Thе petitioner was a company making cotton cloth (denim) in two factories in Connecticut and keeping its books on an accrual basis. It returned its income taxes for the years 1916,1917, 1918, 1919, 1920, and 1922, and asserts that the Commissioner assessed deficiencies for each year, to review which it filed two petitions with the Board of Tax Appeals. The Board held that, as the Commissioner had assessed no deficiency for 1917, it had no jurisdiction for that year and entered an order fixing the deficiencies only for 1916, 1918, 1919, 1920 and 1922. As the question of its jurisdiction is a preliminary point, we dispose of it first. Strictly it is not before us, because, so far as appears, the Board entered no order, declaring that it was without jurisdiction, as required by section 1217 (d), title 26, of the tT. S. Code (26 USCA § 1217). Such an order must be entered before we ourselves have jurisdiction, but, since the defect is purely procedural, and the opinion of the Board has dealt with the point, to avoid further delay we will say what we think should be done, leaving it to the Board to enter the proper order.
In March, 1923, the Commissioner provisionally assessed a deficiency of $7,746.-36 against the company, for the abatement of which it later filed a claim, along with a claim for a refund of $10,000. On November 7, 1924, the Commissioner rejected $10,083.-90 of these two claims, and allowed $7,662.-46. This action he subsequently and finally confirmed by a “deficiency letter” of November 23, 1926, covering all the years in dispute, giving credit for the smaller amount in the year 1917. The jurisdiction of the Board depends upon section 283 (f) of the Act of 1926, 26 USCA § 1064 (f) which the facts fully satisfy if any “deficiency” had been “assessed.” Were we dealing with the language of the Act of 1924, it would be easier to assume that the definition of “deficiency” in section 273 (1), 26 USCA § 1047(1) applied to the same word when used in section 283 (f). There would indeed be verbal difficulties even then, because the definition spеaks of taxes “imposed by this title” and a tax for 1917 was not such. Still, since the section begins with the statement, “as used in this title the term ‘deficiency’ means,” it would perhaps be an excess of literalism to say that the definition did not cover “deficiency,” as used in section 283 (f) though the taxes there in mind are imposed under other acts. Be that as it may, when section 273 (1) was taken ovеr into the Act of 1926, it began as follows: “As used in this chapter, in respect of a tax imposed by this chapter the term ‘deficiency’ means.” This presupposes some deliberate change, and there is a double reason for saying that the definition did not apply to section 283 (f). For these reasons it seems to us impossible to say that the meaning of the term, “deficiеncy,” in section 283 (f) is to be found in section 273 (1) in the sense that the statute *895 so commands. Strictly, tlie meaning of the word is left at large. However, we think it reasonable to accept the definition as a relevant, though not imperative, standard of reference, for in our search for intent, we are entitled to suppose; when nothing to the contrary is intimated, that the same word was not used with a double meaning in the same title. The fact that we need not conclusively so construe it, does not impair tlie propriety of our using the definition as a guide.
Even so the moaning is somewhat obscure. A deficiency is the difference between the “return” as corrected and “the tax imposed.” Tlie return is to he corrected by adding all defiсiencies “previously assessed” or paid and subtracting all sums, abated, refunded, credited or otherwise repáid. If the Commissioner at an earlier stage of the proceedings before him, assesses a deficiency which the taxpayer disputes, and if later he confirms his action and imposes a tax, including that deficiency, there will nevertheless be no defiсiency, if this language be read literally. The “previous” deficiency added to the return will be the same as the tax imposed. A fortiori if the Commissioner abates a part of the deficiency and grants a certificate of over assessment pro tanto. Yet it is hard to believe that Congress intended to take away any right of review in such a situation. De facto the taxpayer has been assessed a deficiency and has a complaint. The phrase “deficiencies previously assessed” must mean, we think, those which are conceded by the taxpayer, else the result merely depends upon what items the Commissioner reserves for his final action. Such was apparently the understanding of the Board in Austin Co. v. Commissionеr, 8 B. T. A. 628. We think it the right one, and we hold that there was here a deficiency of $83.90. Therefore that tax for the year 1917 will be redetermined in accordance with what we say below.
Three questions arise upon the merits; a fourth, which concerned a patent used by the company, having been abandoned npon the argument. The first of the three is of the deduction of а state tax for 1918, calculated upon the company’s federal return. As the Commissioner increased the income for 1918, and the state tax was calculated upon it, it resulted that the state tax was also proportionately increased. The dispute is as to when the increase in the state tax may he taken as a deduction, whether for the year 1918, оr when it was finally fixed as a tax upon the income as increased by the Commissioner. The company insists that it should bo deducted from the income for the year 1918, because it had then accrued. The Commissioner refused to allow it as a deduction for that year, and the Board confirmed his ruling. We think that the ease falls within U. S. v. Anderson,
The second question arises from the calculation of the company’s invested capital used in fixing its excess profits tax. The Commissioner reduced this by certain deficiencies for earlier years, 1909-1916, inclusive, assuming that those were collectible. It is conceded that if they were not, the deductions wore unauthorized, and the point therefore turns upon their validity. All the deficiencies were assessed after June 2,1924— the date when the Revenue Act of that year went into effect — and on that day the time had already expired, when any assessment could be made or a tax collected. However, the company gave waivers after June 2, 1924, which, if valid, authorized the Commissioner to assess and collect deficiencies, and acting upon these he did assess them.
Confessedly, had the time for assessment expired after June 2,1924, the waivers would have been good, though executed after the
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■expiry of the time to assess or collect. Burnet v. Railway Equiрment Co.,
Subdivision (a) extends indefinitely the time for all assessments where the return was fraudulent, or there was none. This had already been done by second proviso of section 250 (d) of the Act of 1921 (42 Stat. 265), and section 250 (d) of 1918 (40' Stat. 1083) had the same provision for fraudulent returns, though none for a failure to make any. Before 1918 there was a limit of three years for fraudulent returns and no returns. Section 2, subdivision E, Act of 1913 (38 Stat. 169); section 9 (a) Act of 1916 (39 Stat. 763). Subdivision (e) of section 278 of the Act of 19-24 (26 USCA § 1062 note) could not therefore affect subdivision (a), 26 USCA § 1058, and so it was observed in Burnet v. Chicago Railway Equipment Co., because such аssessment and collections were not barred on June 2, 1924.
Subdivision (b) of section 278 (26 USCA § 1059) refers to deductions taken in amortization of war investments, and extends indefinitely the time finally to assess deficiencies, because of these. This was already the law under the third proviso of section 250 (d) of the Act of 1921 (42 Stat. 265), though there had been a limit in the Act of 1918, § 214 (a) (9), § 234 (a) (8), 40 Stat. 1067, 1078, as to tentative dеficiencies, which indeed remained in the identical sections of the Act of 1921. Thus the final assessment of such deductions had already been' extended indefinitely, and subdivision (e) so far as it touched assessments at all did not apply to subdivision (b).
Subdivision (d), 26 USCA § 1061 note, did not concern assessments but collections, and for that matter has been confined to assessments made after Junе 2, 1924, as we have said. Therefore, as subdivision (e), 26 USCA § 1062 note, limits the force of the section at large not only as to collection, but as to assessment, it must control assessments made under waivers, for there is no other assessment mentioned in the section on which it can operate. Unless then we construe it to mean that a waiver shall not revive a tax if the period of assessment has expired on June 2, 1924, we leave it in the air, qua assessments; it becomes brutum fulmen. This of course cannot be, and we therefore hold that the waivers did not revive the taxes. We do not find that the Commissioner used these taxes for 1919.
The third and last point is the most important, and concerns the valuation of the buildings and machinery, and the allowance fоr their depreciation. The company argues first that it appears that the Commissioner proceeded by a wrong method in figuring depreciations. These first became deductible under section 234 (a) of the Act of 1918 (40 Stat. 1077) and were defined in section 234 (a) (7) of the Act of 1921 (42 Stat. 255). The claim is made therefore only from 1918 onwards. The facts stipulated are that the Cоmmissioner took the costs of December 31, 1917, and figured the depreciations on them. Prima facie this was wrong. The fair market price or value of March 1, 1913, is the basis under the Act of 1921, and we may assume arguendo that the same is true for 1918. However, the record discloses not only the costs- as of December 31, 1917, but those of the additions that had been made since March 1, 1913. The costs as of March 1, 1913, can therefore be readily reckoned, and indeed as to one of the factories the computation appears to have been made upon the basis of those costs, plus the costs of the later additions. It appears to us to be of no consequence that the Commissioner made a short cut аnd used the aggregate costs. We cannot assume that his figures were of the depreciated costs as of December 31, 1917, in which ease alone the company could complain.
It is true, however, that he should have used not costs, but “the fair market price *897 or value” as of Maxell 1, 1913, and this was again prima facie an error. Still we have no reasоn to suppose that the costs were less than the value, except as the company made some proof of it, for the burden rested upon it to show that the error was prejudicial and for this it must rest upon its own evidence. Again, so far as the costs of the property were the basis for computing its invested capital, it has no complaint if the deрreciations were not taken up to December 31, 1917, for the failure to take sueh depreciations would increase the capital and this would be to the company’s benefit. Its position is quite the opposite; that the values were much larger than those allowed. Hence we can find no damage done except in so fa,r as the Board disrеgarded the company’s evidence of value, and the ease comes down to the cogency of what it produced.
Its proof was by the testimony.of its president and sole shareholder, who appraised the property and estimated the proper annual rates of depreciation. He did not satisfy the Board, which disregarded his testimony, and аffirmed the Commissioner, although he called no witnesses in answer. This raises the question of most importance in the case, for the testimony set much higher values on the property and gave it a much shorter life than the Commissioner had allowed. We start with the doctrine that a finding of the Board is not to be upset, when there is any evidence to sustain it; a doctrine which had bеen often laid down by Circuit Courts of Appeal and has now received the sanction of the Supreme Court. (Phillips v. Commissioner,
A jury need not accept the opinions of even a bevy of disinterested witnesses (Head v. Hargrave,
It is true that in these proceedings the Board is to follow the rules of evidence in equity of the courts of the District of Columbia (section 1219, title 26, U. S. Code [26 USCA § 1219]), and the company insists that the point is therefore ruled by Dempster Mill Mfg. Co. v. Burnet, supra,
The company bore the risk of persuading the tribunal of its own selection. It has failed, and that failure is due to the inevita.ble unreliability of the evidence which it presented. Aрparently it has failed altogether; the Board was not moved at all. Had it adopted a valuation intermediate the witness’ appraisal and that of the Commissioner, the .decision might appear1 to be without support, not to be the result of a judgment drawn from sources accessible to both parties, ordinarily a condition upon any judicial actiоn. Even so, it is hard to see how any one but the Commissioner could complain. But we need not consider that situation; here the Board left the appraisals as it found them. Such a case is the usual one where the loss must fall upon the party having the affirmative.
Order reversed; cause remanded for further proceedings in conformity with the foregoing.
CHASE, Circuit Judge, dissents without opinion as to that part of the foregoing relating to the first and second questions on the merits.