Court Opinion

ID: 5747072
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:51:09.196773+00
Date Added: 2024-06-11T08:41:11.106355
License: Public Domain

Eager, J.
(concurring). 1 concur in an annulment of the determination of the Comptroller and remission of this matter to him for further proceedings.
In connection with the prior proceedings with respect to the assessment of a tax for the years 1948,1949 and 1950 against the petitioner on the “ financial business ” basis, it appears that the parties had stipulated 11 that, had respondent elected to treat United States Steel as a ‘ general business ’, and to apply the then prevailing ‘ general business ’ rate of one fifth of 1% to ‘ gross receipts ’, without allocation, the principal tax would have amounted to $808,379.91. But, apart from its contention that it is entitled to be treated as a 1 general business, ’ United States Steel has never conceded that the tax could have been imposed upon the basis of the entire gross receipts, without, regard to apportionment. ’ ’ (Matter of United States Steel Corp. v. Gerosa, 7 N Y 2d 454, 458.)
The Court of Appeals annulled the assessment of a tax for the years in question against the petitioner on the “ financial business ’’basis, holding that the statute did not authorize the taxing of the petitioner, as a holding company, at the ‘ ‘ financial business ” rate. (See, further, Matter of United States Steel Corp. v. Cerosa, supra.) The Court of Appeals, without passing upon the liability of the petitioner for a tax at the “ general business ” rate, held (p. 461.): “ we may not here decide the amount of the g’eneral business tax, if any, which the respondent might have imposed ”, and remitted the matter to the Comptroller for further proceedings not inconsistent with its opinion.
The dividend and interest income received by the petitioner was on the remand to be considered by the Comptroller in calculating the general business tax owing by the petitioner for the years in question, and I agree that the assessment of a tax deficiency to be now fixed by him on a proper basis is not barred by the Statute of Limitations.
A question remaining for determination by the Comptroller on the remand by the Court of Appeals was whether or not he was required to allocate and exclude from the tax base dividends and interest received by petitioner from controlled corporations located and doing business wdiolly without the State or partly without and partly within the State. By stipulation, the *322parties had: agreed, to the amount- of the. tax- at .the “ general business ” rate “ without allocation ”, but the issue of whether or not. allocation was required was left open.
The Comptroller, on the' remand, in fixing the deficiency of tax on a “ general business ” tax basis, took the position that under the facts, the allocation of income was not necessary. He argues on this appeal that “ there is no need to allocate at all ”. And, as the petitioner states, ‘e All of the facts in this regard are in the record, and there is no dispute about them.” So, we are squarely faced with the question of whether or not the petitioner is properly to be subjected to a “ general business ” tax to be calculated on basis of its entire dividend and interest income. In fact, as I see it, if allocation is not required, the determination of the Comptroller should be confirmed.
I would conclude, however, that, as a matter of law, the action of the Comptroller in assessing the “general business” tax against the petitioner on a base of its entire dividend and interest income was illegal. Such action clearly constitutes a discriminatory application of the taxing statute and of the Comptroller’s regulations without regard to due relationship to business transacted in the City of New York. The imposition of a tax on basis of all of such income, without allocation, is contrary to the intent of the statute and the regulations, construed as a whole, and, in fact, runs counter to the Comptroller’s practice of many years standing in the following of an allocation formula in calculating a tax on receipts from foreign business activities. Furthermore, the action here cannot be justified on the ground that the tax imposed does not exceed a tax calculated under article 305 of the regulations. Said article was enacted to provide for allocation of receipts of dividends and interest where a tax was to be- imposed at the “financial business” rate and, in any event, the fixing in such regulations of a 12%% minimum of total income as a tax base, would appear on the record here to be illegal in its application to the petitioner. (See Matter of Gulf Oil Corp. v. Joseph, 307 N. Y. 342.)