BIR Ruling

September 24, 1968 J. S. Zulueta & Co. Certified Public Accountants P. O. Box 2405 Manila Gentlemen : This refers to your letter dated September 12, 1968 requesting information as to whether or not a Philippine Domestic corporation which will purchase from your client, Argo Refining Co., Inc., machinery and equipment with an original landed cost of P757,937.50 which were imported tax-free by the latter under the provisions of Section 1 of Republic Act No. 901, is subject to compensating and other taxes. In reply, I have the honor to inform you that inasmuch as the sale of the machinery and equipment is a liquidation of assets by your client on account of its cessation of manufacturing operations, and considering the fact that said machinery and equipment were actually used by your client for more than five (5) years, it is the opinion of this Office as it hereby holds that the purchaser of the machinery and equipment in question is no longer subject to the compensating tax or any other taxes. It is understood, however, that any amount realized by your client over and above by which the selling price exceeds the book value of the machinery and equipment constitutes gain subject to income tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue