BIR Ruling [UN-278-95]

July 31, 1995 BIR RULING [UN-278-95] Ortaes University No. 22 Encarnacion St. B.F. Homes, Quezon City Attention: Atty . Leopoldo C . Tomas (For and in behalf of the Chairman of the Board) Gentlemen : This refers to your letter dated July 14, 1995 requesting for exemption from the creditable expanded withholding tax prescribed by Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, on your sale of several real properties to the 21st Century Steel Mills, Inc. cd You have represented that you have permanently ceased your school operations since school year 1986-1987 and has since been incurring expenses without any source of income; that for the immediately preceding two (2) years you realized no revenue/income but incurred expenses which were charged to the Deferred Account of the Balance Sheet; and that you have sold to the abovenamed buyer several parcels of land covered by Transfer Certificate of Title Nos. 496801 to 496986, inclusive, all of the Registry of Deeds for the Province of Rizal for P1,417,740.00; and that you are not expecting to realize a taxable net income from the aforesaid transaction. In reply, please be informed that under Section 4(d) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, implementing Section 50(b) of the Tax Code, as amended, the withholding tax therein prescribed shall not apply to income payments to a payee who suffered net operating losses during the immediately preceding two (2) years. Such being the case, since you suffered net operating losses during the immediately preceding two (2) years, the sale of your real properties covered by various Transfer Certificate of Titles described in the Deed of Absolute Sale executed between you and 21st Century Steel Mills, Inc., is exempt from the 7.5% creditable expanded withholding tax imposed by Section 1(j) (4) of said Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation the facts turned out to be different from those represented, then this ruling shall be considered null and void. (BIR Ruling No. 126-94 dated August 15, 1994) Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)