*1 language added, shall be etc. is not This strong enough Congressional to show a opinion intention that the Commission’s completely

should unreviewable. expert opinion would be Commission’s one, presumptively right, and would be op- But should be an course.

portunity possible arbitra- for review

ry action, or sub- action not based

stantial evidence. motion for sum- The Government’s

mary judgment on its counterclaim is

overruled.

It is so ordered. Judge,

JONES, and Chief LARA-

MORE, LITTLETON, WHITAKER and

Judges, concur. Cleveland, Katcher, Ohio, Richard PEDONE, Executrix of the Rose Estate plaintiffs. Jerome N. Curtis and Her- Pedone, Rose of Sam and Pedone Levine, Cleveland, Ohio, on B. were bert v. the briefs. The UNITED STATES. C., Langley, Washington, Walter B. D. Atty. with whom was Asst. Gen. Charles PEDONE and Marian Charles Pedone Rice, P. K. for defendant. James Gar- v. Bowden, Washington, A. land and Allen The UNITED STATES. C., were D. brief. 39-55, Nos. 40-55. JONES, Judge, Before Chief Court of United States Claims. LITTLETON, WHITAKER, MADDEN 8,May 1957. Judges. LARAMORE, Judge. MADDEN, recovery These actions are for alleged taxes been im- year properly assessed against plaintiffs Pedone, Sam Rose against jointly wife, as husband and Pedone, Charles and Marian jointly wife, as husband and $2,756.64 $2,797.64, amounts plus spectively, interest. Since the ac- instituted, plaintiff tions were Sam wife, has died Pedone Rose *2 289 Specific penalties execu- Pedone, for violation as been substituted has provisions provided for of the act are of his estate. trix pertinent pendix, act bilization Production 803-812, ject buildings. above partners partnership. of apply tering Company, marily to the interior walls and Stabilization tiffs Sam and Charles do the The lation.” purposes partments agencies any payment made in contravention of other tion promulgated ployer tion, der this title. shall also any wage, salary, these matter of ernment At all During employing plasterers ^[******] “Sec. “Sec. to the exercised, operations operated pursuant disregarded by authority granted by this title rough referred to prescribe shall receive, any §§ jobs as purposes. compensation in contraven- shall provisions as 405. Board, times 401. 2061 et follows: jurisdiction any (Emphasis supplied.) dealing Act of regulation The materials the Pedone this cooperate in were and finish coats of Agency amended, any period in all pay, any * * a regulation whose * * title, herein The President which agencies the business plastering contractor. seq., other law or employees also the President employer with the the executive de- of title wage, or extent and its Pedone, weré within * business or order shall 2101-2110. Lathing & Plas- supplied * governmental to the compensation were question, no carrying pertinent, (b) necessary to salary, Whenever U.S.C.A.Ap- or employee ceilings IV of laborers jurisdic- Wage the lim- were Stat. No em- organized Economic consisted was Defense regu- order shall Gov- plaster un- out plain- equal or or sub- Sta- prD whenever junctions, of a also in section 409 thereof: more than $50 as the amount of the overcharges, plus $10,000, event shall.such amount exceed the an amount not less than tion is based as the court in its dis- discretion amount not court, plus fees currence tion hereinafter material or service violates a Sections be liable for reasonable the amount cretion material or service for use or tion or order der cretion, of trade or one ings or ney General, more may certify sumption other ishment lieve $10,000, vision of shall be ever the son who about “(c) “Sec. 409. provide ceilings, subject temporary overcharges, upon overcharge. year against and costs shall, upon sums to be than one If may determine, any person cause restraining or to President subsection, under this 409(a) willfully guilty any person engage from the section may to a fine for the brought. any person whichever provided, more the seller the facts to the business ** who imprisonment year, prescribing person appropriate proceed- greater: determine: overcharge, violation, except than conviction and 706 of the act determined than three 405 of this violates permanent has may, in of not more than availability * or both. When- date a misdemeanor the seller shall any is liable any overcharge, or orders other subsection, who in the course which the on account bring (b) Any reason to be- may, court selling any act violative of the oc- action attorney’s engaged (1) buys any pro- $25 thereof, or regula- or the follow- * ceiling within Attor- in its times nature, such pun- such title of in- per- nor .