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Income Tax and Shareholding Value Rules

The document discusses two rulings from the Supreme Court of the Philippines regarding taxation. The first ruling establishes that an increase in the value of a taxpayer's shareholdings is not considered taxable income until the shares are actually sold. The second ruling states that any reversal or modification of a Bureau of Internal Revenue ruling will not be applied retroactively if it would prejudice the taxpayer, unless the taxpayer misstated facts or the facts relied on in the ruling differ materially from the actual facts. The principle of non-retroactivity can only be invoked by a taxpayer who originally sought the ruling.

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550 views1 page

Income Tax and Shareholding Value Rules

The document discusses two rulings from the Supreme Court of the Philippines regarding taxation. The first ruling establishes that an increase in the value of a taxpayer's shareholdings is not considered taxable income until the shares are actually sold. The second ruling states that any reversal or modification of a Bureau of Internal Revenue ruling will not be applied retroactively if it would prejudice the taxpayer, unless the taxpayer misstated facts or the facts relied on in the ruling differ materially from the actual facts. The principle of non-retroactivity can only be invoked by a taxpayer who originally sought the ruling.

Uploaded by

ryanmein
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

National Internal Revenue Code; income tax; gross income.

No deficiency tax can be assessed on the


gain on the supposed dilution and/or increase in the value of taxpayers shareholdings in the transferee
which the Commissioner of Internal Revenue (CIR), at any rate, failed to establish. Bearing in mind the
meaning of gross income, it cannot be gainsaid that a mere increase or appreciation in the value of
the shares cannot be considered income for taxation purposes. Since a mere advance in the value of
the property of a person or corporation in no sense constitute the income specified in the revenue
law, it has been held in the early case of Fisher vs. Trinidad that it constitutes and can be treated
merely as an increase of capital. Hence, the CIR has no factual and legal basis in assessing income tax
on the increase in the value of the taxpayers shareholdings in the transferee until the same is actually
sold. Commissioner of Internal Revenue vs. Filinvest Development Corporation, G.R. No. 163653, July 19,
2011; Commissioner of Internal Revenue vs. Filinvest Development Corporation, G.R. No. 167689, July 19,
2011

National Internal Revenue Code; non-retroactivity of modification of rulings, circulars, rules and
regulations; who is entitled to the benefit of such rule. Any revocation, modification or reversal of a
Bureau of Internal Revenue (BIR) ruling shall not be applied retroactively if to so apply it would be
prejudicial to the taxpayer. This rule does not apply: (a) where the taxpayer deliberately misstates or
omits material facts from his return or in any document required of him by the BIR; (b) where the facts
subsequently gathered by the BIR are materially different from the facts on which the ruling is based; or
(c) where the taxpayer acted in bad faith. The foregoing principle of non-retroactivity of BIR may be
invoked by the taxpayer who, in the first place, sought the ruling from the Commissioner of Internal
Revenue. Commissioner of Internal Revenue vs. Filinvest Development Corporation, G.R. No. 163653,
July 19, 2011; Commissioner of Internal Revenue vs. Filinvest Development Corporation, G.R. No. 167689,
July 19, 2011

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