G.R. No. 20057; March 24, 1923
THOMAS G. INGALLS, plaintiff-appellee, vs. WENCESLAO TRINIDAD, defendant-appellant.
FACTS
Thomas G. Ingalls filed his income tax return for the year 1920 on March 1, 1921. He reported a net income of P8,333.33 and claimed a total exemption of P9,200, which included a personal exemption of P8,000 as a married man with three children, believing he owed no tax. The Collector of Internal Revenue, Wenceslao Trinidad, allowed only a P6,000 personal exemption and collected P34 as tax on the balance. Ingalls paid under protest and sued to recover the amount. The defendant demurred, arguing the law only allowed a P6,000 exemption. The lower court overruled the demurrer, prompting this appeal.
ISSUE
Whether the personal exemption applicable to Ingalls’ 1920 income, for which the return was filed in 1921, is P8,000 under Act No. 2833 (in force during 1920) or P6,000 under Act No. 2926 (effective January 1, 1921).
RULING
The Supreme Court reversed the lower court’s order and sustained the demurrer. The applicable law is Act No. 2926, which took effect on January 1, 1921, setting the personal exemption at P6,000. Statutes governing income tax collection and deductions refer to the time the return is filed and the tax is assessed. Since Ingalls filed his return on March 1, 1921, the law in force at that time (Act No. 2926) governs, not the law in effect during the income year (1920). The plaintiff was allowed to amend his complaint.
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