State Tax Commission v. Mississippi Power Co

Decision Date22 April 1935
Docket Number31657
Citation160 So. 907,172 Miss. 659
CourtMississippi Supreme Court
PartiesSTATE TAX COMMISSION v. MISSISSIPPI POWER CO

Division B

APPEAL from chancery court of Hinds county HON. V. J. STRICKER Chancellor.

Petition by the Mississippi Power Company to vacate an assessment for income taxes made by the State Tax Commission. From a decree for petitioner, the Commission appeals. Affirmed.

Affirmed.

J. A. Lauderdale, Assistant Attorney-General, for appellant.

Section 5031, Code of 1930, is exactly the same as Section 8, Chapter 132, Laws of 1924, except the phrase "that a taxpayer having a fiscal year beginning in 1929 and ending in 1930" in paragraph (d), Section 5031, Code of 1930 reads, "that a taxpayer having a fiscal year beginning in 1923 and ending in 1924," in said Section 8, Chapter 132, Laws of 1924.

According to the agreed statement of facts in the record, the appellee incurred certain losses in 1928 and 1929. It had a certain net income for the year 1930 and 1931. It construed said Section 5031 so, as to authorize it to deduct said losses from said income; while on the other hand, the State Tax Commission contended that even though said losses were incurred as contended by appellee said statute prevented it from allowing the appellee to deduct said losses from its said income.

The decree of the lower court should be reversed and the petition dismissed.

Crowe v. Cartledge, 99 Miss. 281; McCulloch v. Maryland, 4 Wheat. 316; State Tax on Foreign-Helf Bonds, 15 Wall. (U. S.) 300; Scott v. Reid, 10 Pet. 524; 1 Sutherland on Statutory Construction (2 Ed.), section 85; Story's Conflict of Laws, page 17; Frantz v. Dobson, 64 Miss. 631; Satterlee v. Matthewson, 2 Pet. 380; Charles River Bridge Co. v. Warren Bridge Co., 11 Pet. 420, 582; Breen v. Biddle, 8 Wheat. 1, 89; Bronson's Case, 1 How. 311, 315; Long Island Water Supply Co. v. City of Brooklyn, 166 U.S. 685; Baltimore & Susquehanna R. Co. v. Nesbit, 10 How. 395; Watson v. Mercer, 8 Pet. 88; Calder v. Bull, 3 Dall. 386; Fletcher v. Peck, 5 Cranch, 138; Ogden v. Saunders, 12 Wheat. 266.

Eaton & Eaton, of Gulfport, for appellee.

Exactly that same plan was re-enacted in the Code of 1930 when Chapter 132 of the Laws of 1924 was reenacted as Chapter 124 of the Code. There is no material difference in Chapter 132 and Chapter 124. The only differences are of dates, and these differences are evidently due to the fact that since the Code was adopted in 1930 it was felt advisable to revise the dates of Chapter 132 to make them conform to the date of adoption, but without change in the meaning of application.

The theory of repeal practically applied would create as great a discrimination against the calendar year taxpayer as he seeks to avoid with respect to the fiscal year taxpayer. For example, Paragraph (d), Section 5031 permits a fiscal year taxpayer whose year ends during 1930 to avail himself of losses sustained during his fiscal year--that is, sustained during some part of 1929--but the calendar year taxpayer, under the provisions of Section 5031 relating to him, could not avail himself of any losses sustained in 1929, for losses must be confined to his calendar year--that is, 1930. A construction which leads to the imposition of one discrimination to avoid another must be unsound.

It is equally unsound to demand that judicial construction by taking away a privilege of one group in an effort to equalize their respective tax obligations, must be relied on to prevent discrimination.

When a statute expressly repeals another, yet contains in it a provision of the former statute identical in language--as in the case now before us--or even identical in substance, it cannot be said that as to that provision there has been any repeal.

Anding v. Levy, 57 Miss. 51; State v. Hill, 70 Miss. 106; Abbay v. Board of Levee Commissioners, 83 Miss. 102; McDonald v. State Tax Commission, 130 So. 473; Wilkerson v. Hudson, 71 Miss. 130; Lemonius v. Mayer, 71 Miss. 514; Goodman v. Loan Association, 71 Miss. 310; Miller v. I. C. R. R. Co., 111 So. 558; Town of Utica v. State, 148 So. 635.

Assuredly, if doubts are to be resolved in favor of the taxpayer, the positive plain mandate of the law under Section 4 that accruing or accrued rights are to be preserved in the event of a repeal must be observed.

