BIR Ruling

February 17, 1997 Sycip, Gorres, Velayo & Co. 6760 Ayala Avenue Makati City Attention: Atty . E . C . Alcantara Tax Division Gentlemen : This refers to your protest against the assessments requiring your client, CITY TRUST BANKING CORPORATION to pay the respective amounts of P176,039.13 and P270,470.06, as deficiency withholding taxes for the 3rd and fourth quarters of 1990, inclusive of surcharges and interests, covered by Assessment Notice Nos. FAS-1-92-0001023 and FAS-1-90-92-0001024, both dated March 17, 1992. You alleged that the above deficiency tax assessments were already the subject of previous assessments issued by this Office under Assessment Nos. FAS-190-92-0001023 and FAS-1-90-92-0001024, both dated March 17, 1992 which you also protested, submitting xerox copies thereof. A perusal of the documents you submitted disclosed that the basis of the assessment was the discrepancy between the amount of tax that should have been withheld and the tax actually withheld. You argued therein that the discrepancy was due to the fact that the interest income on savings and time deposits of Ateneo de Manila University amounting to P505,413.30 and P836,659.75 for the third and fourth quarters of 1990, respectively, were not subjected to the 20% final withholding tax on the ground that said interests income were tax-exempt, pursuant to BIR Ruling No. 324-88 issued on July 13, 1988. Verily, the interest income of the Ateneo de Manila, being exempt from the 20% final tax is indisputable, based on the above-cited BIR Ruling 324-88 however, as in your previous protest, you failed to substantiate by documentary evidence your allegation that the interest payments subject of the deficiency tax assessments were paid to Ateneo de Manila University. Accordingly, your protest is hereby denied for being unsubstantiated. In view thereof, you are hereby requested to urge your client, City Trust Banking Corporation, to pay the aggregate amount of P446,509.19 plus updated increments up to the date of payment, to the BIR Collection Office nearest your client's place of business, within fifteen (15) days from your receipt hereof, so that this case may be considered closed and terminated. This constitutes the final decision of this Office on the matter. aisadc Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue