Hotel wins tax case

CEBU, Philippines - The  Court of  Tax Appeals En Banc has ruled that there is no such deficiency income tax collectible from the Waterfront Cebu City Hotel and Casino, Inc. for the year 2006 as alleged by the Commissioner of Internal Revenue (CIR).

The CA has denied the appeal filed by the CIR who claimed that said hotel has to pay P2.6 million representing deficiency income tax assessment for taxable year 2006.

Justice Roman del Rosario said that CIR’s proposition for the Court En Banc to rule in favor of the correctness of the assessment in view of the unilateral effort made by the hotel in correcting the over-claimed prior year’s excess credit in 2006 in its income tax return (ITR), as it allegedly formed part of respondent’s admission to the validity of the assessment, is bereft of merit.

“As shown above, respondent did not derive any tax benefit in 2006 when it erroneously carried over the income tax credits in the amount of P12,785,033 to 2006, instead of the amount of P11,278,461.95,” he said.

Del Rosario thus, affirmed the decision of the Court in Division dated December 12, 2012 and its assailed resolution dated March 1, 2013 cancelling the deficiency income tax assessment of the respondent in the amount of P2,579,289.48 for taxable  year  2006.

Based on the document, the Bureau of Internal Revenue (BIR) issued a letter of authority for the investigation of respondent’s business operations and books of accounts for year 2006.

The BIR then issued a formal letter of demand which was duly protested by respondent. Subsequently, a final decision on disputed assessment was issued seeking collection of deficiency assessment: P2,579,289.48 deficiency income tax; P1,389,389.61 deficiency value-added tax (VAT) and P1,732.20 deficiency expanded withholding tax (EWT) assessments.

Respondent reportedly, settled the VAT and EWT. However, respondent appealed the deficiency income tax by filing a petition for review before the Court in Division dated Dec. 8, 2009.

The CIR however, insisted that the hotel was liable for assessed deficiency income tax.— /GMR (FREEMAN)