Tax Case Digest: CIR v. Mirant (2011)

SECOND DIVISION
CIR v. Mirant (2011)
G.R. No. 176165 June 15, 2011
MENDOZA, J.

Lessons Applicable: Carry-over, Tax Refund, Prescription Period

Laws Applicable:

FACTS:

• Mirant, duly licensed to do business in the Philippines, is primarily engaged in the design, construction, assembly, commissioning, operation, maintenance, rehabilitation and management of gas turbine and other power generating plants and related facilities using coal, distillate, and other fuel provided by and under contract with the Government of the Republic of the Philippines or any subdivision, instrumentality or agency thereof, or any government-owned or controlled corporations or other entities engaged in the development, supply or distribution of energy.
• Mirant filed its income tax return for the fiscal year ending June 30, 1999, declaring net loss and unutilized tax credits.  
• To synchronize its accounting period with its affiliates, with BIR approval, it change its fiscal period to Dec. 31, 1994 indicating the unutilized tax credit to be carried over as tax credit next year.  
• For its Dec. 2000 taxable year, it again had net loss and unutilized tax credits.
• It then filed a claim for refund for 1999 and 2000.
• But, CTA granted only 2000 reduced based on those reconcilable with creditable taxes withheld by Southern Energy Quezon Inc. since the 1999 tax credit was already opted to be carried over.

Issue: W/N refund for 1999 can be claimed

HELD: NO.

• According to Sec. 76 of NIRC once option to carry-over has been made, such option shall be considered irrevocable for that taxable period.  The 2 options are alternative.  The amount being claimed as carry-over would remain in the account of the taxpayer until utilized.  Unlike the option to refund, it has no prescriptive period.
• The requisites for claiming a tax credit or a refund of creditable withholding tax:
  1) The claim must be filed with the CIR within the two-year period from the date of payment of the tax;
  2) It must be shown on the return that the income received was declared as part of the gross income; and
  3) The fact of withholding must be established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld