BIR Ruling

December 28, 1966 Messrs. Gadioma & Josue Attorneys-at-Law P. O. Box 1115 Manila Gentlemen : This refers to your letter dated December 26, 1966 requesting confirmation of your view that the importation of your client the Philippine Air Lines, Inc. of 24 air-conditioners for use in the operation of its airline business is exempt from the compensating tax in view of the provisions of Section 13 of Act No. 4271, as amended by Republic Act No. 2360. In reply, I have the honor to inform you that if, as represented the imported air-conditioners shall be installed in storehouses where aircraft spare parts and equipment have to be kept and maintained at a certain level of temperature, then the same are considered for use in the operation of its airline business, in which case, they are exempt from the compensating tax in line with BIR Ruling no. 66-034. However, if the air-conditioners shall be installed in the administrative offices of the corporation, then their use shall be more for the convenience of its employees and not for use in the operation of its airline business. Consequently, if the imported air-conditioners are used in the PAL administrative offices, the same are subject to the 30% compensating tax pursuant to Section 190, in relation to Section 185-B, both of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue