Park 100 Development Co. v. Indiana Dept. of State Revenue
Decision Date | 21 December 1981 |
Docket Number | No. 1281S360,1281S360 |
Citation | 429 N.E.2d 220 |
Parties | PARK 100 DEVELOPMENT COMPANY, Appellant (Plaintiff below), v. INDIANA DEPARTMENT OF STATE REVENUE, Appellee (Defendant below). |
Court | Indiana Supreme Court |
William M. Evans and Robert P. Kassing, Bose & Evans, Indianapolis, William Wehrle, Martinsville, for appellant.
Linley E. Pearson, Atty. Gen., Rollin E. Thompson, Asst. Atty. Gen., Indianapolis, for appellee.
This cause is before us upon the petition to transfer of defendant-appellee, the Indiana Department of State Revenue (Department). The Court of Appeals, First District, reversed a lower court judgment which had affirmed an assessment of a corporation tax liability against Park 100. Park 100 Development Co. v. Indiana Department of State Revenue, (1979) Ind.App., 388 N.E.2d 293. We now grant transfer and vacate the opinion of the Court of Appeals. The judgment of the trial court is affirmed.
The evidence was summarized by the Court of Appeals as follows:
Park 100 v. Indiana Dept. of State Revenue, supra, 388 N.E.2d at 294.
The trial court found that the corporate income tax was properly assessed against Park 100 since the ultimate beneficial enjoyment of 45% ownership of Park 100 did reside in the two corporate parents of one of the three partners. The court further held that Ind.Code § 6-3-7-1(b), supra, is applicable to any partnership which has as a partner a separate partnership involving a corporation. 1
The Court of Appeals reversed the trial court on two grounds. First, they found that the general rule of statutory construction which holds that statutory words will be accorded their ordinary significance and commonly accepted meaning unless a different purpose is clearly manifest from the statute itself must be applied to the word "partner" in the questioned statute. Thus the structure or substance of the ownership of a partner could not be considered in determining whether a partner qualified for exemption under the statute. Also, the Court found that the general rule that tax-levying statutes are to be construed against the state and in favor of the taxpayer would apply in this case. These rules are valid statements of the law in Indiana. Indiana Department of State Revenue v. Klink, (1953) 232 Ind. 473, 112 N.E.2d 581; Indiana Department of Revenue v. Colpaert Realty Corp., (1952) 231 Ind. 463, 109 N.E.2d 415; Indiana State Department of Revenue v. Bethel San., Inc., (1975) 165 Ind.App. 421, 332 N.E.2d 808.
However, these two rules must be applied in conjunction with the basic principle that all statutes should be read where possible to give effect to the intent of the legislature. It is well settled that the foremost objective of the rules of statutory construction is to determine and effect the true intent of the legislature. Loza v. State, (1975) 263 Ind. 124, 325 N.E.2d 173; Thompson v. Thompson, (1972) 259 Ind. 266, 286 N.E.2d 657; State v. Gilbert, (1966) 247 Ind. 544, 219 N.E.2d 892. It is also well settled that the legislative intent as ascertained from an Act as a whole will prevail over the strict literal meaning of any word or term used therein. State v. George, (1980) Ind., 401 N.E.2d 680; Combs v. Cook, (1958) 238 Ind. 392, 151 N.E.2d 144; Brown v. Grzeskowiak, (1951) 230 Ind. 110, 101 N.E.2d 639, 102 N.E.2d 372. When the court is called upon to construe words in a single section of a statute, it must construe them with due regard for all other sections of the act and with due regard for the intent of the legislature in order that the spirit and purpose of the statute be carried out. Indiana State Highway Commission v. White, (1973) 259 Ind. 690, 291 N.E.2d 550.
A brief study of the history of the Adjusted Gross Income Tax Act, Ind.Code § 6-3-1-1 et seq. (Burns 1978), convinces us that the legislature's intention was to levy a corporate income tax on any corporate entity engaged in a business venture, even though it had joined with others in a partnership. When the Act was originally passed in 1963, partnerships were not subject to the tax whereas corporations were subject to the tax. Thus, corporations could avoid corporate taxation of a business venture by simply joining in a partnership with another corporation, individual or partnership. To stop this type of corporate tax evasion, the Indiana General Assembly in 1969 added section (b) to Ind.Code § 6-3-7-1, supra. This subsection provided that if one of the partners of a partnership was a corporation, then the partnership itself must pay the greater of the gross or adjusted gross...
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