Court Opinion

ID: 4591580
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:06:07.515723+00
Date Added: 2024-06-11T07:50:41.899660
License: Public Domain

VIRGINIA RAILWAY & POWER CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.  NORTHSIDE VIADUCT CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.  CITY GAS COMPANY OF NORFOLK, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Virginia Ry. & Power Co. v. CommissionerDocket Nos. 9040, 11731, 11728, 14200, 11730, 14199.United States Board of Tax Appeals9 B.T.A. 468; 1927 BTA LEXIS 2578; December 2, 1927, Promulgated 1927 BTA LEXIS 2578">*2578  1.  AFFILIATION. - Company A operated the principal properties of companies B and C.  It owned 61.23 per cent of the stock of Company B and 85.18 per cent of the stock of Company C.  Held, all three companies were affiliated.  Company A also owned 19.98 per cent of the stock of Company D and controlled the balance of the stock by means of a 99-year lease from the owner of the remaining 80.02 per cent.  Held, that companies A and D were also affiliated.  2.  INVESTED CAPITAL. - Earned surplus may be reduced by the amount of the preceding year's income and profits taxes prorated.  Appeal of Russel Wheel & Foundry Co.,3 B.T.A. 1168">3 B.T.A. 1168. Bernard R. Youngman, Esq., for the petitioners.  J. Harry Byrne, Esq., for the respondent.  GREEN 9 B.T.A. 468">*468  In this proceeding the petitioners seek redeterminations of their income and profits-tax liabilities for which the Commissioner has determined deficiencies as follows: Virginia Railway & Power Co.Date of letterYear or periodDeficiencyOct. 5, 1925Fiscal year ended June 30, 1918$447.71DoFiscal year ended June 30, 191910,259.72Dec. 14, 1925Period July 1, 1920, to Dec. 31, 19202,646.00Northside Viaduct Co.Dec. 14, 1925Fiscal year ended June 30, 1920$588.75DoPeriod July 1, 1920, to Dec. 31, 1920243.38Feb. 12, 1926Calendar year 1921707.20City Gas Company of NorfolkDec. 14, 1925Fiscal year ended June 30, 1920$12,658.26DoPeriod July 1, 1920, to Dec. 31, 19202,007.01Feb. 12, 1926Calendar year 192136,626.281927 BTA LEXIS 2578">*2579 9 B.T.A. 468">*469  The principal question involved is whether the Virginia Railway & Power Co. was affiliated during the years and periods here in question with the Northside Viaduct Co., the City Gas Company of Norfolk, and a fourth company called the Highland Park Co.  The latter company is not one of the petitioners.  The only other issue is with respect to Docket Nos. 11730 and 14199, where the allegation is made that invested capital should not be reduced on account of prior-year taxes.  FINDINGS OF FACT.  The Virginia Railway & Power Co., during the taxable periods in question, owned in fee $98,900 par value, or 989 shares, or 19.98 per cent of the common capital stock of the City Gas Company of Norfolk.  The Norfolk Railway & Light Co. owned $401,100 par value, or 4,011 shares, or 80.02 per cent of the common capital stock of the City Gas Company of Norfolk.  The total common capital stock of the City Gas Company of Norfolk was 5,000 shares of a par value of $500,000 and the voting privilege was confined exclusively to the common stock.  The Norfolk Railway & Light Co. on April 28, 1906, leased all of its assets to the Norfolk & Portsmouth Traction Co. for 99 years.  A1927 BTA LEXIS 2578">*2580  copy of this lease follows: THIS INDENTURE, made this 28th day of April, A.D., 1906, between Norfolk Railway and Light Company, hereinafter called "Lessor", party of the first part; and Norfolk and Portsmouth Traction Company, hereinafter called "Lessee", party of the second part; WHEREAS, the Lessor is a corporation duly incorporated, organized and existing under the laws of the State of Virginia, with certain rights, powers, privileges and franchises, including among others the right and power to construct, maintain and operate lines of street railway in the city of Norfolk, and county of Norfolk, and elsewhere in the State of Virginia; to maintain and operate certain ferries; to establish, maintain and conduct the business of a general railway, light, heat and power company; and to erect, maintain and operate in said State plants for the generation and supply of electric current for its own uses and for sale to others; and to construct and maintain on the streets and highways of said State its poles, wires, conduits and other appliances necessary or convenient for the conduct of its business; AND WHEREAS, pursuant to and in the exercise of the powers and authority aforesaid, 1927 BTA LEXIS 2578">*2581  and with the consent of the proper authorities of the city of Norfolk, evidenced by certain ordinances of the Councils of said city; and of the proper authorities of the town of Berkley and the county of Norfolk, the Lessor, among 9 B.T.A. 468">*470  other properties, real and personal, owns, maintains and is engaged in the operation of, a system of street railways and light, heat and power plants in the city of Norfolk, county of Norfolk and vicinity, and a steam ferry across Hampton Roads between Willoughby Spit and Old Point, operated in connection with said railways; and also owns $401,100.00 per value of the capital stock of the City Gas Company, a corporation owning and operating a gas plant in the city of Norfolk, of a total of $500,000 par value of the stock of said company now outstanding; and also owns certain real estate, including a tract of land at and near Ocean View, Virginia, with hotel and other improvements thereon; AND WHEREAS, the Lessor has power and authority under its charter to lease all of its properties, real and personal, rights, privileges and franchises, upon such terms and conditions as may be agreed upon between said Lessor and the Lessee thereof.  AND1927 BTA LEXIS 2578">*2582  WHEREAS, the Lessee is a corporation duly incorporated, organized and existing under the laws of the State of Virginia, with certain rights, powers, privileges and franchises, including among others the right and power to acquire by purchase or lease lines of street railway in the cities of Norfolk and Portsmouth, and the counties contiguous thereto, and elsewhere in the State of Virginia; to maintain and operate certain ferries; to establish, maintain and conduct the business of a general railway, light, heat and power company; to erect, maintain and operate gas plants and plants for the generation of electric current for its own uses and for sale to others; and to construct and maintain on the streets and highways of said State its poles, wires, conduits and other appliances necessary or convenient for the conduct of its business; AND WHEREAS, pursuant to and in the exercise of the powers and authority aforesaid, and with the consent of the proper authorities of the cities, and counties aforesaid, the Lessee now owns and is engaged in the operation of a system of street railways, and light, heat and power plants in the cities of Norfolk and Portsmouth, the town of Berkley and vicinity, 1927 BTA LEXIS 2578">*2583  and has power and authority under its charter to lease all of the properties, real and personal, rights, privileges and franchises of the Lessor, upon such terms and conditions as may be agreed upon between the Lessor and the Lessee; AND WHEREAS, all of the railway, light and power properties and plants owned, controlled or operated by the Lessor and Lessee are so connected as to naturally form one complete system, and it is deemed desirable, and is now proposed, to bring said properties under one management and control in order to promote economy and efficiency in operation, and to improve and perfect the service rendered to the public in the communities in which said properties are located; and it is believed that this object can best be accomplished, and the interests of the stockholders of said respective companies and of the public which they are organized to serve, can be promoted by a lease of the properties, real and personal, rights, privileges and franchises of the Lessor to the Lessee, for the period, and upon the terms and conditions hereinafter named (Italics ours); AND WHEREAS, the form of this indenture has been approved by the respective Boards of Directors1927 BTA LEXIS 2578">*2584  of the Lessor and the Lessee, and the execution thereof has been authorized by the proper corporate action of said parties respectively.  