Queries Relative to the Capital Gains Tax Return of New North Fairview Realty & Development, Inc.

April 4, 1994 BIR RULING NO. 083-94 50 (b) 000-00 083-94 Atty. Hernani S. Arboleda Revenue Region No. 4-B1 Revenue District Officer Revenue District No. 30 North Quezon City S i r : This refers to your letter dated June 21, 1993 requesting in effect for a ruling on your following queries relative to the capital gains tax return of New North Fairview Realty & Development, Inc., SEC Building, EDSA Mandaluyong which was filed with that Office on June 17, 1993: cdta "a) Can the Bureau accept the alleged remittance of creditable withholding tax (EWT) made last January 13, 1993 as an actual payment of expanded withholding tax for the aforementioned transaction which was only consummated on June 17, 1993? "b) The buyer, Mr. Delfin Barrera, alleged that he had already deducted and withheld and eventually remitted the tax from the income payments made to the seller, New North Fairview Realty & Development, Inc., but said remittance was credited to the buyer (Mr. Delfin Barrera) as evidenced by the attached BIR Form No. 1743W (Exhibit B), hence, this office, believed that no creditable withholding tax (EWT) was ever paid by the seller, New North Fairview Realty & Development, Inc. It is represented that the pertinent facts of the case are as follows: "1. New North Fairview Realty & Development, Inc. (Vendor) is a registered owner of a parcel of land, Lot No. 124, Blk. No. 168, Phase VI situated at Capitol Site, Quezon City, with an area of Three Hundred Six (306) square meters, covered by Transfer Certificate of Title No. 42737; "2. Mr. Delfin F. Barrera, single, Filipino, of No. 41 Ifugao St., La Vista, Quezon City, Buyer; "3. A Deed of Sale, in the amount of Seven Hundred Sixty Five Thousand Pesos (P765,000.00) was executed and duly signed by both parties on January 13, 1993 and was duly notarized by Notary Public Benjamin L. Rabo on June 17, 1993 and entered in his Notarial Register book under Doc. No. 168, Page No. 35, Book No. XXX, Series of 1993 (Exhibit A) "4. BIR Form No. 1743W (monthly remittance return of income taxes withheld) duly validated by the Bank on January 13, 1993 in the amount of P19,125.00 is hereby attached for ready reference. (Exhibit B)". In reply, please be informed that your queries are answered as follows: a) Your first query is answered in the affirmative. Pursuant to Section 3 of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 1-90, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended, the obligation of the payor to deduct and withhold under the said regulations arises at the time an income which is subject to withholding under Section 1 of the same regulations is payable or paid. Accordingly, since in the instant case, the deed of sale executed by the parties thereto was signed on January 13, 1993, although the actual notarization was made on June 17, 1993, the payment of the creditable withholding tax on January 13, 1993 is proper and legal. b) As regards your other query, although BIR Form 1743W was filed with that Office on January 13, 1993, by Mr. Delfin Barrera as the buyer withholding agent, the creditable withholding tax should not be credited in favor of Mr. Delfin Barrera, but should be credited against the income tax due from New North Fairview Realty & Development, Inc., the seller in said sale transaction in accordance with Revenue Regulations No. 1-90 amending Revenue Regulations No. 6-85. cdti Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue