THE Court of Tax Appeals (CTA) approved a settlement between ABS-CBN Film Productions, Inc. and the Bureau of Internal Revenue (BIR) regarding the company’s P31-million tax deficiency for 2009.

In a 16-page decision issued on July 31, the CTA first division said both parties have complied with the requirements for the settlement.

The case before the CTA is now deemed “closed and terminated.”

“The Judicial Compromise Agreement entered into by the parties is hereby approved and this Judgement on Compromise Agreement is hereby rendered in accordance therewith. The parties are hereby enjoined to faithfully comply with all the terms and conditions of the aforesaid Compromise Agreement,” the court ruled.

Under the compromise, ABS-CBN Film Productions agreed to pay the BIR P16.1 million.

The agreement called for the film production firm to pay the equivalent to 40% of the basic income tax and basic value added tax as well as 100% of the expanded withholding tax and basic withholding tax on compensation, and basic documentary stamp tax.

The court said the application to settle was grounded on “doubtful validity of respondent’s assessment.”

According to Section 3 of Revenue Regulation No. 30-2002, one of the grounds for doubtful validity is that it is based on presumptions with doubts about its legal or factual basis, or the assessment was based on the “best evidence obtainable,” subject but it can be disputed by sufficient or competent evidence.

The BIR was found to have failed to demonstrate that the company received taxable income from any property, activity, or service equivalent to the tax deficiencies. “Absent any empirical evidence that the alleged differences in the data matching were indeed taxable income received by the petitioner, said deficiency assessments were mere presumptions.”

The court said the memorandum of the petitioner refuted the alleged tax deficiency taxes by presenting evidence during the trial that the assessments were not based on actual facts but “mere presumptions, which is a requisite for compromise settlement under the Tax Code.

The agreement was also approved by the National Evaluation Board which is composed of the BIR and four deputy commissioners, which is also required by the Tax Code.

The settlement was approved by Presiding Judge Roman G. Del Rosario and Associate Justices Esperanza R. Fabon-Victorino and Catherine T. Manahan. — Vann Marlo M. Villegas