(2) dis- un- ac- ac- no he or , wage spect payments. other section excessive' provision stipulation contained That the act. stipula- agreed parties Agency Economic Stabilization *3 En- tion be National transmitted to the 1952, April 3, General issued its of the Economic forcement Commission Fed.Reg. 2994, 15, ef- Order No. Agency issuance for the Stabilization policy dealing 5, 1952, April with fective Dis- and transmittal of Certificate respect disallow- procedure with appropriate executive allowance to the De- the title IV ances violation of for agencies departments the Act, supra, and that Production fense 405(b) pursuant section Government provides part as follows: order supra, Act, of the Defense Production policy— “Sec. 4. Disallowance section 4 of Economic Stabiliza- the The (a) Purposes disallowance. ‘of 15, Agency’s No. Order tion supra. General authority the disallowances under agreement an also It contained may granted by sections National Commis- Enforcement the pur- for one or more made certify Com- sion to the could forthwith poses of: for missioner of Revenue that Internal Calculating “(1) deductions calculating purpose the deductions determining gain un- for the basis gains the the for basis United der States; Laws of the the Revenue employer laws of the under the revenue $13,535 should United States the sum disregarded employer’s tax- Determining for “(2) ex- 1952, ending 31, year by able December any penses made contract charged States, deduction should be that the of the United or on behalf ” * * against partners, income of the indirectly; directly or 'either plaintiffs cases. December in these On through 1952, Sep- 1, From March 16, 1952, National Enforcement paid 12, partnership 1952, the tember Commission of Dis- sent a Certificate wages estab- the máximums in excess of of In- allowance to the Commissioner granted pursuant lished by to the ternal here- Revenue and him as advised 405(b) the Defense Pro- inbefore noted. part- quoted Act above. duction nership’s partnership for income return wage its journeyman scales partnership paid amount per plasterers hour about ran from $3.00 employees during performing work period per when hour to $3.50 plastering part was included as approved $2.97 area rate was partnership’s sold and part- per per hour. The hour $3.07 $257,720.72. This amount vary- amounted nership rates its laborers at $13,535. included the above per per hour $2.50 from $2.125 approved area rate was hour when The Commissioner of Internal Reve- per per hour. The hour to $2.35 $2.10 acting nue, purportedly pursuant cooperat- plaintiffs shows that the record Act, Economic Defense Production Sta- Division of the Enforcement ed with Agency Order No. bilization General cutting Wage Board in Stabilization Disallowance, dis- and the Certificate legal upon re- rate area back to $13,535 allowed the inclusion of shows quest do so. The record also partnership’s part of the employer the custom the it was against deficiency sold and assessed a began premium pay since it rates respective taxpayers in an amount employees had operations such an exclusion reflect. proportionately since raises received 4, 1953, plain- November On or about that date. filed a claim for refund tiffs specified 25, 1952, above as November amounts sum or about On sought stipulation refunded this suit. to be Six into a partners entered expired Wage action without Board with months Stabilization jected Commissioner, plaintiffs and the to a Federal income tax at all. brought this It was suit. the intent the 16th Amendment to authorize Federal plaintiffs say Govern- lay upon Government to an income tax refusing ment, to subtract everything of came value that into the though actually, illegally, paid, ownership taxpayer. potential received amounts understanding The common the word taxing contracts, plastering their them, income is the amount which one income, upon not gross their gained by activity. his transaction or They receipts. make gains, gross receipts, His not his are his argument follow, easy constitutionally taxable income. Our which the the services for *4 question is whether line constitu- by “goods sold” were were taxability sharply tional so drawn therefore, them, that, and Congress power, has not the or- in goods and were the costs of the sold promote public policy, der to to some price re- be must subtracted from provide incurring costs, that certain income in ceived order to determine pub- of which is in violation of or law profit were or contracts. If it from the policy, disregarded lic shall be in com- pointed material it out that should be puting gains, e., i. income. If taxable selling services. were not “gain” may provide, so selling jobs plas- They finished were admit, which is taxed