BIR Ruling No. 196-83

November 15, 1983 BIR RULING NO. 196-83 Gentlemen : This refers to your letter dated July 13, 1983 requesting exemption from the capital gains tax under Section 34(h) of the Tax Code as amended by Batas Pambansa Blg. 37. It is represented that Admiral Investment and Financing Co., Inc. is a domestic corporation duly registered and authorized by the Securities and Exchange Commission to engage in real estate business, that it currently owns and operates Admiral Village and South Admiral Village, in Taytay, Rizal and Paraaque, Metro Manila; that your lot buyers have already completed their installment payments, for which you have executed Deeds of Absolute Sale; and that they are being asked and required by the Register of Deeds and Revenue District Officer to pay the capital gains tax. In reply, I have the honor to inform you that the gains that you derive from the sale of subdivision lots are considered ordinary gains, the same being profits derived from the sale of property held primarily for sale to customers in the ordinary course of trade or business under Section 34 (a) (1) of the Tax Code of 1977, as amended. Such being the case, said gains are not subject to the capital gains tax under Section 34 (h) of the Tax Code, as amended by Batas Pambansa Blg. 37, as implemented by Revenue Regulations No. 7-79, but to the ordinary corporate income tax prescribed under Section 24 of the Tax Code, as amended. Moreover, Revenue Regulations No. 8-79 implementing Section 34 (h) of the Tax Code, as amended by Batas Pambansa Blg. 37 is explicit that only natural persons or individuals are liable to the final capital gains tax rates prescribed therein. cdti Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue