TAX Commissioner of Internal Revenue vs. Sony Phil., Inc
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CIR vs SONY PHILIPPINES FACTS: On November 24, 1998, the CIR issued Letter of Authority No. 000019734 (LOA 19734)authorizing certain revenue officers to examine Sonys books of accounts and other accounting records regarding revenue taxes for the period 1997 and unverified prior years. On December 6, 1999, a preliminary assessment for 1997 deficiency taxes and penalties was issued by the CIR which Sony protested. On October 24, 2000, within 30 days after the lapse of 180 days from submission of the said supporting documents to the CIR, Sony filed a petition for review before the CTA CTA-First Division partly granted Sonys petition by disposing as follows: disallowed the deficiency VAT assessment because the subsidized advertising expense paid by Sony which was duly covered by a VAT invoice resulted in an input VAT credit. maintained the deficiency EWT assessment on Sonys motor vehicles and on professional fees paid to general professional partnerships assessed the amounts paid to sales agents as commissions with five percent (5%) EWT pursuant to Section 1(g) of Revenue Regulations No. 6-85 disallowed the EWT assessment on rental expense since it found that the total rental deposit ofP 10,523,821.99 was incurred from January to March 1998 which was again beyond the coverage of LOA 19734 CIR sought a reconsideration of the above decision. CTA-EN BANC dismissed the petition and denied the MR. Thus, this petition. ISSUE: Whether or not CTA EN BANC ERRED IN RULING THAT RESPONDENT IS NOT LIABLE FOR DEFICIENCY VAT IN THE AMOUNT OF PHP11,141,014.41 RULING:
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Transcript of TAX Commissioner of Internal Revenue vs. Sony Phil., Inc
CIR vs SONY PHILIPPINESFACTS: On November 24, 1998, the CIR issued Letter of Authority No. 000019!4 (LOA 19734)"uthori#in$ %ert"in revenue o&%ers to e'"mine (onys boo)s of "%%ounts "nd other "%%ountin$ re%ords re$"rdin$ revenue t"'es for the period 1997 and nveri!ed prior "ears# On *e%ember +, 1999, " ,re-imin"ry "ssessment for 199 de.%ien%y t"'es "nd ,en"-ties /"s issued by the CIR /hi%h (ony ,rotested. OnO%tober 24, 2000, /ithin!0d"ys "fter the-",seof 180d"ys fromsubmission of the s"id su,,ortin$ do%uments to the CIR, (ony .-ed " ,etitionfor revie/ before the C0A C0A12irst *ivision ,"rt-y $r"nted (onys ,etition by dis,osin$ "s fo--o/s3 dis"--o/ed the de.%ien%y 4A0 "ssessment be%"use the subsidi#ed "dvertisin$ e',ense ,"id by (ony /hi%h /"s du-y %overed by " 4A0 invoi%e resu-ted in "n in,ut 4A0 %redit. m"int"ined the de.%ien%y 560 "ssessment on (onys motor vehi%-es "nd on ,rofession"- fees ,"id to $ener"- ,rofession"- ,"rtnershi,s "ssessed the "mounts ,"id to s"-es "$ents "s %ommissions /ith .ve ,er%ent 789: 560 ,ursu"nt to (e%tion 17$: of Revenue Re$u-"tions No.+188 dis"--o/ed the 560 "ssessment on rent"- e',ense sin%e it found th"t the tot"- rent"- de,osit of;10,82!,821.99 /"s in%urred from ANC dismissed the ,etition "nd denied the =R. 0hus, this ,etition.ISS$E:%hether or not CTA EN &ANC ERRE' IN R$LIN( THAT RESPON'ENT IS NOT LIA&LE FOR 'EFICIENCY )AT IN THE A*O$NT OF PHP11+1,1+-1,#,1R$LIN(:No# A Letter of Authority or LOA did not %over the ,eriod /here de.%ien%y /"s "ssessed LOA is the "uthority $iven to the ",,ro,ri"te revenue o&%er "ssi$ned to ,erform "ssessment fun%tions. It em,o/ers or en"b-es s"id revenueo&%er to e'"mine the boo)s of "%%ount "nd other "%%ountin$ re%ords of " t"',"yer for the ,ur,ose of %o--e%tin$ the %orre%t "mount of t"'. there must be " $r"nt of "uthority before "ny revenue o&%er %"n %ondu%t "n e'"min"tion or "ssessment. 5?u"--y im,ort"nt is th"t the revenue o&%er so "uthori#ed must not $o beyond the "uthority $iven. In the "bsen%e of su%h "n "uthority, the "ssessment or e'"min"tion is " nu--ity. As e"r-ier st"ted, LOA 19!4 %overed the ,eriod 199 "nd unveri.ed ,rior ye"rs. 2or s"id re"son, the CIR "%tin$ throu$h its revenue o&%ers /ent beyond the s%o,e of their "uthority be%"use the de.%ien%y 4A0 "ssessment they "rrived "t /"s b"sed on re%ords from