NOW, THEREFORE, THIS INDENTURE WITNESSETH, that for and in consideration of the rents to be paid, and of the covenants on the part and in behalf of the Lessee to be kept by it and performed, as hereinafter provided, the Lessor has granted, demised and let, and by these presents does grant, demise and let unto the Lessee, its successors and assigns, all of the lines of street railway and the light, heat and power plant, or interests therein, owned by the Lessor in the 9 B.T.A. 468">*471  city of Norfolk and vicinity, together with all plants and equipment owned or used in connection therewith, or in the operation thereof; also all ferries, or interests therein, owned or operated by the Lessor, and all boats, vessels or other craft, or interests therein, including the steam vessel "Ocean View", owned or used in connection therewith or in the operation thereof; also all real estate, or interest in real estate, with appurtenances thereunto belonging, now owned by the Lessor, including certain lands or lots, at Ocean View, with hotel, and all other improvements1927 BTA LEXIS 2578">*2585  upon said lands or lots; also all stocks, or interest therein, owned by the Lessor, including $401,100 par value of the capital stock of the City Gas Company; also all personal property of every kind, character and description, owned or used in connection with or in the operation of, the system of street railways, light, heat and power plants, or owned or used in connection with, or the operation or, the ferries or hotel or other property of the Lessor, aforesaid; also all franchises, rights, privileges and easements vested in or owned, possessed or enjoyed by the Lessor, or to which the Lessor may be entitled by virtue of any law or statute of the State of Virginia, or by virtue of any grant from or contract with any city, town or county - except the franchise of the Lessor to be a corporation; also all other property, real, personal and mixed, of every kind and description, franchises, contracts, rights, privileges, immunities and easements, now owned or which may hereafter be acquired by or for the Lessor, during the term of this lease, or any extension or extensions thereof, Except the franchise of the Lessor to be a corporation, and such of its franchises, rights and privileges1927 BTA LEXIS 2578">*2586  as are or may be necessary to preserve its corporate existence and organization, its corporate seal, its records, transfer and stock books and books of account, and its deeds, plats and other instruments and documents containing the evidence of its right and title to the properties now or hereafter owned or operated by it; and the Lessor expressly covenants and agrees that this lease shall embrace and apply to all additions to and extensions of said lines of street railway, light, heat and power plants, ferries, hotels and other property, and any and all new lines of railway, light, heat and power plants, ferries, hotel and other property, whether connected with said existing properties or not; and all additions to, extensions of, or acquisitions of other property, real, personal and mixed, franchises, contracts, rights, privileges and easements, or interests therein, which may hereafter during the term of this lease, or any renewals or extensions thereof, be made, or acquired by the Lessor.  (Italics ours.) TO HAVE AND TO HOLD the said demised premises, properties, franchises, contracts, rights, powers, privileges and easements, with the right to demand and receive for its own1927 BTA LEXIS 2578">*2587  sole use and benefit, the tolls, rents, dividends, earnings, profits, revenues and income to be derived therefrom or any part thereof, and from the operation of said lines of street railway and other properties, and from the exercise of the rights, powers, privileges and franchises hereby demised, unto the Lessee, its successors and assigns, during the term commencing on the first day of June, A.D. 1906, and continuing for a period of ninety-nine (99) years thence next ensuing, until the first day of June, 2005, but upon the terms, conditions and covenants following, that is to say (Italics ours): ARTICLE I If the Lessee shall fail, for ninety days after written demand, to make payment of any instalment of rent, or to make payment of any other sum of money hereinafter provided to be paid by it; or if the Lessee shall fail through its own fault to substantially keep and perform any other of its covenants or agreements in this lease contained, and such last named default shall continue for 9 B.T.A. 468">*472  six months after written notice thereof shall have been given by the Lessor to the Lessee, then and in either of said events the Lessor not being in default in respect of1927 BTA LEXIS 2578">*2588  any of the covenants hereof to be performed by it, this lease shall, after the expiration of said period of ninety days, or six months, as the case may be, expire and terminate at the option of the Lessor, and the Lessor may thereupon re-enter upon the premises and resume possession of the property hereby leased and demised and the same own, hold, and possess as of its former estate, without prejudice to its right of action for arrears of rent or breach of covenant.  ARTICLE II The Lessor will surrender and deliver to the Lessee on the first day of June, 1906, being the date of the beginning of said term, sole and exclusive possession of all of the demised premises, property, rights, powers, contracts, privileges and easements, including all cash, bills, notes, and accounts receivable and other quick assets belonging to the Lessor as a going concern; and certificates assigned in blank for all shares of the capital stock of any incorporated company, held by the Lessor and in its possession, and all other personal property embraced in its lease; and will, from time to time, during the continuance of this lease or any renewals or extensions thereof, as other property is acquired1927 BTA LEXIS 2578">*2589  and comes into the possession of the Lessor, deliver possession thereof to the Lessee.  (Italics ours.) ARTICLE III The Lessor will suffer and permit the Lessee, it keeping all the covenants on its part herein contained, to occupy, hold, use, possess and enjoy the property, rights, contracts, powers, privileges and franchises herein demised, during the term of this lease and of any and all renewals or extensions thereof, as herein provided, without hindrance or molestation from the Lessor or any person claiming by, through or under it; and does warrant, and will defend the Lessee in such use and enjoyment, subject, however, to a certain mortgage or deed of trust executed by the Norfolk City Railroad Company (one of the constituent companies of the Lessor) to the Mercantile Trust Company of New York, Trustee, dated the 2nd day of January, 1888, to secure an authorized issue of bonds of the said Norfolk City Railroad Company to the amount of $125,000 par value, bearing interest at the rate of six per centum per annum, payable semi-annually; all of which bonds have been issued and are now outstanding; and to a certain other mortgage executed by the Norfolk Street Railroad Company1927 BTA LEXIS 2578">*2590  (another of the constituent companies of he Lessor) to the Mercantile Trust & Deposit Company of Baltimore, Trustee, dated the first day of January, 1898, to secure an authorized issue of bonds of the said Norfolk Street Railroad Company to the amount of $1,500,000 par value, bearing interest at the rate of five per centum per annum, payable semi-annually, of which there have been issued and are now outstanding, bonds to the amount of $915,000 par value, the remainder of said bonds being reserved in the hands of the Trustee under the terms of said mortgage; and to a certain other mortgage, executed by the Virginia Electric Company (another of the constituent companies of the Lessor) to the United States Mortgage and Trust Company of New York, Trustee, dated the first day of April, 1898, to secure an authorized issue of bonds of the said Virginia Electric Company to the amount of $500,000.00 par value, bearing interest at the rate of five per cent. per annum, payable semi-annually, of which there are now outstanding, bonds to the amount of $20,000.00 par value; and to a certain other mortgage, executed by the Lessor, to the International Trust Company, of 9 B.T.A. 468">*473 Maryland, Trustee, 1927 BTA LEXIS 2578">*2591  dated the second day of November, 1899, to secure an authorized issue of bonds to the amount of $4,000,000 par value, bearing interest at the rate of five per centum per annum, payable semi-annually, of which there have been issued and are now outstanding bonds to the amount of $2,940,000 par value, the remaining $1,060,000 par value of said bonds being reserved by the terms of said mortgage and held by the Trustee to retire the underlying bonds aforesaid.  And the Lessor covenants that the total amount of principal of the bonds issued and outstanding, the payment of which is secured by the mortgages aforesaid, is four million dollars par value, as hereinbefore stated, and that there are no liens or encumbrances other than the mortgages aforesaid, upon any of the demised property, rights, powers, privileges and franchises, except current taxes and charges imposed thereon by any law of the State of Virginia or city or county of Norfolk or by ordinance of the city of Norfolk or town of Berkley, as provided in said laws or ordinances, and the lien of certain judgments recovered against the Lessor on account of injuries to persons and property occasioned by the operation by the Lessor1927 BTA LEXIS 2578">*2592  of its said lines of street railway and other properties, subject to which said charges and judgments the property demised is to be taken and held by the Lessee.  ARTICLE IV The Lessor will at any time, and from time to time hereafter, upon the reasonable request of the Lessee, do, make, execute, acknowledge, and deliver, or cause or procure to be made, done, executed, acknowledged, and delivered all and every such further and other lawful and reasonable acts, conveyances, transfers, assignments, and assurances, as by the Lessee shall be reasonably devised, advised, or required for the better and more effectual vesting and confirming in and to the Lessee, of the premises, property, rights, powers, contracts, privileges, and franchises hereby leased or demised, or intended so to be, and for the better and more effectual vesting and confirming in the Lessee of such premises, property, rights, powers, contracts, privileges and franchises as shall be hereafter acquired by, or come into the possession of the Lessor.  ARTICLE V The Lessor will, during the term of this lease, and all renewals or extensions thereof, do all things required by law or which may be necessary or proper1927 BTA LEXIS 2578">*2593  to be done to maintain its corporate organization, and will hold all necessary meetings, elect all necessary officers, and make all necessary records, reports and returns, as required by law; and the Lessee hereby covenants to pay to the Lessor, or on its account, the actual expenses thereof, not to exceed fifteen hundred dollars ($1,500) per annum, to be paid as the accounts for said expenses, approved by the proper officer of the Lessor, may be rendered by the Lessor to the Lessee; and the Lessee will provide the Lessor free of expense to the Lessor, during the term of this lease, or any renewals or extensions thereof, with a suitable office in the city of Norfolk, for the transaction of its necessary business and the keeping of its records and papers.  ARTICLE VI The Lessee may use the Lessor's name, but at the sole expense of the Lessee, in all legal or other proceedings necessary or proper for the protection or enjoyment of the property, contracts, rights, powers, privileges and franchises herein demised, or for the acquisition of additional property, rights, powers, 9 B.T.A. 468">*474  privileges or franchises, or for the making of extensions of the lines of the Lessor; and the Lessor1927 BTA LEXIS 2578">*2594  will from time to time, when requested by the Lessee, subscribe the corporate name and affix the corporate seal of the Lessor, and cause proper acknowledgments to be made to all such instruments as may be necessary or proper to enable the Lessee to carry into effect the provisions of this lease, to perform the obligations imposed upon the Lessee by this instrument or by law, or the ordinances of any city, town or county, and to exercise the rights, powers, privileges and franchises hereby leased and demised; and the Lessee may, at all reasonable and convenient times have access to and make copies of the Lessor's plats, deeds, grants and other instruments and documents containing the evidence of its right and title to the properties, contracts, powers, rights, privileges and franchises hereby leased, demised and assigned.  ARTICLE VII The Lessor will not, during the term of this lease, do or omit any act or thing which by law or the provisions of any ordinances of, or contracts with, any city, town or county, or of any other contract, grant or instrument under which it has obtained or may hereafter obtain title or right to any of the demised property now owned or hereafter acquired1927 BTA LEXIS 2578">*2595  may work, or be cause for, a dissolution of its corporate existence, or a forfeiture of any of its franchises, rights, privileges and easements, or divest, or in any manner impair its ownership of or title to the demised property, or any part thereof, or affect the possession or enjoyment thereof by the Lessee, under this lease, but any expenses incident to the performance of the covenants in this article contained shall be borne by the Lessee.  ARTICLE VIII Subject to the provisions of the aforesaid mortgages of the Lessor and the Norfolk City Railroad Company, Norfolk Street Railroad Company and Virginia Electric Company, the Lessee shall have the right, and the Lessor hereby authorizes and empowers the Lessee to disuse, take up, remove, sell or otherwise dispose of, from time to time, as the management of the business and the improvement and development of the property hereby leased and demised may, in the judgment of the Lessee require, any of the cars, rails, tools, machinery, poles, mains, wires, conduits, cables, and other tangible personal property and fixtures of the Lessor; and the Lessor also, subject to the provisions of the mortgages aforesaid, authorizes and empowers1927 BTA LEXIS 2578">*2596  the Lessee, with the consent of the Board of Directors of the Lessor, to sell from time to time any of the real estate and buildings of the Lessor, or abandon any plant, location or right of way which may no longer be needed for the corporate purposes of either the Lessor or the Lessee; and the Lessor agrees to execute all necessary conveyances, assignments or other instruments required in order to effect such sales; provided, however, that the proceeds of all sales of real and personal property and fixtures shall, except when and as otherwise consented to in writing by the authority of the Board of Directors of the Lessor, and subject to the provisions of the mortgages aforesaid, be held by the Lessee as a special fund, and be applied by it to the making of additions, extensions and improvements to the leased property, or to the acquisition of new property, which shall, unless otherwise agreed to in writing by the authority of the Board of Directors of the Lessor, and permitted by the provisions of said mortgages, be transferred to and become the property of the Lessor, and pass under and be subject to the terms of this lease.  9 B.T.A. 468">*475  ARTICLE IX The Lessor will indemnify1927 BTA LEXIS 2578">*2597  and save harmless the Lessee during the term of this lease, so long as the Lessee performs all the covenants on its part contained in this lease in relation to said mortgages, or the bonds secured thereby, from any claim under, or by virtue of either of the mortgages above mentioned, before maturity of the bonds secured thereby, by expiration of the time of payment fixed therein, and at the maturity of said bonds, if this lease is still in force, will pay and discharge the principal thereof, or failing so to do, will cooperate with the Lessee in refunding, renewing or extending the same in accordance with the provisions therefor hereinafter contained.  ARTICLE X The Lessor will retain its ownership of all shares of stock of other corporations, now owned or hereafter acquired by it, subject, however, to the lien of the existing mortgages aforesaid, or any renewal or refunding mortgages, and will cause proper proxies to be executed and delivered to the Lessee or its appointee, so that any voting power vested in the Lessor as to all and every of said shares of stock subject to this lease, may be exercised by the Lessee, its successors or assigns. (Italics ours.) ARTICLE XI 1927 BTA LEXIS 2578">*2598  The Lessor will at all times hereafter, when requested by the Lessee, make application for additions to and extensions and renewals of the rights, privileges and franchises either territorial or in time, hereby leased; and will, upon like request accept such renewals and extensions when made; and will execute all the necessary papers in that behalf; and on the request of the Lessee, will permit the use of its (the Lessor's) name in any proceeding, legal or equitable, in eminent domain or otherwise, which may be necessary for the protection or enjoyment of the Lessee's interest in the lines of street railway and other property, and the rights, powers, contracts, privileges and franchises, hereby leased, and all additional or extended or renewed rights, privileges and franchises shall be treated as part of the leased property, and be subject to all the terms, conditions and provisions of this lease, the same as if they had been vested in the Lessor at the date of this lease.  Should the Lessor be required to incur any expense by the performance of any act required by this article, the Lessee shall, on demand, reimburse the Lessor.  Should any of the property of any kind or character1927 BTA LEXIS 2578">*2599  covered by this lease be appropriated by any authority clothed with the power of eminent domain, the money derived therefrom shall be applied to the betterment or enlargement of the property hereby leased, and the Lessee shall seasonably notify the Lessor of such application, and the rental shall not thereby be diminished.  Provided, however, that nothing in this article or in this indenture, contained, shall be construed to limit or affect in any way the right of the Lessee, to make application in its own name for any rights, powers, privileges, franchises, or licenses, or to make, construct or acquire in its own name, extensions to the lines of railway, or new lines of railway or other property, upon any street or highway not now actually occupied by the rights, privileges and franchises, or the railways or other property of the Lessor; but it is expressly agreed that the Lessee may, at its option, acquire any such rights, powers, privileges, franchises and licenses, and may make or acquire any such additions or extensions to existing lines of railway or property upon any streets or highways or parts thereof not now 9 B.T.A. 468">*476  actually occupied by the Lessor, as aforesaid, or1927 BTA LEXIS 2578">*2600  may construct or acquire any new railway or properties, in its own name and right; and the rights, powers, privileges, franchises, and licenses so acquired in the name of the Lessee, and all extensions and additions to existing railways and properties of the Lessor, and all new railways or other properties so made, constructed or acquired by the Lessee in its own name, shall as between the Lessee and the Lessor, and all parties claiming under or through the Lessor, be the absolute property of the Lessee.  ARTICLE XII Upon the expiration of any grant, license, contract or privilege, now possessed by the Lessor, or any extension thereof, under any grant or agreement of any municipality, or the local authorities of any county, town or district, within said State of Virginia, before the determination of the term of this lease, whereby the whole or any portion of the property of the Lessor shall be made inoperative or inefficient, the Lessee, in the discretion of its Board of Directors, shall have the right, to surrender to the Lessor so much of said property as the Lessee shall determine can not thereafter be operated to advantage, and upon such surrender, to a proportionate abatement1927 BTA LEXIS 2578">*2601  of the rental herein provided to be paid.  Such proportion shall be ascertained and fixed by the award of three arbitrators, one to be chosen by the Lessor, one by the Lessee, and a third by the two so selected, who shall proceed to value the property desired to be surrendered by the Lessee, and its annual rental value in relation to the annual rental value of the entire property and franchises hereby leased, and the amount so ascertained shall first be deducted from the annual rental herein provided to be paid under Article XX of this lease.  If such deduction and allowance shall at any time or times exceed the whole of the annual rental provided to be paid in said Article, the Lessee shall have the right to elect to cancel and determine this lease, and upon such election all liability of the Lessee hereunder shall cease.  The award of such arbitrators, or a majority of them, shall be final and binding upon the parties hereto, and the same may be made a rule of the court at the option of either of the parties, and enforced accordingly; provided, however, that nothing in this Article or in this Indenture contained, shall be construed to give to the Lessee the right directly or indirectly1927 BTA LEXIS 2578">*2602  in its own name, or in the name of any other person or corporation, as against the Lessor, to apply for or cause application to be made for a renewal of said expiring franchises or any part thereof, but as between the Lessor and Lessee, or anyone acting for or on behalf of the Lessee the right to a renewal of such franchises shall be in the Lessor.  ARTICLE XIII The Lessee will accept and take possession of all the leased property at the commencement of the term herein provided, and retain such possession daring such term; and at its own risk and expense, and in its own corporate name, work and operate the said lines of street railway and electrical plant and each of them; maintain and keep in good order and repair, and renew and replace said lines and each of them, and their rolling stock, equipment and appendages respectively, and supply such additional rolling stock as shall be required in the operation of said leased lines, and maintain the said street railway and electrical plant, make any and all changes and do and perform all other things necessary to make and maintain said plant as a first-class street railway and electrical system, as required for the public convenience1927 BTA LEXIS 2578">*2603 9 B.T.A. 468">*477  and by law and the terms of the respective grants by, and contracts with, the respective cities, towns, and counties; and will save the Lessor harmless from the payment of any claim, debt or liability, whatsoever, growing out of the working, maintenance or operating of said leased property during the term of this lease, or growing out of any fault or neglect of the Lessee, or its agents or employees, or its or their violation of any laws or municipal ordinances now existing or hereafter lawfully passed, the Lessee taking upon itself the same duties, obligations and liabilities in respect of such leased lines of roads and leased property and their appendages and appurtenances, and the working, maintaining, and operating of the same, as if the Lessee, by succession, had become the corporate owner thereof.  ARTICLE XIV The Lessee will perform all of the obligations imposed upon the Lessor by law, or the provisions of its said grants from or contracts with, the various cities, towns, or counties, in relation to the leased property, and will not do or omit, or suffer to be done or omitted, any act or thing which would be ground for forfeiture of any of the franchises, rights1927 BTA LEXIS 2578">*2604  and privileges or easements derived from any city or other municipal or public authority, for the construction and maintenance and operation of the street railway and other property, or any part thereof of which the Lessee shall at the time be in possession under this lease, or which shall be a breach of any condition or obligation imposed on the Lessor by either of the mortgages hereinbefore mentioned, or any other contract entered into by the Lessor; and said Lessee shall and will hold the Lessor harmless from all liability, cost or expense arising during the term hereby created, for or upon the bonds heretofore or hereafter executed by the Lessor, to any city, town or county, conditioned for the faithful performance of the obligations of the Lessor, under its grant or license from, or contract with any such city, town or county.  ARTICLE XV The Lessee covenants that it will pay to the Lessor, from time to time, such sum or sums as shall be equal to the sums necessary for the payment, as and when they become due and payable, of all debts and obligations of the Lessor, and rightful claims and demands against the Lessor existing at the commencement of the term of this lease, and1927 BTA LEXIS 2578">*2605  whether arising out of contract or tort, a schedule or statement whereof, signed by the Treasurer of the Lessor Company, has been delivered to the Lessee at the time of the execution of this indenture, except the principal of the bonds secured by the several mortgages hereinbefore mentioned, or of any bonds issued to refund, renew or extend the bonds, or any of them, secured by said mortgages, or either or any of them; but nothing in this article shall be held or construed to give to any creditor or any other person or corporation other than the Lessor, a right of action against the Lessee for the payment of any such debts, obligations, claims or demands; and the Lessee covenants that it will during the term of this lease pay all taxes, imposts, excises, rates, charges, assessments, ordinary and extraordinary, which may lawfully be imposed or assessed in any way upon the Lessor with reference to its capital stock or dividends thereon, or to the property, contracts, rights, powers, privileges or franchises hereby demised, or upon the rental herein reserved, and also pay all sums of money which the Lessor may now be, or may hereafter become during the term of this lease, liable to pay1927 BTA LEXIS 2578">*2606  by law, contract or otherwise, for the possession, enlargement or 9 B.T.A. 468">*478  perpetuation of any of its rights, powers, privileges, and franchises, said payments to be made as the same become due, to the officer or other person entitled by law to receive the same, whether federal, state, or local, so that the Lessor shall be saved harmless during the term of this lease from the payment of any tax, impost, excise, rate, assessment or charge under any law or proceeding which may be taken or authorized by the United States, or by the State of Virginia, or by any municipality or local authorities of said State; and in the event that said Lessee has failed to make such payment when the same becomes due, or if the validity thereof is contested in good faith by the Lessee, when the validity thereof has been finally established, the Lessor may at any time thereafter make such payment and recover the amount thereof, and of all costs, attorneys' fees and other expenses incurred by the Lessor in connection therewith, with interest thereon from the date thereof, from the Lessee.  ARTICLE XVI The Lessor shall and will, at its own expense, keep the demised property in good repair, and make1927 BTA LEXIS 2578">*2607  all alterations, improvements, renewals, changes and replacements to and upon the railway lines, plants and other property of the Lessor, covered by this lease, necessary to meet the requirements of the business and to satisfy the obligations of the Lessor, and increase or change any power used in the operation of said properties and plants, whenever necessary for the maintenance thereof, or required by or in accordance with the provisions of any law, ordinance or contract of or with any city, town or county, for the proper maintenance of the properties and plants of the Lessor as a modern and efficient street railway, light, heat and power system; and in the event of this lease being terminated through any default or omission of the Lesee, all improvements so made, together with the entire leased property, shall and will be surrendered to the Lessor without charge or costs to the said Lessor.  Upon the expiration of the term of this lease, and of all renewals and extensions thereof, or if before the expiration of the term thereof and all renewals and extensions of said term, this lease be terminated for any cause other than the default of the Lessee, the Lessor shall pay to the1927 BTA LEXIS 2578">*2608  Lessee the actual value at the time of said expiration or determination, of all additions, improvements, betterments and renewals made by the Lessee, to and of the leased property except such as shall have been made out of the proceeds of the sale of, or insurance on the property now owned by the Lessor; but the payment of such value shall be postponed to the liens of the aforesaid mortgages now existing upon the property of the Lessor, and of any refunding or renewal mortgages, to the extent that may be necessary for the payment of the bonds secured thereby.  Such value shall be ascertained and fixed by the award of three arbitrators, one to be chosen by the Lessor, one by the Lessee and the third by the two so selected, and the award of such arbitrators, or the majority of them, shall be final and binding upon the parties hereto, and the same may be made a rule of court, at the option of either of the parties, and enforced accordingly.  For the purpose of ascertaining at such expiration or termination of the lease what additions the Lessee shall have made which shall then be the subject of valuation as herein provided, the Lessor and Lessee shall simultaneously with the execution1927 BTA LEXIS 2578">*2609  of this lease, each appoint a proper person to make an inventory of the entire property covered by this lease.  In the event of such persons disagreeing as to any of such property, they shall select a third person, and the decision of the majority of them shall be final as to any such difference.  When such inventory is completed, copies of the same 9 B.T.A. 468">*479  marked "Schedule A" shall be deposited, duly certified by the persons so selected, with the Lessor and the Lessee, respectively.  At the termination of this lease as aforesaid, another inventory shall be made by persons selected in the same way, and a comparison of the two shall be made for the purpose of ascertaining what, if any, additions have been so made, and so exist for the purpose of valuation as aforesaid.  But nothing herein shall be construed to be an "addition" which is furnished or used by the Lessee, in renewal or in place of or in substitution for any of the property hereby leased, saving to the extent that the additions shall at that time possess value in excess of the original cost of the matter or thing substituted or furnished by way of renewal.  Nothing herein contained shall be construed to embrace or1927 BTA LEXIS 2578">*2610  apply to any extensions made, or new lines constructed or acquired by the Lessee, in its own name, or by virtue of any rights, powers, privileges, franchises or licenses granted to or contracts made with the Lessee; or any rolling stock, equipment or appliances, or any plants, terminals, terminal stations, car-barns, powerhouses, machinery, poles, wires, conduits or other property or appliances, acquired or constructed by the Lessee upon its own property or in its own name, whether such extensions, lines, properties and equipment be used upon or in connection with the demised premises or not; but all such extensions, lines, properties and equipment shall be and remain the property of the Lessee.  ARTICLE XVII The Lessee covenants that it will save the Lessor harmless from all charges, actions, costs, damages and expenses arising from the maintenance and operation of the street railway and electrical plant or other use by the Lessee of the property, contracts, rights, powers, privileges or franchises hereby leased and demised, and that the Lessee will at its own expense, defend all suits brought against the Lessor for any such matters, and pay the final judgment therein.  ARTICLE1927 BTA LEXIS 2578">*2611  XVIII The Lessee shall keep the property subject to this lease, liable to be injured or destroyed by fire, reasonably insured, at the expense of the Lessee, in good and solvent companies; and in case of destruction or damage by fire all insurance money derived from such insurance shall, subject to the provisions of any mortgages thereon, be by it promptly applied to replace, restore or repair such property as may have been injured or destroyed, or in constructing or otherwise acquiring other property for the maintenance or operation of the Lessor's railway and electrical system, and such replaced, restored or additional property shall immediately become subject to this lease.  In case of any failure on the part of the Lessee to keep such property so insured, it shall be lawful for the Lessor to cause its interest in said property to be insured, and the Lessor may recover the amount of any payments or premiums for such insurance, with interest thereon from the date of payment, from the Lessee; Provided, however, that the Lessee may adopt such other plan or method of protection against loss by fire, whether by the establishment of an insurance fund, or otherwise, as may be approved1927 BTA LEXIS 2578">*2612  by the Board of Directors of the Lessor, and will constitute a compliance with the insurance clauses of any existing mortgages upon the demised property, or any renewal thereof.  ARTICLE XIX Whenever, during the term of this lease, the principal of any bonds secured by any of the mortgages hereinbefore mentioned, shall become or be due or payable, the Lessor shall and will do or procure to be done all acts or things 9 B.T.A. 468">*480  necessary or proper to provide, either by the continuance of the existing bonds or mortgages, or by the execution or renewal of refunding bonds and mortgages, for the payment or extension of time of payment of such principal.  The Lessee covenants that the Lessor may do all such acts or things, and that the Lessee shall and will do all acts and things necessary or proper to be done on its part to obtain such extensions, renewals or refundings, the negotiations for which shall be controlled by the Lessee.  But no greater amount of bonds shall be issued or secured by any such renewal or refunding mortgage than is required to enable the Lessor to retire all bonds then outstanding which are secured by the mortgages aforesaid, and to pay the legal and other expenses, 1927 BTA LEXIS 2578">*2613  including banker's commissions incident to the issue and sale of said refunding bonds, and the making, executing and recording of the mortgage to secure the same; and the interest on said refunding bonds shall be fixed at the lowest rate which will enable the Lessee to sell the same at not less than par, less costs, expenses, and banker's commissions.  Such bonds shall be sold by the Lessee at the highest price which it is able to obtain for the same, and the proceeds shall be applied to the retirement of the outstanding bonds and the payment of expenses, including banker's commissions above mentioned.  Any surplus arising from the sale of such renewal or refunding bonds over and above the amount required to retire said outstanding bonds, and to pay the expenses incident to the making and recording of said renewal and refunding mortgage and the issue and sale of the bonds secured thereby, shall be applied to extensions of, additions to, or improvements upon, the Lessor's property, not including, however, in such additions, extensions or improvements, any expenditures which are properly chargeable to maintenance and repairs.  Until payment in full of the principal and interest of all1927 BTA LEXIS 2578">*2614  bonds secured by said mortgages, or by any renewal or refunding mortgage, such bonds and any mortgage by which they are secured, shall be and remain a lien in their order upon all the property, contracts, rights, privileges and franchises of the Lessor, which are now subject or which may hereafter become subject, to the lien of any such mortgage, superior in all respects to any right of the Lessee under this lease.  ARTICLE XX The Lessee covenants and agrees that in addition to the other payments herein provided to be made by the Lessee, it will pay to the Lessor as rental of the leased property and franchises, from time to time, in gold coin of the United States of America of the present standard of weight and fineness, or its equivalent, a sum or sums equal to each and every instalment of interest which shall become due and payable by the Lessor while this lease is in force, upon any of the now outstanding bonds secured by any of the several mortgages upon the property of the Lessor hereinbefore mentioned, or upon any bonds which may be issued in refunding, renewing or extending said outstanding bonds, as and when such instalments of interest respectively become due and payable, 1927 BTA LEXIS 2578">*2615  and the Lessor covenants and agrees that the sum or sums so paid shall be applied by it to the payment of such interest charges, and to no other purpose; but nothing herein contained shall be held or construed to give to any holder of said bonds any right of action against the Lessee for the payment of the principal or of the interest thereon.  