BIR Ruling No. 020-82

January 26, 1982 BIR RULING NO. 020-82 20-b 000-00 020-82 Messrs. Fernandez, Angeles & Evidente Rm. 205 Hillcrest Condominium E. Rodriguez Sr. Avenue Quezon City Attention: Mr . Benjamin I . Fernandez Gentlemen : This refers to your letter dated September 4, 1981, requesting a ruling on the following: (1) Whether or not the joint venture of Umali-Pajara Construction Company to undertake construction projects is exempt from income tax under Presidential Decree No. 929 as amended by Presidential Decree No. 1774; (2) Whether or not the income tax paid by the joint venture can be the subject of an automatic tax credit deduction against the income taxes of R.L.U. Construction Corporation and J.H. Pajara Construction proportionate to their investment; and (3) Whether or not the joint venture is exempt from filing quarterly and final adjustment corporate income tax return. It is represented that R.L.U. Construction Corporation and J.H. Pajara Construction represented by their General Managers formed a joint venture on January 3, 1977; that the joint venture was formed to engage in the business of general builders and contractors of public or private roads, bridges, buildings, barracks, piers or tunnels, airports and other constructions; that each firm shall contribute P2.5 million to the capital of the joint venture to be used exclusively to finance and carry out any and all projects to be undertaken by the joint venture; that the net profit and losses shall be shared by both parties on a fifty-fifty basis after deducting expenses and taxes; and that the joint venture was awarded three being construction projects. In reply thereto, I have the honor to inform you as follows: (1) That since the joint venture or consortium was formed for the purpose of undertaking construction projects, the same is exempt from the payment of corporate income tax pursuant to Section 20(b) of the Tax Code, as amended by Presidential Decree No. 1774; (2) That the income tax erroneously paid by the joint venture cannot be the subject of an automatic tax credit against the income tax liabilities of R.L.U. Construction Corporation and J.H. Pajara Construction. A claim for refund should be filed by Umali-Pajara Construction Company within two years after the payment of the tax; pursuant to Section 295 of the Tax Code; and cdtech (3) The joint venture being exempt from corporate income tax is not required to file quarterly and final or adjustment returns. Very truly yours, RUBEN B. ANCHETA Acting Commissioner