paid or ~ccr~ed ~ithj.n the tax- able year on indebtedness , 11 Underlining m o) 6 See Frieda Hempel , 47 , 183 PHTC Memo ; Rainbow Gasoline Corp o Vo Comm , of Int o Rev ., 31 BTA 1050, 10607 A. Backus Jr Q & Sons Vo Comm o of Into Rev., 6 BTA 590 , 592 ..

DECISION - CTA CASE NO . 2346 - 18 - If there is any liability of the � stockholders and employees on their respective loans for which they have paid an interest of 6%, it is to their lender, or petitioner herein, to whom they 1.-1ere individually indebted and the interests they have paid on their individual lilians can be claimed by them as deductions in their respective individual income tax returns . And the return to petitioner of the 6/o interests, paid by the stockholders and employees to petitioner on the loans given to them~ therefore , will not give rise to the dis- allowance of the interest of �29 , 483.93 paid by petitioner to the bank on the overdraft, equivalent to 8% interest charged against the monthly ba- lances of the individual loans to the petitioner ts employees and stockholderso Uere we to take the stand of respondent and disallm�l the interest claimed to the extent o the sum of ~29 , 483993 , that would have the effect of disregarding the legal rights of the parties , which is the right of. the petitioner, on one hand, to lend money at a . legal rate of interest , and the indi~ vidual stockholders and employees , on the other hand, to borrow money at an interest which contracting parties are recognized

DECISION .... CTA CASE NO . 2346 T - 19 - by law as personalities independent of and dis- tinct from one another9 vfuile the Government it is true may have an interest in all taxable transactions between contracting parties , and qualified to question their validity or ligitimacy whenever necessary to block tax evasion, and disregard said tran- sactions when ille gal~ the loans, however , granted ~~ by petitioner to its employees and stockholders were not invalid or illegalp The evidence at ha...-d do not show that petitioner had intended , by granting said individual loans , to evade taxes to the jeopardy or prejudice of the Government ~ 1;bat may perhaps be unla\vful would be, if peti- tioner did not recognize in its 1961 income tax return the 6~ interest income it had earned from the individual loans granted to its stockholders and employees , but there is no indication towards this end , and this question was not brought before us . These individual loan transactions between petitioner and its employPes and stockholders cannot , therefore , be legally disregarded o In one case in 7 Antonio Medina vso Collq of Int ~ Rev ~, CTA Case No. 129 , November 26, 1958; aff 1 d in Antonio Molina vs . Collector of Into Revo , et al o G.Ra L-15113 , Jan. 28 , 1961 , lSCRA 3o2 , 3o7

DECISION - CTA CASE NO. 2346 - 20 - the U. So , where a divorced wife had actually paid the interest on a personal mortgage debt , not a business debt , a loan obligation_, an9. a liabilit ~ of the divor ce d husband , who is a lawyer by profession , the interest paid by the divorced wife but claimed by said di- vorced husband as interest deduction in his return \-Jas held allm-Jable as he (the divorced husband) was the one personally and principally 8 liable for the mortgage debt . In this particular case at bar , the in- terest having been paid by petitioner on its personal loan obligation to the Philippine Trust Company which was as aforesaid on a '1line of credit" or an 11overdraft, 11 such interest is clear- ly deductible from gross jncome . The interest to be deductible need not be one that is paid, or incurred, only upon a loan obligation se- cured for business purposes, since, as shown by the above cited authorities , interest is deductible under Section 30(b)(l) of the National Internal Revenue Code, �whether the debt was secured for business or for personal purposes. 8 EdvJard c . Kohlsaat , QI2 � ill~, PP o 528 , 532- 534

DECISION - CTA CASE NO. 2346 - 21 - As in the last throes of the struggle, respondent finally asserted that the non- deductibility of the interest in question can be based upon the fact that there were no records which will support the payments of the interests. This assertion can hardly be considered meritorious inasmuch as there was an actual finding by Examiner Federico Doria that there was an overdraft incurred by petitioner from the Philippine Trust Co. of which the 129,483.93 computed interest is only part of that large interest recognized by respon- dent as having been paid by petitioner to the bank on the said overdraft, and that the only reason for his disallowance of the deduction is because it is not a business expense, or that it was paid or incurred for the "benefit of the stockholders and employees. 11 9 This last ground asserted by respondent counsel in defense of his disallowance seems to us to be just an afterthought since this was not asser- ted by him even during the administrative in- vestigation. 9BIR rec., p. 32.

.I DECISION - CTA CASE NO . 2346 - 22 - ' Petitioner also claimed a deduction in the amount of �110o00 as contribution to the Mindoro Farm but which was disallowed by respondento In denying the claimed contribution deduction, res- pondent based his action on the fact that peti- tioner, having incurred a net loss in its farming business in the year 1961, it cannot have been pos- sible that the latter made that contribution. 10 We find this contention equally not worthy. The disallowance of contribution could not be validly based simply upon the fact of the existence of a net loss to the business of petitioner. In order to be valid, the disallowance should be based on the fabt that there was not in fact any contribution. The records or worksheets 11 'of respondent actually show that this contribution was made by petitioner in the year 1961 during the time that the Mindoro Farm to which it was then given was apparently still in operation. It is not con- vincingly logical for respondent to even suppose that since petitioner had suffered a net loss in its farm business operation at the end of the tax- able year 1961, it would nigh be impossible that a ~ 0BIR, REC., P� 32.

DECISION .... CTA C SE NO . 2346 - 23 - contribution of 110900 have been made by peti- tionerp Not only is the amount*or�contribut1on claimed very small , but this amount can certainly be deductible even if petitioner ' s business have suffered a loss at year ' s end as long as it was actually been contributed by it o Petitioner 1 s claim for deduction of the sum of ~llO o OO as contribution should , therefore , be allowed�o ~mEREFORE , the decision appealed from should be , as it is hereby, reversed o Without pronouncement as to costso SO ORD'SRED ., Quezon City, December WE ~ ~: �LA&O;Rfo&LlVtAR,:Z~ Presidi Judge ~ d.L ~ � L ~~~� :de ~ b.MANTE ILLE : Associa e Judge