Revenue v. India

GANCAYCO, J.:

This is a Petition which seeks the review of a Decision of the Court of Tax Appeals. The private respondent Air India is a foreign corporation organized under the laws of India. It is not licensed to do business in the Philippines as an international carrier.

Its airplanes do not operate within Philippine territory nor service passengers embarking from Philippine ports. The firm is represented in the Philippines by its general sales agent, Philippine Air Lines, Inc., a corporate entity duly organized under the laws of the Philippines. Air India sells airplane tickets in the Philippine through this agent.

These tickets are serviced by Air India airplanes outside the Philippines. In sum, Air India's status in the Philippines is that of an off-line international carrier not engaged in the business of air transportation in the Philippines. The total sales of airplane tickets transacted by Philippine Air Lines, Inc. for the private respondent during the fiscal year ending March 31, 1976 amounted to P2,968,156.00.

On account of the same, the herein petitioner Commissioner of Internal Revenue held the private respondent liable for the payment of P142,471.68.1 The amount represents the 2.5% income tax on the private respondent's gross Philippine billings for the said fiscal year pursuant to Section 24 (b) (2) of the National Internal Revenue Code, as amended, inclusive of the 50% surcharge and interest for willful neglect to file a return as provided under Section 72 of the same code. The computation is as follows- Gross Philippine billings P2,968,156.00 Income Tax due thereon at 2.5% 74,204.00 Add: 50% surcharge 37,102.00 14% interest per annum (42% maximum) 31,165.68