G.R. No. 179617; January 19, 2011
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. ASIAN TRANSMISSION CORPORATION, Respondent.

FACTS

Respondent Asian Transmission Corporation (ATC), a domestic corporation, filed its annual Income Tax Return (ITR) for the year 2000 on April 10, 2001, declaring a net loss and a Minimum Corporate Income Tax (MCIT) of ₱7,410,642.00. This MCIT due was offset against existing tax credits and creditable taxes withheld, leaving an excess tax credit or overpayment of ₱30,890,556.00, for which ATC opted to be issued a Tax Credit Certificate. In its 2001 ITR, ATC again declared a net loss and an MCIT of ₱6,456,796.00. After applying part of its unutilized 2000 creditable taxes to its 2001 MCIT, ATC was left with remaining unutilized creditable taxes. On April 9, 2003, ATC filed an administrative claim with the CIR for a tax credit certificate or cash refund of ₱28,509,578.00, representing excess/unutilized creditable income taxes withheld as of December 31, 2001. The next day, April 10, 2003, ATC filed a petition for review with the Court of Tax Appeals (CTA) without waiting for CIR action to avoid the prescriptive period. The CTA First Division partially granted ATC’s claim, ordering the CIR to issue a tax credit certificate for ₱24,325,856.58 representing unutilized creditable withholding taxes for 2001. The CTA En Banc affirmed this decision in toto. The CIR filed the present petition.

ISSUE

Whether the Court of Tax Appeals correctly held that ATC is entitled to a refund or tax credit for its unutilized creditable withholding taxes for the taxable year 2001.

RULING

Yes. The Supreme Court denied the CIR’s petition and affirmed the CTA En Banc’s decision. The Court held that ATC sufficiently established its claim for refund/tax credit by complying with the requisites: (1) the claim was filed within the two-year prescriptive period from the date of payment (construed as the date of filing the annual ITR); (2) the income upon which taxes were withheld was included in ATC’s returns; and (3) the fact of withholding was established by Certificates of Creditable Tax Withheld at Source (BIR Form 1743-A). The CTA correctly recomputed the supported amount based on the substantiated certificates. The Court also ruled that ATC was not required to prove the net losses declared in its 2000 and 2001 ITRs, as the burden to prove any irregularity in those declared losses rests on the CIR. In the absence of contrary evidence, the income tax returns prepared under penalty of perjury are considered accurate and regular.