BIR Ruling No. 098-62

January 10, 1962 BIR RULING NO. 098-62 The Regional Director Regional District No. 7 Cebu City S i r : There are returned to you the enclosed papers bearing on the internal revenue case of the Sacred Heart Mission Seminary, Inc., that city. It appears from the representations of counsel for said corporation that it is a non-stock corporation devoted exclusively to religious and educational purposes; that no part of its net income, if any, inures to the benefit of any private stockholder or individual; and that it has no "income of whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit." Accordingly, counsel claims that the corporations is exempt from the income tax pursuant to section 27(e) of the Tax Code. And being so exempt, it is further claimed that the corporation is also exempt from filing income tax returns and keeping books of accounts, all notwithstanding the fact that it failed to comply with the requirements prescribed in section 24 of Revenue Regulations No. 2. It also appears that the corporation had filed corporated returns for the period in question. On the other hand, the provincial revenue officer, that city, maintains that compliance with the requirement of said section 24 is a condition precedent before the corporation can take advantages of the exemption provisions of section 27(e) of the Tax Code and, having admittedly failed to comply with those requirements, it must be considered as subject to the income tax, the requirements of filing returns and the profit and loss statements and balance sheets, in short, it should be treated like any other corporation for internal revenue purposes. It is indubitable that under section 46(a) of the Tax Code, corporations subject to the income tax are the only ones required to file income tax returns. Likewise, corporations subject to internal revenue taxes only are, among others, duty bound to keep and use the books of accounts required by section 334 of said Code. Such being the case, and on the fair assumption that the only tax that the Sacred Heart Mission Seminary, Inc. may be liable is the income tax, the questions to be resolved in the present case boil down to two, namely: (1) Whether or not is subject to the income tax; (2) In the negative case, whether or not non-compliance with section 24 of Revenue Regulations No. 2 is fatal to its exemption. LLjur ( MISSING PORTION OF BIR FILES )