CTA Case No. 1273 (Decision)

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Republic of tho hilippines COURT OF TAX APPEALS Manila

CENTRAL AZUCARERA DON PEDRO Patiticner. (

M - V*rsu$ C.T.A.CASE NO.1273

COMISSIONER OF INTERNAL REVENUE. Respondent.

DECISION

This is an appeal from the dacision of the res-

pondent holding the potitioner liable for the paymant of the sum of l,509.30, Nepresenting K% monthly interest on the deficioncy_income tax assesaod against petition-

er for the fiseal year ending on August 3l, 1954. The

facts of the case, as stated hy counsel for petitioner.

are as follows.

virtue of the laws of the Philippinen. with Den Pedro, is a corporaticn duly organized oxisting end doing bus iness under and by officos at Nasughu, Batangas. The petitioner, Central Azucarer

in tho Bureau of Internai nevenue ito in- cooputing its net incoma. reporting the come tax thereon. on tho fiacal year basio is, within the period granted to the peti- tioner under section 46 of the Revenue Code. same for income taxation, and paying the in- ending August 31 of avery year. come tax return for ito fiscal year ended August 31. 195 on0ctobor 28,i934. that The petitioner has consistently heen Itfiled

ont Official Receipt No. 539l05. dated Jan- pondent, within the period prescribed thezo- for. the sum of m491.038.00 repre3enting the inceme tax due for said fiseal year as such payment, it was issued by the respond- ot 245,5i9.00 and Offici1 Receipt No. computed in its snid income tax retun. uary 15, 1933, corresponding to the amount Tho petitioner duly paid to the res- FOr

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C.Y.A.CASE NO, 1273 DACISION-

ing to th0 amount of 245.519.00. 352165.dated Apri1 15. 1953.correspond-

did not call for the payment of any inter- supposedly due tor the fiscal year onded assessed against tho petitioner the amount August 31, 1954; this deticieney as9essmant eat on the oupposed deficiency income tax oo assassod. of 167.939.00 as eticiencx income tax On Cctober 15.1959.tho respondent

interposing objection to tho above said, deficiency assesament and requesting cencel- submitted to the respondont a lettar-protost laticn thereof. On Octoher 26.1959.tho potitioner

August 31.1954 the sum of 11.571.30.to pay which tho petitionar was granted by the respondent odvised the patitioner that there had ultimately been tound to he dw from the latter for its fiseal year ended 31-32. cTA rocos.) raspondent a period expiring January 2i. 1962. Ey latter datod Decembar 20, 1%l. the (seo Petitionert Memorandum, pagos

The eole issue is whother or not petiticnor is

liablo for the poyment of the interest of Kx per month

on the deficioncy income tax in question presctibed in

Section Sl(d) of tho National Internal Revenue Code. as

amended by Bepubl1c Act No. 2343.

Section Sl(d) of tha Revonue Codo. as anonded by

Republic Act No. 2343, provides

provisions regarding preaeription to the con- upon tho amount determined ns deficiency deficiency and shall bo poid upon notice Revenue; and shall bo collected as a part Per onnum from the date prescribed for the in installments, fron the date preseribed to the date tha deficiancy is assossed Provided. That tho maximum amount that may be collacted as interest on deficiency shall trary notwithstanding. shall be assesaed at the samo time as the ond denand from the Commissioner of Internal of the tox, ot tho rate or six pet centum peyment of the tox (ot. if the tax is paid for the payment of the first installmant) in no case exceed the amount correaponding to o period ef throo yanra, the presont (a) Intereat on deficiency.- Interest

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C.7.1. CASE . 1273 DECISKN C

3

Republie Aet No. 2343 took offoct on June 20, 1959. It is contended that the imposition of interest

on the deficiency incone tax for the fiscal year ending August 3l. 1954 io tantomount to retroopective appli-

cation of Republic Aet No. 2343. The same question was

Presented in Moald Lumber Coipany V. Padilla, C.T.A. No. 1222.March 23, 1964.wherein 1t wes held

tor thetaxabio year i953.after.thot- fectivity of Repuhlic Act No.343. new law is, therefore, applicable to th ot herain petitionor te the effect that to new iaw would have the ffect ol applying the same retroactively. wmich is not gane- retroactivaly has no legal basis. The deficiency assessment was made on Nov- ember 24, 196i (for deficiency income tax petitioner for the yoar l953. Congress has full power to provide for pay- ment of interat on doIinzuency taxes which Should have hacn paid hefore the anactment fective. for yoars prior to the effectivity of the which is sought to bs collactod has been computed only from June 20, 1959. tho date of effactivity of the new iaw. tion that the law is sought to be applied assessaent of tho deficiency tax against but assessod nftor the new law hecsa af impoae interest on doficlency incona tax tioned by the law. of tho Iaw prescrihing paymgnt of interoot We cannot subscribe to the theory Precisely. the interest W We think Tho alleg The

In this case, the deficiency income tax ter tho

fiscel yoar ending August 3l, 1954 was assessed against

petitioner on Dacomber 20, l96l. after the effectivity of Republic Act No. 2343. Tharefore, tho doctrine laid down in the cnso ot Heald Lumber Company. citod above.

applies with equal force to the caso at bar.

Section l3 of Republic Act Ne. 2343 which providas

upon its approvaii Proyidad: That the rote come received from January firat, Mineteen hundred and fifty-nine. and for fiscal per- iods onding after June thirty, Nineteen hereinabove stipulated shali apply to in- Bec. l3. This Act shall take effect

144

C.T.A.CASE NO.1273 DECISION

hundred ond fifty-nine.

has been cited in support ef the view that the inter-

gst provided in Section 5l(d) of tho Revenue Code can-

not be inposed on deticiency inceme tax assessed on in-

come eozned prior to l959 (or te fiseal periods ending prior to June 30, 1959). The provision cf Seetion 13 of Republic Net Mo. 2343 limiting the applicability ef the rates of ineome tex Prescribed in Saction l of said

Act (amending Section 21 of the Revonue Code) to income

received from January l, l959, ond for fiseal periods

ending aftez June 30, 1959, can not be considerad as an

indication of the intentien of Congress te limtt tho ap-

plicability of the interest prescribed in 3ection Sl(d)

to the deficieney income tax on income earned fron tho

dato of the offeetivity of the anandatory Act. Section 3l(d) does not distinquish tha deficiency income tax on

income emrned prior to the effoctivity of Republic Act

No. 2343 from the doficiency income tax on incomo earned from the date of offoctivity of aeid Act./As me have

heretofore held in the Moald Lumber Company cose. Congress has full power to #impose interest on deficiency income

tax on income carned prior to the amendatory iaw but assessed aftez its onactment. ]

Pinding the decisien oppealed from in orde*, the same is hereby affirmed, with costs against petitioner.

W CU Mani1a, June 15, 1964. SO ORDERED PoOrdna RONAN N UALI Associato Judge

niAg MART MDNARI

-/Associate Judge LICIANO 145