Eastman Kodak Co. v. District of Columbia

• Decision Date: 02 November 1942
• Docket Number: No. 8135.,8135.
• Citation: 131 F.2d 347,76 US App. DC 339
• Parties: EASTMAN KODAK CO. v. DISTRICT OF COLUMBIA.
• Court: U.S. Court of Appeals — District of Columbia Circuit

76 US App. DC 339, 131 F.2d 347 (1942)

EASTMAN KODAK CO. v. DISTRICT OF COLUMBIA.

No. 8135.

United States Court of Appeals for the District of Columbia.

Argued October 12, 1942.

Decided November 2, 1942.

Mr. James S. Y. Ivins, with whom Mr. John C. Reid, both of Washington, D. C., was on the brief, for petitioner. Mr. Richard B. Barker, of Washington, D. C., also entered an appearance for petitioner.

Mr. Glenn Simmon, Assistant Corporation Counsel, with whom Messrs. Richmond B. Keech, Corporation Counsel, and Vernon E. West, Principal Assistant Corporation Counsel, all of Washington, D. C., were on the brief, for respondent.

Before GRONER, Chief Justice, and EDGERTON and RUTLEDGE, Associate Justices.

EDGERTON, Associate Justice.

Petitioner complains of the income tax which it paid to respondent, under protest, for 1939. Petitioner's gross receipts were (1) from sales everywhere, $89,044,490.25, and (2) from sales in the District of Columbia, $339,027.36. The ratio of District sales to total sales was .38073 per cent. Respondent applied that ratio to petitioner's total apportionable net income, $18,298,472.25. The result, $69,667.77, was found by respondent and by the Board of Tax Appeals of the District to be petitioner's net income taxable in the District.

The District of Columbia Revenue Act of 1939 taxes "the taxable income from District of Columbia sources" of every corporation,¹ and provides that "In the case of any corporation, gross income includes only the gross income from sources within the District of Columbia. The proper apportionment and allocation of income with respect to sources of income within and without the District may be determined by processes or formulas of general apportionment under rules and regulations prescribed by the Commissioners."² The Commissioners' regulations provide in Art. 3(b) (1) that "Where gross income for any taxable year is derived from the manufacture and sale or purchase and sale of tangible personal property, the portion thereof to be allocated to the District shall be taken to be such percentage of the total of such income as the sales within the District during such taxable year bear to the total sales of the corporation for such taxable year. * * *"³ Petitioner's attack is directed against that apportionment formula.⁴ It does not contend that its District sales were less profitable than other sales, or that they, together with the manufacture of the goods involved, did not result in a profit of $69,667.77. Petitioner's contention is that, since the goods sold in the District were produced elsewhere, the profit which resulted was not entirely or even chiefly "income from sources within the District of Columbia." Petitioner concedes that no question of constitutionality is involved.⁵ The only question is one of statutory construction.

It may be true, as petitioner contends, that from the economic point of view a large portion of the income in question is attributable to activity which took place outside the District. But that is not material to the question whether the income came from "sources" within the District, as that term is used in the tax acts. It has been consistently held that, unless a different legislative intention appears, the geographical "source" of income from the manufacture and sale, or purchase and sale, of goods is in the jurisdiction where the sale is made.⁶ Congress must be assumed to have written the District Revenue Act in the light of the authorities. Moreover, the District business privilege tax, which the present income tax supplants, was measured solely by gross receipts from District sales.⁷

Petitioner relies on the fact that Congress has expressed a different intention with respect to the Federal income tax. Section 119(e)⁸ of the Internal Revenue Code of 1939 provides that income "from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the United States, or produced (in whole or in part) by the taxpayer without and sold within the United States, shall be treated as derived partly from sources within and partly from sources without the United States." Petitioner relies, further, upon the provision in the District of Columbia Revenue Act of 1939, Sec. 29(a),⁹ that the assessor "shall apply as far as practicable the administrative and judicial interpretations of the Federal income tax law so that computations of income for purposes of this title chapter shall be, as nearly as practicable, identical with the calculations required for Federal income tax purposes." But the language just quoted can apply only to those parts of the Federal law which are like parts of the District of Columbia law. There is nothing in the District law which even remotely resembles the quoted language of Section 119(e) of the Internal Revenue Code. Moreover, the express purpose of the quoted language of the District act is to make computations of income under that act "as nearly as practicable, identical with the calculations required for Federal income tax purposes." Petitioner's proposed insertion in the District law, with regard to...