CTA Case No. 772

DECISION

In a letter dated Pebruary 25, 1958, the peti- tioner wes granted by the Bureau of Internal Revenue an extension of time until April 3%, 1958 within which to file ite income tax return for the calendar year 1957, subject to the condition that 50% of the tax due on the return was to be paid to the City Treas urer of Manile on or before May 15, 1958, with or with- out assessment notice from said Dureau, otherwise, the whole amount of the tax would be subject to the S% surcharge and the 1% monthly interest. from May 16, 1958, pursuant to Section Sl(e) of the National Inter- “nal Revenue Code. Petitioner’s income tax return was filed on April 24, 1958, showing an income tax due in the sum of °1,148,585.00.

Subsequently, on or about May 24, 1958, peti- tioner received from respondent an assessment notice dated May 21, 1958, requiring the former to pay the sum of °1,146.585.00, the tax due from it as shown on the return, the payment to be made gt its option in two equal installments, the first installment on

DECISION «

C.T.A. CASE NO. 772 «= 2 « or before June 15, 1958, and the second installment on or before August 15, 1958. Neither installment was paid on said dates.

On March 13, 1959, petitioner paid the whole amount of the tax, plus 5*® surcharge, interest and compromise in the sum of #],303,693.98 The amount of | interest peid by petitioner was computed from May 16, 1958 to the date of payment, except thet on one-half of the tax, interest was computed from August 16, 1958 to the date of payment. Holding that petitioner ie liable for the interest of 1% per month on the entire amount from May 16, 1958 to the date of payment, ress pendent demanded from the former the sum of 17,228.77, which amount corresponds to the umpaid interest from May 16 to August 16, 1958 on onecehalf of the tax. Petitioner's request for reconsideration having been denied by respondent, the case is now before us on ep- peal.

The sole issue in this case, as presented by the parties, is whether or not upon failure of peti- tioner to pay the first installment of its 1957 in. come tax on or before May 15, 1958, the whole amount of the tax, not the first installment alone, became subject to interest from May 16, 1958 to the date of payment. Petitioner maintains that without notice or demand from respondent the second installment is not subject to interest before its due date on August 15, 1958; respondent, on the other hand, contends that no such notice or demand is necessary. Apparently, both 275

Swed

DECISION

C.T.A. CASE NO. 772 = - parties assume that the tax in question was payable by instellment.

The lew applicable to the case is Section 61 of the National Internal Revenue Code, before its amend- ment by RepG@blic Act Ne. 2343, which provides:

SEC. Sle income tax.~ ( Agaeesnsnt of tax. 1 assessments shall made by t llec- tor of Internal Revenue and all persons and corporations subject to tax shall he notified of the amount for whieh they are respectively liable on or before the first day of May of esch successive year.

(b) « The tetal amount of tax ingosel t this Hite shall be paid on ox before the fifteenth day of May foele lowing the close of the calendar year, by the person subject to tax, and, in the case of a co ation, by the president, vice- president, or other responsible officer thereof. If the return is made on the basis of a fiscal year, the tetal amount of the tax shall be paid on or before the fiftednth day of the fifth month following the close of the fiscal year.

tax t the taxpayer is in excess of ten pesos, the taxpsyer may elect to pay the tax in two equal installments in which case the first installment shall be paid on or before the date prescribed in the preceding subsection, and the second in- stallment, on or before the fifteenth dey of August following the close of the calen- dar yeet, or on or before the fifteenth day of the eighth month following the close of the fiscal yeer, as the case may be.

If any installment is not paid on or be- fore the date fixed for its payment, the whole emount of the tax unpaid shell be paid upon notide and demand from the Cole lector of Internal Sevenue.

(d) ; usal or neg © Make @ return and in udulent cases of erroneous, false, or fra returns, the Collector of Internal Revenue shall, Pr the discovery thereof, at any time wi three years after said return is due, or hes been made, make a return upon information obtained as provided for 276 PPR.

DECISION -

e4 in this code or by existing law, or ree quire the necessary corrections ta be made, and the assessment made by the Collector of Internal Revenue thereon shall he paid such person or corpor.- ation immediately upon notification of the amount of such assesamei (e) ° = TO any Sum or sums due and unpeid after the dates prescribed in subsections (b), (e) and (d) for the payment of the game, there shall be add.

tax from the time the same beceme dua, except from the eatates of insane, de- ceased, or insolvent persons.

The law provides that, in the case of calendar year Rampayent. of which petitioner is one, the tetel amount of income tax must be paid on or before the fif- teenth day of May fellowing the close of the calender year. (Subsec. (b), Secs Sl.) However, when the tax asseseed ageinet the taxpayer was in excess of ten pesos, the texpayer could elect to pay the tax in two ecval instaliments, in which case the first install. ment must be peid on or before May 15th, and the sec- ond installment, on or before August 15th following the close of the calender year. And if any install. ment was not peid on or before the date fixed for its payment, the whole emount of the tax unpeid must be paid upon notice and demand from the Commissioner of Internal Revenue. (Subsece (c¢), id.) To any sum or sums due and unpaid after the dates prescribed in sub- sections (b) end (c)fex the payment of the same, there shall be added interest at the rate of 1% « month upon said tax from the time the same became dus.

DECISION -

C.T.A. CASE NO, 772 = 5 = (Subsec. (@), ide) When did the tax becomes due in ene neaaeatereantperarpatangennenanrnee this case?

It will be noted thet, under the law, if the amount of the tax was in excess of "10.00, @ taxpay~- * I me ee ™ } er eculd elect to pay the tex in two equal install. ments, the first installment being payable not later than May 15th, end the second, on or before August 25th after the. close of the calendar year. The taxe= payer must elect to pay by installment to be entitled to the privilece. In this case, petétioner did exercise the option tco-pay by insteliment. There is nothing of record to show thet petitioner gave no- tice te respondent, directly or indirectly, of its desire to psy the tex by installment. In fact, the whole amount of the tax was paid on March 13, 1959. Therefore, the whole amount of the tex was due and payeble on or before Mey 15, 1958, pursuant to Subt Section (b) of Section 51, and interest at the rate of 1% pex mcnth is due on the entire smount from said date, when it became due, te the date of payment. Sub.

section (c) of Section 31, preseribing the dates of payment of income tax by installment, is not applice.

DECISION e C.T.A. CASE NO. 772 - 6 « ble as petitioner did not choose to pay by installment. ~ Finding the decision of respondent in accordance with law, the same is hereby effirmed. No costs.

Associate Judge

WE CONCURS

Presiding Judge