one must a tering, essentially from different parties fictitious one. If interested Mate- finished books or doors. storm promise legislative pay representa- a necessary pro- and labor are rials $50,000 tive to secure the enactment of things, these the ma- duce legislation, represent- certain and if the terials, improved and increased value spends legislators $25,000 ative to bribe things by labor, are the in order to obtain or better insure the passes. title legislation, enactment of the refinements these But we think that $50,000, stitutional to tax as income the property noth- of ing of title to the law only $25,000 repre- or which the problem. do our There spent sentative has left after he had ordinary case the no doubt that wages $25,000 Supreme for bribes? See persons who work on the Lilly discussion v. Commission- product subtractable from the are sol,d er, 90, 72 U.S. S.Ct. L.Ed. price, in- sale taxable 769. subtraction is made Whether that come. column, early column or that or in this this Since as Revenue Act of schedule, 214(a) (1) 234(a) the income schedule sections case, form, not, (1)1 Congress the normal does tax has limited the amount may affect the amount of the tax. rare which be subtracted for income tax purposes, a case in which does make difference account of salaries and la- placed selling bor, price the labor costs goods, where form is illustrated Wood- tax a allowance” “reasonable for salaries 1124; Acres, Inc., wages. 46 B. T. A. af- side The Commissioner of In- Cir., firmed, has, 134 F.2d 793. necessary, But Revenue ternal when computation question of order of amounts, particularly duced the of ex- form, question a salaries, regarded tax in- on the terpretation ecutive to what he application of the tax- reasonable amounts in the circumstances. ing statutes, important plaintiff’s is not in rela- correct, If the contention provision constitutional to the tion the successive stat- receipts may certain be sub- whether utes been unconstitutional. We do (1952 ed., II) (1) corresponding provision Supp. 162(a) See 26 U.S.C. 1. Internal Revenue Code 1954. in- rendered the aforementioned em- a constitutional think ployees nature, are, of their ele- firmity decades because for all these has existed being exposed in ments of the cost of discovered and without litigation. opinion, therefore, constitutionally exempt ac- Common legisla- They permit quiescence by taxation. contend that those affected long period is evidence income tax on these would over a tion community capital, Government the 16th Amend- its since a sense permits powers. ment exceeded lawful to the Constitution has not its taxation on “income” the tax gives the 16th Amendment If ar- unconstitutional. Plaintiffs leeway refuse to treat Government gue provision “income” in as a subtractable cost gross 16th mean Amendment does not actually salary wage perfectly lawful very receipts term, by and that rightfully paid, because the Government nature, permits an exclusion from the large, unreasonably concludes that it is receipts of cost of the fortiori, that, Gov- seem it'would sold before tax- the income similar treatment ernment could accord able under the 16th Amendment. The payments violation of law made in *5 goods sold, argued, the cost of is is it so, public policy. it not do If it could capital. plaintiffs’ sold in position sub- find of would itself in the they argue, thus, services, cases were sidizing pub- the of its violation law money partnership when the is in im- policy, percentage lic of the since a rendered, for value the of the services proper payment, depending tax on the payment represents merely the a return taxpayer, bracket capital expenditure wages. for covered the form of a reduc- him in Therefore, plaintiffs continue, to ex- the type of In this tion of his income tax. receipts repayment tent that embrace a eases, in unreasonable as the cases of capital expenditure, of to the that salaries, that understand we receipts the extent that the are reim- practice refusing the to the of allow goods sold, for bursement the cost of expenditures al- of subtraction such they exempt constitutionally old law. most as as the income taxation, hence, In- the Commissioner of history background Upon ternal Revenue cannot exclude the value willing to opinion are not we common determining the in- services revolutionary doctrine which impose the subject taxation, despite the urges upon con- us. Our plaintiff Defense Production Act General Or- over- did not is that clusion der No. 15 of the Economic Stabiliza- petitions taxes, must their pay their Agency tion which were basis of dismissed. actions these the Commissioner’s Taxpayers argue, however, so ordered. that

