BIR Ruling

June 4, 1975 The President Transocean Transport Corporation 520 T.M. Kalaw, Ermita Manila S i r : This refers to your letter dated May 21, 1975, requesting information as to whether or not the excess of the insurance proceeds over the net book value of your vessel, the H.V. "Transocean Shipper" which was lost in transit from Wakayama, Japan to Westminster, Vancouver, Canada, and already so declared a total loss by your insurance company is subject to tax. In reply, I have the honor to inform you that the gain you will derive from the insurance proceeds, being income incident to your operations as an interocean carrier, shall not be subject to income tax pursuant to Section 2 of R.A. No. 1407, as amended, provided that such gain shall be utilized in the construction, purchase, or acquisition of vessels and equipment and/or in the improvement of your vessels and equipment and that the amount so invested shall not be withdrawn for a period of twenty years after the expiration of the period of income tax exemption as provided for in said Act. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5