The Lessee also covenants and agrees to pay to the Lessor as rental from time to time, such sum or sums as may be necessary to be paid by it for the account of any sinking fund required to be maintained under the provisions of any mortgage created and existing upon the property of the Lessor; and the Lessor hereby covenants to apply the payments so made by the Lesses to such purpose, and to no other.  9 B.T.A. 468">*481  The Lessee also covenants and agrees to pay to the Lessor in addition to the sums aforesaid, in gold coin of the United States of America of the present standard of weight and fineness, or its equivalent - On the first day of June, 1906, the sum of sixteen thousand five hundred dollars ($16,500.00); On the first day of December, 1906, the sum of sixteen thousand five hundred dollars ($16,500.00); On the first day of June, 1907, 1927 BTA LEXIS 2578">*2616  the sum of sixteen thousand five hundred dollars ($16,500.00); On the first day of December, 1907, the sum of twenty-four thousand seven hundred and fifty dollars ($24,750.00); On the first day of June, 1908, the sum of twenty-four thousand seven hundred and fifty dollars ($24,750.00); On the first day of December, 1908, the sum of thirty-three thousand dollars ($33,000.00); On the first day of June, 1909, the sum of thirty-three thousand dollars ($33,000.00); On the first day of December, 1909, the sum of thirty-three thousand dollars ($33,000.00); On the first day of June, 1910, the sum of thirty-three thousand dollars ($33,000.00); On the first day of December, 1910, the sum of forty-one thousand two hundred and fifty dollars ($41,250.00); On the first day of June, 1911, the sum of forty-one thousand two hundred and fifty dollars ($41,250.00); On the first day of December, 1911, the sum of forty-one thousand two hundred and fifty dollars ($41,250.00); On the first day of June, 1912, the sum of forty-one thousand two hundred and fifty dollars ($41,250.00); On the first day of December, 1912, the sum of forty-nine thousand five hundred dollars ($49,500.00); 1927 BTA LEXIS 2578">*2617  On the first day of June, 1912, the sum of forty-nine thousand five hundred dollars ($49,500.00); And thereafter on the succeeding first day of December and June of each year during the term of this lease, or any renewal or extension thereof, the sum of Forty-nine thousand five hundred dollars ($49,500.00).  Such sums shall be payable to the Lessor, but if, ten or more days before any such payment or payments become due the Lessor shall notify the Lessee in writing that in anticipation thereof it has declared a dividend of the whole, or a portion thereof, to the holders of the shares of its capital stock, and shall then furnish to the Lessee a list of the registered holders of such shares, certified by the Treasurer of the Lessor, and request that the payment to the amount of such dividends shall be made directly to such stockholders, then the Lessee shall have the right, and will, as agent for the Lessor, distribute the same to the said stockholders in accordance with the Lessor's request; but it is expressly agreed that this provision, and the assumption by the Lessor of such distribution, is made upon the condition that no default by the Lessee in making such payment or distribution, 1927 BTA LEXIS 2578">*2618  and nothing done or omitted by the Lessee in connection therewith, shall give to any stockholder of the Lessor any right whatever as against the Lessee, or entitle any stockholder of the Lessor to institute any suit or proceeding in law or in equity against the Lessee, on account of the sums so to be distributed or otherwise.  9 B.T.A. 468">*482  ARTICLE XXI All sums of money and amounts to be paid as herein agreed to be paid without relief from valuation or appraisement laws.  ARTICLE XXII The parties hereto covenant each with the other that the covenants herein contained shall inure to the benefit of, and be obligatory upon them respectively, and their respective successors and assigns, but any assignment hereof shall be upon the condition that both the Lessee and its assignees shall be and remain jointly and severally liable upon all the covenants and agreements of the Lessee herein contained unless such assignment be approved and the Lessee be expressly released from liability under this lease by proper corporate action of the Lessor.  ARTICLE XXIII In the event of any dispute or difference between the parties of this Indenture as to the proper interpretation thereof and the1927 BTA LEXIS 2578">*2619  parties themselves shall fail to agree upon a settlement of such dispute or difference, the questions so at issue shall be determined by the award of three arbitrators, one to be chosen by the Lessor, one by the Lessee, and third by the two so selected, who shall hear and determine the questions so submitted to them in the manner and with the effect provided by the laws of the State of Virginia in such cases.  The Virginia Railway & Power Co. is the successor of the Norfolk & Portsmouth Traction Co. by virtue of an agreement of merger and consolidation, dated May 22, 1911, and effective July 1, 1911, and the Virginia Railway & Power Co., by reason of this merger agreement, is the lessee under the lease from the Norfolk Railway & Light Co.  The Virginia Railway & Power Co. exercised its control through ownership by voting 989 shares of the common capital stock of the City Gas Company of Norfolk from the time of the acquisition of the aforesaid stock up to and including the taxable years and received all dividends paid by said company.  The Virginia Railway & Power Co. under the terms of the aforesaid lease with the Norfolk Railway & Light Co. voted by proxy the 4,011 shares of1927 BTA LEXIS 2578">*2620  the common capital stock of the City Gas Company of Norfolk during the taxable years.  The Virginia Railway & Power Co. owned, during the taxable years in question, 21,294 shares (or 85.176 per cent) of the total of 25,000 shares of the common capital stock of the Highland Park Co. and the voting privilege is confined exclusively to the common stock.  The Virginia Railway & Power Co. owned, during the taxable period in question, 1,009 shares (or 61.225 per cent) of the total common capital stock of 1,648 shares of the Northside Viaduct Co., and the voting privilege is confined exclusively to the common stock.  9 B.T.A. 468">*483  The minority stock of the Highland Park Co. and the Northside Viaduct Co. was owned and is now owned by individuals who did not vote their stock, either directly or through proxy, during the taxable years involved herein.  During said years the Virginia Railway & Power Co. voted the stock that it owned in said companies.  The principal property of the Highland Park Co. is a piece of track over which the Virginia Railway & Power Co. operates its cars.  The principal property of the Northside Viaduct Co. is a viaduct which is used and operated by the Virginia1927 BTA LEXIS 2578">*2621  Railway & Power Co. in its transportation system.  The officers of the Virginia Railway & Power Co., the City Gas Company of Norfolk, the Northside Viaduct Co. and the Highland Park Co. during the years involved herein were as follows: Virginia Railway & Power Co., 1917-1921Thos. S. WheelwrightPresidentF. SitterdingVice presidentG. B. WilliamsSecretary and treasurer.W. J. KehlGeneral auditor.C. B. Buchanan (to 1920, inclusive).Vice president and general manager.City Gas Co. of Norfolk1917-19191920-1921PresidentPresidentDirectorDirectordoSecretary and treasurer.Secretary and treasurer.Vice presidentVice presidentNorthside Viaduct Co., 1917-1921Highland Park Co., 1917-1921Vice presidentDirector.PresidentPresident.Secretary and treasurer.Secretary and treasurer.DirectorVice president.The respondent reduced the invested capital of the City Gas Company of Norfolk for the fiscal year ended June 30, 1920, the period July 1, 1920, to December 31, 1920, and the calendar year 1921, by the amount of the prior-year taxes prorated from the dates that such taxes were1927 BTA LEXIS 2578">*2622  payable.  