It cases. authority act no or the Judge, JONES, and WHIT- Chief empower order the Commissioner Judge, AKER, concur. disallow as speaks “expenses” act and the “deductions,” Judge. order of both which are LARAMORE, carefully words of art which have a de- opin- from the respectfully dissent I meaning fined under Internal Reve- majority this case for ion nue Plaintiffs contend Code. that cogent very rea- some think aye what Defense Production Act and order sons. provide only use those terms the. they that concede made Plaintiffs the disallowance of deduction excess of máximums wage payments in expenses normally 405(b), which are pursuant deduct- to section established services under 23 of the argue ible value Internal that but contends, plaintiff did because Code,1 as Revenue plaintiff, broadly they, against which offset goods to disallow not intend receipts vested their business so, partnership and later do tribution without it was being profits which had been constitu- net allowed the cost of accumulate. tionally item. argues sup- argue Defendant further that to further Plaintiffs port plaintiffs’ Act frus- contentions would Production Defense extent regulate placed interpretation trate the of the act permits intent wages; respect however, plain- Rev- Internal in this Commissioner point sections act tiffs to other is unconstitutional. enue provide criminal and civil sanc- hand, Defendant, feels tions, purposes en- which are to 405(b) Pro- the Defense that section force the act. Act, supra, the Com- duction authorizes “costs” As to word in section 405 dis- Revenue to of Internal missioner argue (b) plaintiffs it has reference regard any tax- amount contract upon receipt of a Certificate able income by or made on behalf the United arguing Disallowance. purpose or for the States laws other subtracting Commissioner’s actions than revenue laws and that section- tax- amount 4(a) (2) Economic Stabilization despite fact correct able income was ,No. Agency’s supports General Order may properly have been sum

that the this view. plaintiffs’ element *6 argument fallacy Despite of sold, says the the defendant that defend- Congress argument feeling taxpayers’ majority is ant and the the wages by court, point I intended to control all this believe should out act, argument any by fallacy employer not covered that Con- wages gress wages even, just as not included intended cover which are to all goods part part goods sold; if sold. Defend- to argues if, wit, plaintiffs contend, in word “costs” as ant also that the sub- ject 405(b) wages constitutionally, section the act indicates amount of congressional taxation, cover items intent to all from then it matters including part Congress, by labor which are not that Defense Pro-' ' goods Act, as- overpayments sold. Defendant duction the cost intended that wages excluded amount serts that a tax on the of such should be in excluded capital because, would not constitute a tax on income taxable in purposes possession, 1. Revenue Code use or Section 23 the Internal turned for 1939, 23, business, property follows: or U.S.C. of tbe trade § to gross taxpayer from 23. Deductions which the not “Sec. taken or is taking not or in come. title which he has no computing equity. sports any pro- shall In the “In net income there case of gram be allowed deductions: conducted for the benefit of the Expenses. “(a) Cross, expenses American National Red expenses. “(1) (16) 22(b) (B) Trade or business described section shall general. ordinary “(A) subparagraph All be allowable this under necessary expenses paid expenses or incurred to the extent that such ex-- during year carrying , gross taxable ceed amount excluded from in — any including by business, 22(b) (16).” or trade a rea- section sonable allowance for salaries or other Section 23 from continues subsection compensation personal through (b) (4) (if) services ac- subsection and re-> rendered; tually traveling (in- lates to other items not covered in the expended cluding paragraph above entire amount but which the code away lodging) specifically meals while home denominates as deductible in pursuit business; or of a trade taxable under income the code. payments required specifically and rentals Section deals with items be made a condition to not deductible. income,” cases are Con- income” or “net case, without would be such Congress quite point does gress’ settled on the jurisdiction so. to do “gross receipts.” regulate not certainly power mean has the available means of all kinds “ * * * to determine In order ex- provisions it, but, constitutional if loss, gain or whether there has been taxation, mere empt item from gain, any, if and the amount rep- item payment of that fact gross from the we must withdraw does statute the violation of resents proceeds sufficient an amount levy a Congress empower existed store value supreme The Constitution it. period at the commencement Congress except ac- act cannot Doyle v. consideration.” cordance it. with 179, Co., U.S. Mitchell Brothers reasoning, plaintiffs’ if By 467, 469, the same 62 L.Ed. 38 S.Ct. correct, argument defendant’s 1054. word extent correct also subject Mertens, On Law of Fed- this 405(b) was “costs” contained section Taxation, eral Income volume to mean intended 5.10, therein, are cases cited sold, then refer to the cost quite explanatory: Congress’ term use of the action regulate history trying “The of the income tax in the cost hence, country begin- and, improper ineffectual crude sold was ning as a war-time measure unconstitutional. day, present 1861 to the shows a it, Thus, the issues in this as I see development idea the cost whether case imposed upon should net a tax taxation to income may be income. The Amendment Sixteenth if light 16th Amendment not, however, does define income and paid by not, are the specify does whether tax is charged employees imposed upon net truly doing plastering work Although income. under our *7 cost an element present statutory scheme the tax is question the first partnership. If essentially imposed upon net in- negative and answered be can comes, such whether affirmative, plaintiffs can second may imposed gross upon tax be a they recover, must fail. otherwise academic; income is not it arises opinion that the cost of am allowance or disallowance constitutionally is statutory deductions, particular- and that here and taxation from ly in whether taxable truly an element question are income must allow exhaustion goods sold. cost producing receipts, the asset receipts whether that in- present income tax basis capital. return clude a to 16th Amendment laws provides as which follows: Constitution agreed generally “It now that Congress power have shall “The not the income tax is limited to incomes, lay taxes collect may ‘net income’ but under certain derived, with- source whatever from imposed circumstances be among the sev- apportionment gross out income. The courts have re- regard States, without eral peatedly viewed deductions as mat- [Em- or enumeration.” any census legislative grace, ters so that ‘net supplied.] phasis statutory income’ becomes rather concept years, economic While, there has been than an under over might items the term which be dispute as whether some gross “gross by sidered income as therein means busi- contained “income” ordinary taxable as seem clear to the man are treated ness only gain person over come statute. that original is income. gross in- say “To that items of adopted Hence, the same view. may same taxed come be the cost be sold must al- circum- say' that under all as lowed as a deduction countenance courts mil stances the receipts at the income gross receipts. The terms tax on subject which is under receipts’ ‘gross ‘gross income’ and the amendment revenue laws.” synonymous. ‘Gross are not ceipts’ emphasis [Citations omitted and term, includ- broader is a supplied.] may receipts which it within income, agreement capital as as well quo- constitute I am in above with the * * * may capital quite returns emphatically tations and feel “gross designated receipts” omitted not be taxed.” [Citations cannot as be supplied.] emphasis specified the “income” 16th subject Amendment to income taxation. states, volume cited Section 5.06 generic “Income” in both and tech- page follows: at gain. nical sense connotes some and still there has been “While Therefore, tax, pursuant groping in deter- is considerable Amendment, 16th can assessed be capital mining increment when “gross receipts.” on “income” not on be tax- so as has been realized able, gross receipts The term embodies within agreement substantial there is expenditure capital was as a return received that amounts spent product Before for the sold. investment are not in- income, expenditure cap- can be general meaning within the ital must recovered. After be it has may taxed term and then, recovered, only then, been Amendment.” Sixteenth may there income which emphasis omitted and [Citations the 16th taxation under Amendment. supplied.] expounded also been This view has seems little There doubt this is Magill work proper Taxable Roswell construction 16th cited, Income, page apparently therein and cases Amendment. recognized itself placed upon he states: 359 wherein the limitations the amendment the revenue laws decisions, line of “This consistently “gross since used Doyle Bros. v. Mitchell Co. down starting point income” as the of all in date, term ‘in- indicates that *8 the taxation and courts have inter gross mean does not total come’ meaning just preted it as that and not property. ceipts sale of from Sullenger receipts.” “gross See v. Com Although expressly are the decisions 1076, missioner, 1077; 11 T.C. Edenfield statutory con- in terms of worded Commissioner, 22; 13, 19 T.C. v. Scales go struction, actually of some them Commissioner, 1263, 1276; 18 v. T.C. specific beyond that, under the since Weisman, Cir., v. 1 Commissioner 197 of act considered Good- terms 221, 224. Section 22 F.2d of the Inter Edwards, example, v. rich 1939, of nal Revenue Code 26 U.S.C. § profit, have been taxable would 22, of is indicative this use of the term gain no Court held that whereas the “gross income.” has not at realized. income This re- was levy tempted gross an income tax on capital quirement invest- receipts the ratification of since the 16th must be returned before the ment Amendment the states. taxable proceeds as income become Thus, sharp the somewhat from believe that the true results distinction, cost of regard, cannot, present goods least at in this sold capital. Constitution, between income and It of the state 296 properly argued since items income taxation the labor of an electrical falling contracting category represent properly an ele- within that business was goods income, constitu- ment of the sold. The and not cost of However, argument tionally Commissioner’s by sustained from taxation. was expense merely of of decision the Tax with item because an language following category page placed ac- 19 T.C. at been rightly countant does mean that not 22: determine there. The courts must $758,004.18 “Petitioner claims truly a cost ' whether or the item not gross reported his income was question product Such is a sold. Co. business of Edenfield Electric of determined with ref- fact and must be that, course, Of he correct if as to peculiar case of erence to facts 275(e) clearly then does

