Request to Pay Only the Amount Representing Deficiency Income Tax on Over Availment of 1989 Income Tax Holiday

August 21, 1992 BIR RULING NO. 229-92 204; 247 000-00 229-92 Asian Transmission Corporation 3rd Floor, Valgosona Building 2151 Pasong Tamo Makati, Metro Manila Attention: Mr . Gregorio T . Eleosida Senior Vice-President Gentlemen : This refers to your letter dated January 17, 1991 seeking this Office's approval of your company's request to pay, without surcharge, interest and compromise penalty incident to late payment , only the amount of P598,317.00 representing deficiency income tax on your company's over availment of its 1989 income tax holiday. It is represented that the Asian Transmission Corporation (ATC) is registered with the Board of Investments (BOI) as a pioneer/expanding export producer of automotive transmissions under Executive Order No. 226; that as a consequence, ATC was given an income tax holiday of three years, starting from July 1, 1989; that for the year 1989, the estimated income tax exemption computed, on the basis of Section 2(b) of the Rules and Regulations to implement EO 226, and availed of by ATC amounted to P3,527,701.00; that upon the other hand, the BOI approved the amount of P2,929,384.00 only, thus resulting in an over-availment of P598,317; that the said deficiency income tax was paid by ATC on May 31, 1991 as reflected in Confirmation Receipt No. 22634931; and finally, that ATC's computation of the amount of its income tax holiday for 1989 was not borne by any intention to defraud the government but by an honest mistake and absence of a confirmatory guideline from the BOI. In reply, please be informed that in view of the above justifiable reason, this Office has decided to forego the imposition of the 25% surcharge provided by Section 248 of the Tax Code, as amended. Good faith, however, has been held not to be a defense for non-payment of interest on the amount assessed. (Republic vs. Lian Tian Teng Sons & Co., L-21731, March 31, 1966; Republic vs. Philippine Bank of Commerce, L-20951, July 31, 1971). Therefore, this Office denies your request for waiver of payment of interest but grants the waiver of surcharge on your settled basic tax deficiency of P598,317. Accordingly, the amount of P204,424.97 must be paid to this Office, through the Legislative, Ruling and Research Division, as interest from April 16, 1990 to December 31, 1991. aisadc This constitutes the final decision of this Office on the matter. Very truly yours, EUFRACIO D. SANTOS Deputy Commissioner of Internal Revenue Chairman Special Review Committee RSO 1-89