Commonwealth v. Repplier Coal Co.
| Decision Date | 03 January 1944 |
| Docket Number | 29 |
| Citation | 348 Pa. 372,35 A.2d 319 |
| Parties | Commonwealth, Appellant, v. Repplier Coal Company |
| Court | Pennsylvania Supreme Court |
Argued November 29, 1943.
Appeal, No. 29, May T., 1943, from judgment of C.P. Dauphin Co., Commonwealth Docket, 1941, No. 160, in case of Commonwealth v. Repplier Coal Company. Judgment affirmed.
Appeal by corporation from decision of Board of Finance and Revenue.
The facts are stated in the opinion, by HARGEST, P.J., of the court below as follows:
This is an appeal by the defendant from the settlement for Corporate Net Income Tax for the calendar year 1936 in the sum of $913.68, upon which interest was subsequently settled amounting to $157.40, making a total of $1,071.08, which amount was paid under protest.
Briefly the contentions are (1) whether the Act of April 8, 1937 P.L. 227, re-enacting the Act of May 16, 1935 P.L. 208, applies to the income for the year 1936, and (2) whether the defendant and its parent corporation had a right to file a consolidated return.
FACTS
We have answered the requests for findings of fact and filed the same of record. We repeat so much of them as is necessary to this discussion.
1. The defendant is a domestic corporation subject to the Corporate Net Income Tax Act, and during the year 1936 the Buck Run Coal Company, also a domestic corporation subject to said Act, owned or controlled a majority of the voting capital stock of the defendant.
2. On March 4, 1937, the Buck Run Coal Company made application to the Department of Revenue for permission to file a consolidated report for both companies for the calendar year 1936, which application was refused March 9, 1937.
3. On April 9, 1937, the Buck Run Company, on behalf of itself and the defendant, submitted a report showing the combined net income and that there was a net consolidated loss of the parent and subsidiary company of $211,638.72 for the year 1936. Attached to the consolidated report there was submitted, without prejudice, reports on a separate basis by each company.
4. On February 25, 1936, the Department of Revenue issued a regulation with reference to the consolidated reports providing that only corporations subject to the Pennsylvania Corporate Net Income Tax Act which make consolidated reports to the Federal Government, under Section 141 of the Revenue Act of 1934, could make consolidated reports to the Pennsylvania Department of Revenue.
5. In the Corporate Net Income Tax Report which the defendant filed with the Department of Revenue on a separate basis on April 9, 1937, it reported its net income as reported to the Federal Government for the year 1936.
6. On February 1, 1940, the Department of Revenue settled, and on February 19, 1940, the Department of the Auditor General approved, an account against the defendant for the year 1936 in the amount of $913.68, based on the report of net income which the defendant filed on April 9, 1937, on a separate basis, and later an account for $157.40 for interest was also settled. Both amounts vere paid under protest.
7. In the report filed by the Buck Run Company on a separate basis April 9, 1937, it showed a loss as reported to the Federal Government for the calendar year 1936, and on December 5 1938, the Department of Revenue settled, and on December 30, 1938, the Department of the Auditor General approved, an account in which no tax was charged against that company. No petition for resettlement or review was filed as to this settlement.
8. Had a settlement been made upon the report filed upon a consolidated basis, no tax would have been due from the Repplier Company.
9. The Department of Revenue did not, prior to April 15, 1937, prescribe or prepare a form upon which either the defendant or the parent company could make either an application for filing a report or a report on a consolidated basis showing the combined net income of the defendant and its parent company.
10. On January 15, 1938, and on January 31, 1938, the Department of Revenue issued regulations and instructions interpreting the Act of 1935, as amended by the Act of April 8, 1937, relating to the filing of consolidated reports, which provided that the right to file consolidated returns, under the decision of the Supreme Court (National Transit Co. v. Boardman, 328 Pa. 450), could "apply only to settlements for the Calendar Year 1935 and for Fiscal Years beginning in 1935" and "are governed by the amendment of 1937 which fixes the additional requirement that consolidated reports may be filed only by those corporations filing on a consolidated basis with the Federal Government." These regulations did not revoke the regulation referred to in Finding No. 4 above.
11. The Federal Net Income and Excess Profits Tax Report for the year 1936 was due and filed with the Federal Government on March 15, 1937.
12. Corporations which could file net income reports with the Federal Government on a consolidated basis in 1936 were defined in Section 141 of the Federal Revenue Act of 1934, as amended, to be corporations which were common carriers by railroad or their related holding or leasing corporations. Neither the Buck Run Company nor the defendant was so engaged during the year 1936.
13. From May 16, 1935, to the time of the trial in this case, the evidence shows it has been the practice of the Department of State of the Commonwealth to require corporations to file in that Department certificates issued by the Department of Revenue as a condition precedent in each of the following cases:
(a) To the issuing of letters patent to a corporation in the case of merger or consolidation of corporations; (b) to the issuance by the Department of State of a certificate of dissolution; and (c) to the cancellation of the certificate of authority of a foreign corporation and issuance of a certificate of withdrawal. There must be filed in each case a certificate of the Department of Revenue setting forth that all reports required by that Department have been filed to the date of the proposed merger, dissolution or withdrawal, as the case may be, and that all taxes, bonus, fees, and charges required by law have been paid up to and including said date.
14. From May 16, 1935, to the time of the trial of this case, it has been the practice of the Department of Revenue to require, as a condition precedent to the issuance of the certificates mentioned in the preceding finding, that (a) each corporation which goes out of existence as the result of a merger, consolidation or dissolution, and (b) each foreign corporation which desires to have its certificate of authority cancelled, and a certificate of withdrawal, shall file a report showing the corporate net income received up to the date of merger, consolidation, dissolution or withdrawal, as the case may be, and pay to the Commonwealth the tax shown by such report to be due by reason of the receipt of such income.
15. The administrative practices above referred to in the two preceding findings were followed and applied in all cases of merger, consolidation, dissolution and withdrawal which occurred between May 16, 1935, and the end of 1936, and between December 31, 1936, and April 15, 1937, and there were a number of such cases during each period.
16. The corporate net income tax of every corporation which entered into a merger or consolidation, or which dissolved or withdrew from the Commonwealth, between January 1, 1936, and April 15, 1937, was computed according to the provisions of the Act of May 16, 1935, P.L. 208, as amended by the Act of August 7, 1936, P.L. 127. The provisions of the Act of April 8, 1937, P.L. 227, were not applied to such settlements, nor were they applied in any case to the settlement of corporate net income taxes for the year 1935.
ACTS OF ASSEMBLY
This Act is known as the Corporate Net Income Tax Act.
The re-enactment of 1937 provides "That the title and all the sections of the act" (of 1935) as amended, "are hereby re-enacted, amended or further amended, as the case may be."
The Act provides for "an excise tax, for a limited period of time, on the net incomes of certain corporations."
Section 3 of the Act of 1935 provided, in part:
"Every corporation shall be subject to, and shall pay for the privilege of doing business in this Commonwealth, a State excise tax at the rate of six per centum per annum upon each dollar of net income of such corporation received by, and accuring to, such corporation during the calendar year one thousand nine hundred thirty-five, . . . a similar tax at the rate of ten per centum per annum upon each dollar of the net income of such corporation during the calendar year one thousand nine hundred thirty-six . . ."
Section 3 of the Act of 1937 provides for a tax of seven per cent. for the calendar years of 1937 and 1938, and for the payment upon the basis of a fiscal year where the corporation reports to the Federal Government on that basis.
Section 4 requires each corporation liable to tax to report prior to April 15 on a form prescribed of each of the years 1936, 1937, 1938 and 1939 the amount of net income, and pay one half of the tax when making the report and the balance in thirty days thereafter.
Section 5 provides:
"The department (shall) may, upon application made to it, in such form as it shall prescribe, permit any corporation owning or controlling, directly or indirectly, a majority of the voting capital stock of another corporation or of other corporations, subject to the provisions of this act, to make a consolidated report, showing the combined net income: Provided, That consolidated reports may be made only by corporations making consolidated returns to the Federal Government."
Section 13 provides:
"This act shall become...
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