then under consideration. any application. But have seems product plaintiffs’ al- In the cases gross petitioner to us that receipts confuses legedly of its em- sold services was gross ob- income and plain- so, ployees. cost to If that viously two are same. not the services of those tiffs the rendition The constitute cap- expenditure represent would an part operations cost n part to be ital on their Electric Co. the Edenfield such, could income tax recovered before expenses are de- these to be pursuant to constitutional be assessed gross receipts in arriv- ducted from ing amendment. gross at income. Internal Revenue authorizes no deduc- Code costs, as labor It settled that is well goods cost tion for cost such, may, depending on the nature ' operation must be labor, be an element cost gross in- deducted goods Co. v. Com- sold. United Carbon come.” 1000, missioner, 32 B.T.A. reversed 43; grounds, Cir., 4 90 F.2d other In that stood case Government Commissioner, Acres, Inc. Woodside v. gain by the inclusion of the labor 1124, affirmed, Cir., 2 B.T.A. the issue there cost sold because 793; Commission- Edenfield v. F.2d taxpayer omitted was whether had er, supra. The court Woodside Acres gross percent on his return his page 46 B.T.A. at 1129: stated as follows bring 5-year as to into come so effect ** “* Expenditures included thereby lifting limitations, statute production milk cost of 3-year taxpayer statute. The bar ' certainly include the of feed wages he were claimed that the and the men the cows part of cost of sold and that care of the animals took who only his materials were. With the in- The milk then had milked them. part clusion of labor as separated cream and had gross taxpayer’s it reduced pasteurized. The butter had to be amount, which when added men be churned. income, report- made the amount through product put these who percent *9 less than true ed part properly processes a of the are brought thereby opera- and into production.” cost of 5-year statute of limitations tion against plaintiff. The Government’s also held that Court Tax argument wages the Tax Court decision where and in in construction business a to indicate product case seem that the Gov- sold is the services that primary recognize actually part and the Tax employees a are ernment of its question of goods sold, costs nature Edenfield v. Commis- labor in that suit, case, was instant that labor costs of supra. that it sioner, n Commissioner pri- business construction where Revenue a who of Internal only, not truly on income services, income tax are to assess mary product sold is capital. goods sold on of part cost a n wages paid my business. opinion that all the It is charged employees by plaintiffs those cer- that establish cases While these doing plastering duty of as with the wages may properly included tain truly part partnership’s also, of goods work are sold part of of cost n goods theory can on no cost sold and of properly includible item that an 'of the cost labor be excluded tax such goods goods accorded should be sold cost constitutionally They . sold. are terminol- that consistent treatment tax To them from taxation. question of ogy, they not involve the do levy ceilings tax an income would be in excess whether prescribed pursuant and not on income. can be to statute by the Commissioner excluded therefrom Further, my opinion it is the ex- that statute of Internal Revenue when gives wage $13,535 payments cessive question here authority cer- the President truly part cost are also governmental depart- tify various to the goods sold; hence, the Commissioner depart- which that ments the extent to of Internal Revenue does not have the ' ment should disallow the amount authority those to exclude them from overpayment arriving income not- costs in at taxable ' However, expenses and the violator. withstanding the Production Defense clear, quite it seems on what I based say situa- Act. This is not a above, have said if involving wages a which are not tion truly the cost are an element goods part other- sold but cost n they cannot be excluded sold ordinary neces- wise deductible as and therefrom of Inter- the Commissioner sary business under section despite nal Revenue the Stabilization the 1939 Internal Revenue Code Act; Congress indeed, cannot even the power Commissioner would not have the exclude them payments exclude deduc- excessive they truly if an element thereof. arriving income when tions at taxable Moreover, any attempts revenue act he received of Disallowance. a Certificate reach the actual cost of clearly authority to He deny its inclusion in given do so in such case as was him gross income is unconstitutional. 405(b) the Defense Produc- supreme Constitution is all else sub- tion Act. However, ordinate thereto. I do not I feel that is no un- element think the Production Act of Defense constitutionality 405(b) in section simply say 1950 is unconstitutional. expenses” “costs therein used placed upon that a construction cannot be “deductions” used in the Economic attempt that act that would Agency General Order No. Stabilization stitutionally exempt Section item. relate, insofar Internal as the Revenue agencies of the 1950 “all act states that concerned, only Code is to those items dealing with the matter of properly déductible or excludible under title, within the limits code. Since such deductions or exclu- jurisdiction, carry- cooperate shall legislative grace, matters of sions are purposes.” Thus, out these can be Congress they away by can be taken seen that had no intention of well. give attempting to the Commissioner appropriate would be I think it to note power Internal Revenue a he did not my here views do not tend in (cid:127) specifically otherwise have. The act said purpose way to defeat the of the act *10 only he could act within the limits of was, alia, prevent inter inflation ' authority, holding and his was lim- prescribed to certain máximums, they put Constitution which allows nor do tend ited him position “of subsidiz- Government in the public pol- law the violation of its suggests, icy,” majority sec- since provide civil the act and 706 of tions penalties suffi- which are

and criminal ciently adequate substantial insure Among things,

compliance. those sub- sections the law make a violator of

ject imprisonment $10,000 to a fine and year. Also, I feel that for one do not suggested by opinion a decision as policy public would frustrate law majority It as the it would. believes Constitution,

seems to me that land,

basic the framework law the Congress ap- public policy. for all regulate wages parently power has the doing cut so it cannot reduce or policy across the announced of the Con- stitution as it income taxa- relates to

tion, cap- income,

ital, subject to taxation. I think the entitled to a

judgment claimed, for the entire amount

plus provided by interest law. LITTLETON, Judge, joins

foregoing dissent. (For INDUSTRIES, Inc.

HOUDAILLE merly as Houdaille-Her Known shey Corporation)

v. UNITED STATES. No. 155-53. States Claims.

United

May 8, 1957.