Pioneer Parachute Co.  v. Comm'r of Internal Revenue

• Decision Date: 25 September 1944
• Docket Number: Docket No. 3367.
• Citation: 4 T.C. 27
• Parties: PIONEER PARACHUTE COMPANY, INC., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

4 T.C. 27

PIONEER PARACHUTE COMPANY, INC., PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 3367.

Tax Court of the United States.

Promulgated September 25, 1944.

1. JURISDICTION— DEFICIENCY IN ONE KIND OF TAX BUT OVERASSESSMENT IN ANOTHER.— The Tax Court has no jurisdiction over income tax or or declared value excess profits tax where overassessments were determined by the Commissioner in those taxes, even though, in the same notice, the Commissioner determined a deficiency in excess profits tax for the same year.

2. EXCESS PROFITS TAX— RELIEF UNDER SECTION 722— jurisdiction.— The Tax Court, in a proceeding based entirely upon a notice of deficiency in excess profits tax, will not consider the question of relief under section 722, since the statute now requires that the claim be considered first by the Commissioner and gives this Court jurisdiction to hear the parties only after a claim has been rejected in whole or in part by the Commissioner, and this is so even though the petitioner was filed while a statute was in effect under which the benefits of section 722 could be claimed to a limited extent in a petition filed with this Court and based upon a notice of deficiency in excess profits tax. Edmund S. Kochersperger, Esq., for the petitioner.

R. C. Whitley, Esq., for the respondent.

OPINION.

MURDOCK, Judge:

The Commissioner determined a deficiency in excess profits tax for the calendar year 1941, and in the same notice advised the petitioner of the determination of an overassessment in income tax and an overassessment in declared value excess profits tax. The petitioner, in a petition filed November 6, 1943, attempts to place all of these taxes in controversy and also ‘invokes the jurisdiction of this Honorable Court for the redetermination of excess profits taxes for the year 1941 (or any portion thereof) by the application of the relief provisions under Section 722.‘ The Commissioner has moved to dismiss the proceeding for lack of jurisdiction in so far as it relates to income tax and to declared value excess profits tax. He has also moved to strike from the petition paragraphs ‘Fifth‘ and ‘sixth (k)‘ which relate to relief under section 722. The parties were heard on these motions.

This Court has been given jurisdiction in income tax cases only where the Commissioner has determined a deficiency in that tax. The income tax mentioned in the notice of deficiency and the excess profits tax are separately imposed, so that a determination of a deficiency in one does not support any jurisdiction of this Court over a determination of an overassessment in the other. The same is true in regard to the declared value excess profits tax and the excess profits tax. Therefore, as to the income tax and the declared value excess profits tax, this proceeding is dismissed for lack of jurisdiction. Cf. Superheater Co. v. Commissioner, 125 Fed.(2d) 514; Will County Title Co., 38 B.T.A. 1396; Hobbs Western Co., 43 B.T.A. 5; Scaife Co., 47 B.T.A. 964; Liberty Mirror Works, 3 T.C. 1018.

This Court, in Uni-Term Stevedoring Co., 3 T.C. 917, held that it has no jurisdiction to consider and rule upon an application by the petitioner for relief under section 722 of the Internal Revenue Code in a proceeding based entirely upon a notice of deficiency in excess profits taxes. The petitioner argues that the Uni-Term Stevedoring case is not authority here. It points out that, unlike the situation in that case, the petition here was filed prior to the amendment of section 722(d) by Public Law No. 201, 78th Cong., 1st sess., approved December 17, 1943, and under the prior provisions a taxpayer to whom the Commissioner had mailed a notice of deficiency in excess profits tax could claim the benefits of section 722 in a petition filed with this Court. Therefore, it argues, we did obtain jurisdiction and never lost it.

The method of handling applications for relief under section 722 was developed over a period of years through a number of amendments. As first enacted by section 201 of the Second Revenue Act of 1940, the law provided no machinery for the administration of claims for relief. Section 6 of the Excess Profits Tax Amendments of 1941, and section 222 of the Revenue Act of 1942 provided for the handling...