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    CIR vs. BOAC

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    Pat Espinoza
    This case involves CIR seeking to review a CTA decision regarding deficiency income taxes assessed against BOAC for fiscal years 1959-1971. The CTA sided with BOAC, finding that proceeds from ticket sales in the Philippines did not constitute Philippine-source income since BOAC performed no carriage services in the Philippines. However, the court held that BOAC's ticket sales activity in the Philippines was the income-producing activity, making the income subject to Philippine taxation, as the source of income is the activity within the country producing the income.

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    CIR vs. BOAC

    Uploaded by

    Pat Espinoza
    50 views1 page
    This case involves CIR seeking to review a CTA decision regarding deficiency income taxes assessed against BOAC for fiscal years 1959-1971. The CTA sided with BOAC, finding that proceeds from ticket sales in the Philippines did not constitute Philippine-source income since BOAC performed no carriage services in the Philippines. However, the court held that BOAC's ticket sales activity in the Philippines was the income-producing activity, making the income subject to Philippine taxation, as the source of income is the activity within the country producing the income.

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    Original Title

    54. CIR vs. BOAC

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    This case involves CIR seeking to review a CTA decision regarding deficiency income taxes assessed against BOAC for fiscal years 1959-1971. The CTA sided with BOAC, finding that proceeds from ticket sales in the Philippines did not constitute Philippine-source income since BOAC performed no carriage services in the Philippines. However, the court held that BOAC's ticket sales activity in the Philippines was the income-producing activity, making the income subject to Philippine taxation, as the source of income is the activity within the country producing the income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    50 views1 page

    CIR vs. BOAC

    Uploaded by

    Pat Espinoza
    This case involves CIR seeking to review a CTA decision regarding deficiency income taxes assessed against BOAC for fiscal years 1959-1971. The CTA sided with BOAC, finding that proceeds from ticket sales in the Philippines did not constitute Philippine-source income since BOAC performed no carriage services in the Philippines. However, the court held that BOAC's ticket sales activity in the Philippines was the income-producing activity, making the income subject to Philippine taxation, as the source of income is the activity within the country producing the income.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 1

    CIR vs.

    BOAC
    149 SCRA 395
    GR No. L-65773-74 April 30, 1987

    DOCTRINE:
    "The source of an income is the property, activity or service that produced the income.
    For such source to be considered as coming from the Philippines, it is sufficient that the
    income is derived from activity within the Philippines."
    FACTS:
    Petitioner CIR seeks a review of the CTA's decision setting aside petitioner's
    assessment of deficiency income taxes against respondent British Overseas Airways
    Corporation (BOAC) for the fiscal years 1959 to 1971. BOAC is a 100% British
    Government-owned corporation organized and existing under the laws of the United
    Kingdom, and is engaged in the international airline business. During the periods
    covered by the disputed assessments, it is admitted that BOAC had no landing rights for
    traffic purposes in the Philippines. Consequently, it did not carry passengers and/or
    cargo to or from the Philippines, although during the period covered by the
    assessments, it maintained a general sales agent in the Philippines — Wamer Barnes
    and Company, Ltd., and later Qantas Airways — which was responsible for selling
    BOAC tickets covering passengers and cargoes. The CTA sided with BOAC citing that
    the proceeds of sales of BOAC tickets do not constitute BOAC income from Philippine
    sources since no service of carriage of passengers or freight was performed by BOAC
    within the Philippines and, therefore, said income is not subject to Philippine income tax.
    The CTA position was that income from transportation is income from services so that
    the place where services are rendered determines the source.
    ISSUE:
    Whether the revenues derived by BOAC from sales of ticket for air transportation, while
    having no landing rights here, constitute income of BOAC from Philippine sources, and
    accordingly, taxable?
    HELD:
    Yes. The source of an income is the property, activity or service that produced the
    income. For the source of income to be considered as coming from the Philippines, it is
    sufficient that the income is derived from activity within the Philippines. In BOAC's case,
    the sale of tickets in the Philippines is the activity that produces the income. The tickets
    exchanged hands here and payments for fares were also made here in Philippine
    currency. The site of the source of payments is the Philippines. The flow of wealth
    proceeded from, and occurred within, Philippine territory, enjoying the protection
    accorded by the Philippine government. In consideration of such protection, the flow of
    wealth should share the burden of supporting the government.

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