BIR Ruling [UN-242-A-94]

August 18, 1994 BIR RULING [UN-242-A-94] Sycip Gorres Velayo & Co. 6760 Ayala Avenue Makati, Metro Manila Attention: Mr . E . C . Alcantara Tax Division Gentlemen : This refers to your letter dated August 15, 1994 in behalf of your client, Uniwide Sales Realty and Resource Corporation requesting for the waiver of the surcharge on the income tax due for fiscal year ending June 30, 1993. cdtech It is represented that your client is a domestic corporation primarily organized to engage in realty business; that for the fiscal year ended June 30, 1993, it filed its tentative Corporation Annual Income Tax Return on October 15, 1993 and paid the income tax due (then) in the amount of P5,731,598.00 computed as follows: Net Income P21,209,777.00 Less: Deduction under special laws Taxable income P21,209,777.00 Tax rate 35% Tax due P7,423,422.00 Less: Payments Prior year's excess credit P34,311.00 Creditable Tax withheld 1,657,513.00 1,691,824.00 Income Tax due P5,731,598.00 =========== that said tentative income tax return was filed by your client in view of the fact that the audit examination of its financial accounting records for the fiscal year has not yet been completed and that it has no means of determining the actual and true income generated and deductions incurred for the period; that since the company is still new in the realty business has not yet acquired the expertise, experience and confidence in the income and expense recognition; that the complex accounting system in recording the transactions of a realty business (particularly the recognition of sales for a given period) was no yet in place and fine-tuned, hence, your client encountered a great deal of difficulties on this area had to rely on the final report of its external auditors in arriving at the final figures for the period; that upon completion of the auditor's report on May 21, 1994, it verified the final figures thereat and accordingly prepared its final corporate annual income tax return for the fiscal year ended June 30, 1993; that the said-return declares that a net income tax of P16,456,826.00 (exclusive of penalties and interest) is due and payable for the period, computed as follows: Net Income P68,229,280.00 Less: Deductions under special laws Taxable income P68,229,280.00 Tax rate 35% Tax due P23,880,248.00 Less: Payments Prior Year's Excess Credit P34,311.00 Creditable tax withheld 1,657,513.00 4th Quarter Payment 5,731,598.00 7,423,422.00 P16,456,826.00 =========== Based on the foregoing, you now request for a waiver of the surcharge arising from late payment thereof only to give a reprieve to your client and give due consideration on its honest and straight-forward acceptance of its adjusted income tax liability. However, you are amenable to the imposition and payment of the interest on late payment (computed from the date the same fell due to the time of payment, i.e., October 15, 1993 to August 15, 1994) in the amount of P2,741,301.00; and that wherefore, the total liability of your client is P19,198,127.00, computed as follows: Income tax still payable P16,456,826.00 Add: Interest (Oct. 15, 1993 to August 15, 1994) 2,741,301.00 P19,198,127.00 =========== In reply, please be informed that in view of the above stated justifiable reasons, your request is hereby granted and your tender of payment in the amount of P19,198,127.00 is hereby accepted. You are therefore advised to remit to this Office the said amount as payment of your client's income tax liability and interest for the fiscal year ended June 30, 1993. The acceptance by this Office of your client's tender of payment in the amount of P19,198,127.00 representing its corporate income tax liability for fiscal year ending June 30, 1993 does not preclude this Office from conducting an investigation/verification of your client's tax liability for said year and for issuing an assessment notice against it if it is found out that there is still a deficiency in the payment made. cdtech Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue