THE Court of Tax Appeals (CTA) partially granted SM Investments Corp.’s tax refund claim from 2013, but drastically reduced the initial claim of over P1 billion to just P179.3 million.
In a 26-page decision dated March 4, the CTA special second division ruled that of the initial P1.17-billion tax refund claim of SM Investments, the company was only able to prove its entitlement for refund of excess creditable withholding tax (CWT) for 2013 in the amount of P179.3 million.
“In sum, the Court finds that petitioner was able to prove that it is entitled to its refund claim only in the total amount of P179,295,580.72. Hence, the partial grant of the instant Petition is in order,” according to the decision, written by Associate Justice Juanito C. Castañeda, Jr.
The court ordered the remainder of the claim disallowed in the absence of records reflectng its corresponding payments and for failure to prove that the corresponding payments were properly recorded.
Other CWTs were disallowed for not being fully supported by the original copies of pertinent documents.
The CTA said that when there is a discrepancy between the amounts shown in the financial statements and the amounts per certificate of withholding, “there is uncertainty as to whether the income payments indeed formed part of petitioner’s revenue in its return.”
“Petitioner did not offer any explanation or reconciliation of the difference that may be brought about by timing or revenue recognition difference,” it said.
The tax appellate court said it is strict in applying the “well-settled rule” that actions for tax refund or credit should be backed up with pieces of evidence entitling a taxpayer to an exemption that is scrutinized and duly proven.
“The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit. In the present case, petitioner failed to discharge its burden of complying with the substantiation and reporting requirements of its claim,” the CTA said.
Associate Justice Catherine T. Manahan concurred in the decision. — Vann Marlo M. Villegas