27 F. Supp. 588 | Ct. Cl. | 1939
delivered the opinion of the court:
Plaintiff seeks to recover the alleged overpayments of $5,017.63 for 1919 and $1,159.50 for 1920 on the ground that the Commissioner of Internal Revenue erroneously and illegally excluded as deductions in those years the amounts of $14,841.12 and $9,604.79, respectively, representing Federal excise tax paid in those years on sales by it of sweet apple cider which the Commissioner at that time had ruled was ' subject to the excise tax. Before the plaintiff’s returns and its tax liability for the years 1919 and 1920 were finally audited and determined by the Commissioner and before the expiration of the statute of limitation under waivers that had been filed, the Circuit Courts of Appeals for the First Circuit and the Second Circuit, as shown in finding 5, had decided in 1923 that sweet apple cider was not subject to the excise tax and the Commissioner of Internal Revenue proceeded in 1924 to refund the excise taxes which had been paid by plaintiff in 1919 and 1920. After these decisions holding that the excise tax was not legally collectible, the Commissioner in his final audit and determination of plaintiff’s returns and its income tax liabilities for 1919 and 1920 on June 22, 1925, eliminated the deductions which had been taken for the excise tax paid. The United States Board of Tax Appeals on, appeal by plaintiff as Inland Products Co. v. Commissioner of Internal Revernue, 10 B. T. A. 235, 236, sustained the action of the Commissioner in excluding the excise tax as a deduction from gross income for 1919 and 1920. The parties stipulated for review of the decision of the Board of Tax Appeals by the U. S. Circuit Court of Appeals for the Fourth Circuit and, after hearing and consideration on the merits, that court affirmed the decision of the Board on April 9, 1929, 31 Fed. (2d) 867.
Plaintiff contends that under the decision in Nash-Breyer Motor Company v. Burnet, 283 U. S. 483, the decision of the
The defendant contends, first, that plaintiff’s cause of action is res adjudicaba for the reason that the Circuit Court of Appeals for the Fourth Circuit had jurisdiction of the subject matter and that by stipulation the parties submitted to the jurisdiction of that court with the court’s consent; and, second, that in any event plaintiff is not entitled to recover on the merits for the reason that the decision and action of the Commissioner excluding in 1925 the excise tax as a deduction from gross income for 1919 and 1920 and the decisions of the Board of Tax Appeals and the Circuit Court of Appeals, affirming that action, were correct.
This court has jurisdiction of the subject matter and the parties. We need not discuss the question of whether plaintiff’s cause of action is res adjudicóla for we are of opinion, in any event, that the decisions of the Commissioner, the Board of Tax Appeals, and the Circuit Court of Appeals upon the question presented were correct and that plaintiff is not entitled to recover on the merits. The cases cited and relied upon by plaintiff.are distinguishable upon the facts or upon principle. So long as a case involving the audit and determination of the correct tax liability of a taxpayer is open and under consideration by the Commissioner of Internal Revenue, it is his duty correctly to determine the income of the taxpayer and deductions to which the taxpayer is entitled. Lewis v. Reynolds, 284 U. S. 281; Illinois Terminal Co. v. United States, 73 C. Cls. 263, 53 Fed. (2d) 904. In 1919 and 1920 plaintiff paid certain Federal excise taxes on sweet apple cider pursuant to the regulations and the decisions of the Bureau of Internal Revenue then in effect. But before the plaintiff’s tax liability for 1919 and 1920 was finally determined by the Commissioner it had been judicially