CIR v Algue (Taxation)

CIR v Algue
GR No. L-28896, February 17, 1988


FACTS:

The BIR assessed Algue a total amount of delinquency taxes of Php 83,183.85 for the years 1958 and 1959. It contends that the company's claimed deduction of Php 75,000 in the form of promotional fees is disallowed because it was not ordinary reasonable or necessary business expenses. Algue filed a protest.

BIR did not take any action. So, Algue filed a petition for review with the Court of Tax Appeals which rule in favor of Algue. Thus, the current petition.

ISSUE:
Whether the BIR correctly disallowed the deduction

RULING:
No.

The burden is on the taxpayer to prove the validity of the claimed deduction. Here, the onus has been discharged satisfactorily. Here, the onus has been discharged satisfactorily. The promotional fees were necessary and reasonable in the light of the efforts exerted by the payees in the inducement of investors to venture in an experimental enterprise. Thus, the payees should be sufficiently recompensed.