CIR Vs Rhombus
CIR Vs Rhombus
Facts: Rhombus filed an Annual ITR for taxable year 2005, respondent indicated that its excess creditable
withholding tax ("CWT") for the year 2005 was "To be refunded". On May 29, 2006, respondent filed its
Quarterly Income Tax Return for the first quarter of taxable year 2006 showing prior year's excess credits
ofP1,500,653.00.
On August 25, 2006, respondent filed its Quarterly Income Tax Return for the second quarter of taxable year
2006 showing prior year's excess credits ofP1,500,653.00.
On November 27, 2006, respondent filed its Quarterly Income Tax Return for the third quarter of taxable year
2006 showing prior year's excess credits ofP1,500,653.00.
On December 29, 2006, respondent filed with the Revenue Region No. 8 an administrative claim for refund of
its alleged excess/unutilized CWT for the year 2005 in the amount ofP1,500,653.00.
Respondent filed its Annual Income Tax Return for taxable year 2006 showing prior year's excess credits of
PO.OO. Pending petitioner's action on respondent's claim for refund or issuance of a tax credit certificate of its
excess/unutilized CWT for the year 2005 and before the lapse of the period for filing an appeal, respondent
filed the instant Petition for Review.
Issues: 1. WON RESPONDENT IS ENTITLED TO ITS CLAIM FOR REFUND OF UNUTILIZED CREDIT
ABLE WITHHOLDING T AXES IN THE AMOUNT OF P1,500,653.00, FOR TAXABLE YEAR 2005.
2. WON RESPONDENT HAD ALREADY EXERCISED ITS OPTION TO CARRY-OVER ITS CLAIM
FOR REFUND OF UNUTILIZED CREDIT ABLE WITHHOLDING TAXES
Held: Section 76 gives two options to a taxable corporation whose total quarterly income tax payment in a
given taxable year exceeds its total income tax due. These options are (1) be credited or refunded either in the
form of cash or credit certificate with the excess amount paid; or (2) carry over the excess credit to the
succeeding taxable year.
The first option works simply by applying for a cash refund or tax credit certificate with the BIR for any tax on
income that is paid in excess of the amount due to the government. The second option, on the other hand,
works by applying the refundable amount, as shown on the Final Adjustment Return, of the given taxable year,
against the income tax liabilities of the succeeding taxable year.
Since petitioner incurred a net loss for taxable year 2005, on December 29, 2006, petitioner filed with Revenue
Region 8 an administrative claim for refund of its excess creditable withholding tax for calendar year 2005 in
the amount of P1,500,653.00 (Exhibit "!"). In effect, petitioner availed o f the first option provided in Section
76 o f the NIRC of1997, as amended.
However, a perusal of petitioner's Quarterly Income Tax Return for the first quarter of taxable year 2006
(Exhibit "DD'') shows that petitioner carried over its unutilized creditable withholding tax for taxable year 2005
in the amount ofP1,500,653.00, subject of the present petition for refund or issuance of a TCC.
Also, a perusal of petitioner’s Quarterly Income Tax Return for the second quarter of taxable year 2006
(Exhibit "EE'') shows that petitioner again carried over its unutilized creditable withholding tax for taxable year
2005 in the amount ofP1,500,653.00, subject of the present petition for refund or issuance of a TCC.
Likewise, petitioner's Quarterly Income Tax Return for the third quarter of taxable year 2006 (Exhibit "FF")
shows that petitioner carried over its unutilized creditable withholding tax for taxable year 2005 in the amount
of Pl,500,653.00, subject of the present petition for refund or issuance ofa TCC.
It bears stressing that the last paragraph of Section 76 of the NIRC of 1997, as amended, provides that once the
option to carry-over and apply the excess quarterly income tax against income due for the taxable quarters of
the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period
and no application for cash refund or issuance o f a TCC shall be allowed therefore.