Court Opinion

ID: 4476651
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:07.716861+00
Date Added: 2024-06-11T15:03:26.100558
License: Public Domain

Arundell, J., dissenting: Petitioner subjected a part of the output of its coal mine to an oil treatment process designed to make the coal more salable for domestic home heating purposes. Our query is whether the price received for the coal so treated may be used in its entirety as gross income from the mining property for purposes of computing depletion under section 114 (b) (4) (A) of the Internal Revenue Code. The applicable statutes are quoted in the majority opinion. The statute makes clear that mining is not limited to the mere extraction of the ore, but includes the “ordinary treatment processes normally applied by mine owners or operators in order to obtain the commercially marketable mineral product or products.” There is no question that the oil treatment was a process applied by mine owners to obtain a commercially marketable product, but the majority have concluded that the oil treatment was not an ordinary treatment process normally applied by mine owners. This conclusion is based largely on statistics. Certainly the oil process was not unusual or extraordinary, for tjje amount of coal treated with oil or in a similar manner to allay the coal dust ran into millions and millions of tons a year and a very large part of the bituminous coal which was used for heating homes was so treated. In fact, it is doubtful if there would have been any considerable market for bituminous coal for home heating purposes if thé coal bad not been given this treatment. In a competitive economy, there are always new and better methods being used to accomplish the same end, and whether the coal was washed with water or oil to allay the coal dust should not be a determinative matter in the construction of this statute. The statute looks to a broad construction for, while it names certain treatment processes as “ordinary,” its very wording suggests that other treatment processes may well come within the ambit of the statute. I would hold that the oil treatment was an ordinary process normally applied by mine owners in order to obtain a commercially marketable product within the meaning of the statute. It would follow that the price received for the coal so treated would constitute gross income for the purposes of computing depletion.