Belle Corp. v CIR; G.R. No. 181298; 10 Jan 2011

in Legal Chyme by

Petitioner filed its Income Tax Return (ITR) for the taxable year ending 31 December 1997 reflecting an overpayment of income taxes. Instead of claiming the amount as a tax refund, petitioner decided to apply it as a tax credit to the succeeding taxable year by marking the tax credit option box in its 1997 ITR.¬†For the taxable year 1998, petitioner’s amended ITR also showed an overpayment.

On 12 April 2000, petitioner filed with the BIR an administrative claim for refund, carried over the overpaid amount to taxable year 1999 and applied a portion thereof to its 1999 Minimum Corporate Income Tax (MCIT) liability.

Whether or not petitioner may claim refund of unutilized tax credits.

NO. Under the new law, in case of overpayment of income taxes, the carry-over of excess income tax payments is no longer limited to the succeeding taxable year. Unutilized excess income tax payments may now be carried over to the succeeding taxable years until fully utilized. In addition, the option to carry-over excess income tax payments may no longer be refunded.

Since petitioner already carried over its 1997 excess income tax payments to the suceeding taxable year 1998, it may no longer file a claim for refund of unutilized tax credits for taxable year 1997.

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