OPINION.  GREEN: Was the Virginia Railway & Power Co. affiliated during the years and periods in question with the Northside Viaduct Co. and the Highaland Park Co.?  It operated the principal properties of these companies as a part of its integral system of railways.  It owned directly 61.23 per cent of the capital stock of the Viaduct Company and 85.18 per cent of the Highland.  The minority stockholders of the two latter companies did not vote either directly or through proxies any of their stock during the four years here in question.  The Virginia Company voted during this period all the stock it owned in both companies.  The officers of the Virginia Company were also the officers of the Viaduct and the Highland.  Section 240 of the Revenue Acts of 1918 and 1921 reads in part as follows: For the purpose of this section two or more domestic corporations shall be deemed to be affiliated (1) if one corporation owns directly or controls through closely affiliated interests or by a nominee or nominees substantially all the 9 B.T.A. 468">*484  stock of the other or others, or (2) if substantially all the stock of two or more corporations is owned or controlled by the same interests. 1927 BTA LEXIS 2578">*2623  In the Appeal of Hartford & Connecticut Western Railroad Co.,2 B.T.A. 211">2 B.T.A. 211, the stockholdings were as follows: StockholdersH. & C. Co.New HavenNew EnglandPer centPer centPer centNew Haven5899.9Unknown41.1100.1100100100The New England operated the properties of H. & C. Co. by means of a lease.  After holding that the New England was a "closely affiliated interest" of the New Haven, we said: * * * In the present case, however, it is contended that the existence of a substantial minority of outstanding stock should defeat affiliation.  It is not shown that by any Act such minority has or could frustrate any purpose or plan of the New Haven, but on the contrary, the insignificant number of minority shares which voted at the stockholders' meetings in 1917 and 1918 indicates an unobstructed control by the New Haven.  * * * When one corporation so far controls the property and affairs of the other as to leave in the minority stockholders nothing but a bare interest in a division of the rental, it is quibbling to say that the minority stock is not controlled.  We must conclude that the New Haven1927 BTA LEXIS 2578">*2624  owned directly or controlled substantially all the stock of the taxpayer, and that they were affiliated within the meaning of the statute.  In the instant case, while the record is not as complete as it might be, we believe that the Virginia Company controlled a sufficient amount of the minority stock in the Viaduct and Highland which when added to the direct holdings of 61.23% and 85.18% brings it within the statute of owning or controlling substantially all the stock.  The three companies, in our opinion, are affiliated.  Was the Virginia Railway & Power Co. affiliated during the years and periods in question with the City Gas Company of Norfolk?  It owned directly only 19.98% of the capital stock of the Gas Company.  The remaining 80.02% was owned by the Norfolk Railway & Light Co.  The latter company, however, on April 28, 1906, leased for 99 years all its properties of every description, except its franchise to be a corporation, to the Norfolk & Portsmouth Traction Company which company, by virtue of an agreement of merger and consolidation, dated May 22, 1911, was succeeded by the Virginia Railway & Power Co., the lease in question being assigned to the latter company.  Paragraph1927 BTA LEXIS 2578">*2625  seven of the lease stated that "* * * all of the railway, light and power properties and plants owned, controlled or operated by the Lessor and Lessee are so connected as 9 B.T.A. 468">*485  to naturally form one complete system, and it is deemed desirable, and is now proposed, to bring said properties under one management and control * * *." In order to carry out this proposal the lease specifically provided that among the assets to be leased was the 80.02% "of the capital stock of the City Gas Company." Article II provided that "The Lessor will surrender and deliver to the Lessee on the first day of June 1906 * * * sole and exclusive possession of all * * * certificates assigned in blank for all shares of the capital stock of any incorporated company." Article X provided that the lessor "will cause proper proxies to be executed and delivered to the Lessee or its appointee, so that any voting power vested in the Lessor as to all and every of said shares of stock subject to this lease, may be exercised by the Lessee, its successors or assigns." The Virginia Company voted all the stock of the City Gas Co. and received all the dividends paid by the City Gas Co.  Thos. 1927 BTA LEXIS 2578">*2626  S. Wheelwright and G. B. Williams were president and secretarytreasurer, respectively, of the two companies.  The Virginia Company actually operated the business of the City Gas Co. as a part of its own system.  It is, therefore, our opinion that the evidence in this case is convincing as to our conclusion that the Norfolk Railway & Light Co. is the closely affiliated interest through which the Virginia Railway & Power Co. controlled the 80.02% of the stock of the City Gas Company of Norfolk, thereby bringing its control of such stock up to 100 per cent.  Appeal of Huntington & Clearfield Telephone Co.,1 B.T.A. 731">1 B.T.A. 731. Since the Virginia Company owned directly or controlled through closely affiliated interests 100 per cent of the stock of the City Gas Co., the two companies are, in our opinion, affiliated within the meaning of section 240 of the Revenue Acts of 1918 and 1921.  The respondent devoted a considerable part of his brief to the argument that the two companies should be denied affiliation for the reason that there would be a duplication of statutory invested capital to the extent of 80 per cent, if the two companies were ruled affiliated and "that Congress1927 BTA LEXIS 2578">*2627  intended such a vicious result should not be lightly imputed to it." We might dismiss such a contention with the statement that the determination of the correct invested capital is not now before us, but even if we were to consider it in connection with the proposition that in construing a statute full consideration must be given to all of its provisions and a construction adopted that will permit all sections to harmonize, we see no merit to such an argument for the reason that the same question would be involved in every case of affiliation under section 240(b)(1) of the 1918 Act where the parent company owned less than 100 per cent of the stock of the other or others.  It must have been involved in the Appeals9 B.T.A. 468">*486 of Hartford & Connecticut Western Railroad Co.,2 B.T.A. 211">2 B.T.A. 211L. B. Putney Mercantile Co.,3 B.T.A. 836">3 B.T.A. 836, and Canyon Lumber Co., 4 B.T.A., 940, in which cases this Board allowed affiliation with the parent company only owning 58.9 per cent, 50.2 per cent, and 50 per cent, respectively.  The question of reducing invested capital on account of prior-year income and profits taxes prorated must be decided against1927 BTA LEXIS 2578">*2628  the petitioners in accordance with Appeal of Russel Wheel & Foundry Co.,3 B.T.A. 1168">3 B.T.A. 1168. Reviewed by the Board.  Judgment will be entered on 20 days' notice, under Rule 50.