Facts:
This is a petition for review under Rule 45 of Rules of Court seeking the nullification of CA decision granting respondent’s claim for tax equal to the amount of the 20% that it extended to senior citizens on the latter’s purchases pursuant to Senior Citizens Act.Respondent deducted the total amount of Php219,778 from its gross income for the taxable year 1995 whereby respondent did not pay tax for that year reporting a net loss of Php20,963 in its corporate income tax. In 1996, claiming that the Php219,778 should be applied as a tax credit, respondent claimed for refund in the amount of Php150, 193.
Issue:
Whether or not the 20% discount granted by the respondent to qualified senior citizens may be claimed as tax credit or as deduction from gross sales
Ruling:
“Tax credit” is explicitly provided for in Sec4 of RA 7432. The discount given toSenior citizens is a tax credit, not a deduction from the gross sales of the establishment concerned. The tax credit that is contemplated under this Act is a form of justcompensation, not a remedy for taxes that were erroneously or illegally assessed andcollected. In the same vein, prior payment of any tax liability is a pre-condition before ataxable entity can benefit from tax credit. The credit may be availed of upon payment, ifany. Where there is no tax liability or where a private establishment reports a net loss forthe period, the tax credit can be availed of and carried over to the next taxable year.
This is a petition for review under Rule 45 of Rules of Court seeking the nullification of CA decision granting respondent’s claim for tax equal to the amount of the 20% that it extended to senior citizens on the latter’s purchases pursuant to Senior Citizens Act.Respondent deducted the total amount of Php219,778 from its gross income for the taxable year 1995 whereby respondent did not pay tax for that year reporting a net loss of Php20,963 in its corporate income tax. In 1996, claiming that the Php219,778 should be applied as a tax credit, respondent claimed for refund in the amount of Php150, 193.
Issue:
Whether or not the 20% discount granted by the respondent to qualified senior citizens may be claimed as tax credit or as deduction from gross sales
Ruling:
“Tax credit” is explicitly provided for in Sec4 of RA 7432. The discount given toSenior citizens is a tax credit, not a deduction from the gross sales of the establishment concerned. The tax credit that is contemplated under this Act is a form of justcompensation, not a remedy for taxes that were erroneously or illegally assessed andcollected. In the same vein, prior payment of any tax liability is a pre-condition before ataxable entity can benefit from tax credit. The credit may be availed of upon payment, ifany. Where there is no tax liability or where a private establishment reports a net loss forthe period, the tax credit can be availed of and carried over to the next taxable year.
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