Court Opinion

ID: 4480744
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:30.285818+00
Date Added: 2024-06-11T15:03:35.319092
License: Public Domain

Opper, /., dissenting: The present question can not be evaluated without reference to the true meaning of section 713, under which in fact the petitioner’s claim for relief is made. How this section is to be applied appears not only from its own terms but, if there were doubt, even more clearly from the reports of the congressional committees accompanying the Excess Profits Tax Amendments of 1941. The statement is there made that: Relief is provided for corporations that experienced rapid growth during the base period. Under existing law, only the average experience during those years can be counted in determining the excess-profits credit based on income. Corporations whose facilities and production capacities were substantially increased during this period would thus be penalized as compared to corporations which had already achieved and maintained a high and constant level of production. The bill will give effect to the ratio of increase during these years. This treatment will afford a substantial advantage to these expanding companies as compared with the use of the level average now required.3 [Emphasis added.] The effect of the Tax Court’s opinion in this proceeding is to disregard wholly the purpose of the so-called “growth formula” and to apply it to a situation, or at least to a degree,4 which results not from any growth of the petitioner’s business, but from a purely fortuitous abnormality which happened by accident to occur in the earlier half of the base period. If this petitioner were asking for relief under section 711 and claiming the benefit of an adjustment for the abnormality, it would, I agree, be appropriate to treat its claim with due regard to the qualifying conditions of proof which the statute commands under those circumstances.5 But, since it is the entirely separate principle of section 713 to which petitioner must resort for the relief it now seeks, I see nothing in the statutory language nor in the legislative purpose to justify disregarding an indisputable abnormality. To permit the claim here is equivalent to the granting of relief on the curious theory that petitioner has overcome the presumptive correctness of respondent’s determination under section 713 by failing to maintain a burden cast upon other taxpayers by a wholly different section. TüRNER, ARUNdell, and Disney, <//., agree with this dissent.   H. Kept. No. 146, 77th Cong., 1st sess., p. 3 ; S. Rept. No. 75, 77th Cong., 1st sess., p. 3.    Since the statutory formula takes account of the rate of growth as well as of the fact of growth, it can not successfully be contended that petitioner should succeed here in obtaining a more advantageous base period income credit than the statute permits, as distinguished from some other hypothetical taxpayer whose only basis for resort to the growth formula, at all, might be a similar abnormality.    “* * * This subsection also restricts the benefits of new subsections (H), (I), and (J) [of sec. 711 ] by placing upon the taxpayer the burden of establishing that the abnormalities,” etc. (Emphasis added.) Op. cit., p. 5.