Case Digest Basilan Estate vs. Cir

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Basilan Estates, Inc vs CIR & CTA
GR L-22492; Sept 5, 1967
Bengzon, J.P.

Facts:
1. Basilan Estate, Inc. a Philippine corporation engaged in coconut industry filed in 1954 its income tax returns for 1953 and paid an income tax of P8,028 2. On February 26, 1959, the Commissioner of Internal Revenue, assessed Basilan Estates, Inc a deficiency income tax of a. P3,912 for 1953 and

b. P86,867.85 as 25% surtax on unreasonably accumulated profits as of 1953 pursuant to Section 25 of the Tax Code. 3. On non-payment of the assessed amount, a warrant of distraint and levy was issued 4.  Basilan Estate, Inc. filed before the Court of Tax Appeals a petition for review of the following: a. prescription of the period of assessment and collection b. error in disallowing claimed depreciations (upon these supplemented facts) i. Basilan Estates, Inc. claimed deductions for the depreciation of its assets up to 1949 on the basis of their acquisition cost.  ii.  Accordingly, from 1950 to 1953 it deducted from gross income the value of depreciation computed on the reappraised value. iii. Upon investigation and examination of taxpayer's books and papers, the Commissioner of Internal Revenue found that the reappraised assets depreciated in 1953 were the same ones upon which depreciation was claimed in 1952. And for the year 1952, the Commissioner had already determined, the depreciation allowable on said assets to be P36,842.04, computed on their acquisition cost at rates fixed by the taxpayer. Hence, the Commissioner pegged the deductible depreciation for 1953 on the same old assets at P36,842.04 and disallowed the excess thereof in the amount of P10,500.49. c. error in disallowing travelling & miscellaneous expenses d. error in finding the existence of unreasonably accumulated profits 5. Court of Tax Appeals found that there was no prescription and affirmed the deficiency assessment in toto

Issues:
1. WON period of assessment &...
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