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SUMMARY OF SIGNIFICANT CTA DECISIONS (June 2011)

1. Petition for review (refund of input tax) filed with the CTA is premature if made before the lapse of 120 days from the filing of the administrative claim. Taxpayer filed the administrative claim with the BIR for the refund of input taxes for the 2nd to 4th quarters of 2006 on June 30, 2008. Taxpayer then filed its petition for review with the Court of Tax Appeals (CTA) on July 14, 2008. The CTA ruled that the administrative claim was timely field within the two-year prescriptive period. However, counting 120 days from June 30, 2008, the BIR had until October 28, 2008 to act on the said administrative claim. Taxpayer filed the petition for review before the CTA 106 days earlier prior to the expiration of the 120-day period on October 28, 2008. The petition for review was dismissed on the ground that it was prematurely filed. (Deutsche Knowledge Services PTE. LTD. vs. Commissioner of Internal Revenue, CTA Case No. 7808, June 1, 20111)

2. Likewise, filing of a petition for review beyond the 150-day period from the filing of administrative claim for refund of input tax would result in the denial of the claim. Taxpayer filed on May 17, 2006 an administrative claim for refund with the Bureau of Internal Revenue for input taxes for the year 2005. Taxpayer then filed the judicial claim on April 20, 2007. The Court ruled that the administrative claim was filed well within the 2-year prescriptive period. From May 16, 2006, the BIR had 120 days or until September 14, 2006 within which to decide the administrative claim. Within 30 days from the lapse of the 120-day period or from September 15, 2006 to October 15, 2006, taxpayer should have elevated its claim for refund to the CTA. Since the petition for review was filed on April 20, 2007 which is 187 days way beyond the prescribed 30-day period to appeal to the CTA, the CTA dismissed the case for being filed late. (Chevron Holding, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 7624, June 2, 20112)
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The same decision was made in Harte-Hanks Philippines, Inc. vs. CIR, C.T.A. Case No. 8124, June 1, 2011; Crescent Park 18-2 Property Holdings, Inc. vs. CIR, CTA EB Case No. 684, June 8, 2011; Kepco Ilijan Corporation vs. Commissioner of Internal Revenue, CTA EB No. 611, June 13, 2011; Telus International Philippines, Inc. vs. Commissioner of Internal Revenue, CTA Case Nos. 8053, 8118 and 8160; Mindanao I Geothermal Partnership vs. Commissioner of Internal Revenue, C.T.A. Case No. 8088, June 17, 2011 with the Court further declaring in the last two cases that it had not acquired jurisdiction 2 The same decision was made in Kepco Ilijan Corporation vs. Commissioner of Internal Revenue, CTA EB No. 611, June 13, 2011; Philex Mining Corporation vs. Commissioner of Internal Revenue, C.T.A. EB Case No. 688, June 23, 2011; CBK Power Company Limited vs. CIR, CTA EB Case Nos. 658 and 659, June 27, 2011

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3. The use of a wrong form (capital gains tax return instead of certificate of creditable withholding taxes) cannot support a claim for refund of creditable withholding taxes. The CTA disallowed the claim for refund of creditable withholding taxes supported by capital gains tax return. The CTA ruled that capital gains tax return is not the required document to support a claim for refund of withholding taxes. (Philippine Bank of Communications vs. CIR, C.T.A. EB No. 560, June 1, 2011)

4. When a hospital is a non-stock and non-profit corporation/association operated exclusively for charitable purpose, the income received by it as such is exempt from income tax under Section 30(E) of the Tax Code. In order to apply Section 30(E) and (G) of the Tax Code, the taxpayer must satisfy the following requisites: 1) It is a non-stock corporation; 2) It is operated exclusively for charitable purposes; and 3) No part of its income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person. Citing previous decisions, the CTA confirmed St. Lukes compliance with these requisites and therefore its exemption from income tax. (St. Lukes Medical Center, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 7857, June 3, 2011)

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A letter of authority should cover a taxable period not exceeding one year.

The LOA of Authority (LOA) issued by the Bureau of Internal Revenue for the examination of the taxpayers tax liabilities covers Fiscal Year Ending 2003 & Unverified Prior Years. Pursuant thereto, the BIR issued assessment for the years 2001, 2002 and 2003. The Court ruled that an LOA should cover a taxable period not exceeding one taxable year. Hence, the practice of issuing LOAs covering audit of unverified prior years is prohibited. The Court invalidated the assessments for taxable years 2001 and 2002, being in violation of Revenue Memorandum Order No. 43-90. (De La Salle University Incorporated vs. Commissioner of Internal Revenue, C.T.A. EB No. 671, June 8, 2011)

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