With all deference we submit that to deprive appellee now of this right would be to deny it the equal protection of the laws and to take its property without due process contrary to the 14th Amendment to the Constitution of the United States.

Pritchard v. Norton, 27 L.Ed. 104, 106 U.S. 124; Danzer & Co. v. G. & S. I. R. R. Co., 69 L.Ed. 1126; Gibbes v. Zimmerman, 78. L.Ed. 342.

OPINION

Anderson, J.

Appellee filed its petition in the chancery court of Hinds county against appellant under the provisions of section 5057, Code 1930, praying that an assessment made against it by appellant for income taxes for the years 1930 and 1931 be vacated and set aside. The prayer of the petition was granted. From that decree appellant prosecutes this appeal.

The cause was tried on agreed facts, as follows:

"The Mississippi Power Company's fiscal years are and continuously have been identical with the calendar years.

"In the conduct of business regularly carried on the Mississippi Power Company sustained certain net losses from the sale of capital assets during the calendar years of 1928 and 1929. The Power Company applied these losses as deductions from net income in making reports for income taxes for the income tax years of 1930 and 1931.

"There is no issue as to the correctness of the amounts deducted or of their application to the particular years involved; and provided the taxpayer is legally entitled to deductions on losses no additional taxes are due.

"The issue is whether under the provisions of section 5031, Code 1930, the taxpayer has the legal right to deduct net losses sustained prior to January 1, 1930, from its net income of 1930 and 1931.

"If such right does not exist, then the Mississippi Power Company owes as additional income taxes the following sums, to wit: For the year 1930, twenty-one thousand one hundred seven dollars and eighty-nine cents with interest at the rate of one-half of one per cent per month from March 15, 1931; and for the year 1931, thirteen thousand six hundred sixteen dollars and eighty-nine cents with interest at the rate of one-half of one per cent per month from March 15, 1932.

"The undersigned also agree that the foregoing statement of facts may be used upon the hearing of the appeal of said cause before the State Tax Commission and also the Chancery Court of Hinds county, and the Supreme Court in the event either of the parties to the proceeding elects to seek a hearing before either or both of said courts.

"The Chairman of the Commission, upon the advice of the Attorney for the Commission, has construed chapter 124 (section 5025 et seq.), Code 1930, as amended by chapters 96 and 97, Laws 1932, as not warranting the deduction of losses sustained by Mississippi Power Company prior to January 1, 1930.

"The undersigned also agree that any irregularities or informalities, if such exist, in any of the proceedings prior to the final hearing and determination by the State Tax Commission are hereby waived."

Paragraphs (b), (c), (d), and (e) of section 8, and paragraphs (b), (c), and (d) of section 10 of the income tax statute, chapter 132, Laws 1924, are as follows:

"Sec. 8. . . . (b) If for any taxable year it appears upon the production of evidence satisfactory to the commissioner that any taxpayer has sustained a net loss, the amount thereof shall be deducted from the net income of the taxpayer for the succeeding taxable year and if the net loss is in excess of the net income for such succeeding taxable year, the amount of such excess shall be allowed as a deduction in computing the net income for the next succeeding taxable year, the deduction in all cases to be made under regulations prescribed by the commissioner with the approval of the governor.

"(c) The benefit of this section shall be allowed to members of partnerships and the beneficiaries of any estate or trust, under regulations prescribed by the commissioner with the approval of the governor.

"(d) If it appears upon the production of evidence satisfactory to the commissioner, that a taxpayer having a fiscal year beginning in 1923 and ending in 1924, after the passage of this act has sustained a net loss during such fiscal year, such taxpayer shall be entitled to the benefits of this section in respect to the same proportion to such net loss which the entire portion of such fiscal year falling within the calendar year 1924 after the passage of this act is of the entire fiscal year.

"(e) The benefits of this section may be allowed for a period of three years from the date such loss is sustained, and not thereafter."

"Sec. 10. . . . (b) The net income shall be computed upon the basis of the taxpayer's annual accounting period, either fiscal or calendar year, in accordance with the method of accounting regularly employed in keeping the books of such taxpayer.

"(c) But if no such method of accounting has been employed or if the method employed does not clearly reflect the income, the computation shall be made upon such basis and in such manner as in the opinion of the commissioner does clearly reflect the income.

"(d) If the taxpayer's annual accounting period is other than a fiscal year as defined by this act or he has no annual accounting period, or does not keep books, the net income...

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