THE Court of Tax Appeal (CTA) has upheld its ruling ordering the private owner of Metro Line 3 (MRT) (MRT-3) to pay at least 1.73 billion pesos in income tax for the year 2007.
In a 13-page decision dated July 5, 2021 and written by Presiding Judge Roman G. del Rosario, the CTA en banc ruled that petitioner Bureau of Internal Revenue and respondent MRT Corp. had not raised new arguments in their respective motions for partial reconsideration of its decision promulgated on September 2, 2021.
In its ruling dated September 2, 2021, the Tax Court rescinded and rescinded the tax notices issued by the BIR against MRT Corp. for the 2007 tax year covering the value added tax deficit (penalties only), the final withholding tax and the increases for late payment of income tax amounting to 1.61 billion pesos.
However, MRT Corp. was ordered to pay the BIR the amount of 1.73 billion pesos representing the following items: basic income tax; 25% surcharge; Compensatory interest of 20%; and, 20% default interest imposed on Default Income Tax, Extended Withholding Tax and Employee Benefits Tax.
Additionally, MRT Corp. was ordered to pay late payment interest of 12% calculated from 1 January 2018 until full payment.
Similarly, the CTA prohibited the BIR from imposing the recovery of compensatory VAT, withholding tax and surcharges for late payment of income tax for the year 2007.
In its motion for partial reconsideration, MRT Corp. insisted that the review and the assessments issued against it are null and void since all Revenue Officers (ROs) who reviewed it were unlicensed.
In its comment to MRT Corp.’s motion, the BIR said it had not raised any points of contention that would warrant overturning the CTA en banc decision.
The BIR also filed its own motion for partial reconsideration reiterating its plea in its motion for review for the Court to uphold the 1.61 billion peso shortfall tax assessment against MRT Corp. for the 2007 tax year plus a 25% surcharge, a 20% deficiency and default interest. .
In denying MRT Corp.’s partial motion for reconsideration, the CTA argued that its arguments questioning the authority of the revenue officers who performed the audit and valuation had already been raised by the respondent in its oral arguments. precedents that he had already considered and addressed in the September 2, 2021, decision.
On the other hand, the CTA stated that the grounds raised by the BIR in its partial motion for reconsideration are the same grounds raised in its previous pleadings which had already been addressed and transmitted also in its decision of September 2, 2021.
“To reiterate, the Court en banc finds no sufficient basis to interfere with or alter the corresponding findings, conclusions, and calculations of the Respondent’s liabilities judiciously made by the Divisional Court in its decision of January 8, 2019,” said the CTA.
“In the absence of substantial arguments or compelling reasons advanced by the parties in their respective motions, the Court sees no reason to further alter the impugned decision,” he added.
The tax obligations of MRT Corp. stemmed from underreported income discovered by the BIR during an audit of the company’s books.
BI officers discovered that some lease finance revenue rentals paid by the government for the construction and public use of the rail system were not being taxed accurately.
It turned out that MRT Corp. used different accounting methods which led to only reporting 3.49 billion pesos in his tax return, despite audited financial statements reflecting a much higher figure of 4.28 billion pesos.