Petitioner filed its Annual Income Tax Return (ITR) for the taxable year 2000 declaring unutilized tax credits and opting to carry over said excess tax credit to the succeeding taxable year 2001. It filed its Annual ITR for the taxable year 2001 also stating overpayment of withholding tax and indicating therein the option “To be issued a Tax Credit Certificate” relative to said excess tax credit. On 09 August 2002, petitioner instituted a claim for refund or issuance of a tax credit certificate with the BIR of its unutilized creditable withholding tax.
Whether or not the exercise of the option to carry-over excess income tax credits under Section 76 of the Tax Code bars a taxpayer from claiming the excess tax credits for refund even if the amount remains unutilized in the succeeding taxable year.
YES. A corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes paid has two options: (1) to carry over the excess credit, or (2) to apply for the issuance of a tax credit certificate or to claim a cash refund. If theoption to carry over the excess credit is exercised, the same shall be irrevocable for that taxable period.
This is known as the irrevocability rule and means that the the option to carry over the excess tax credits of a particular taxable year can no longer be revoked.