Dccco V Commissioner Of Internal Revenue Digest 5l6j6h

DCCCO v. COMMISSIONER OF INTERNAL REVENUE G.R. No. 182722 January 22, 2010 FACTS: Petitioner Dumaguete Cathedral Credit Cooperative (DCCCO) was established on February 17, 1968. On November 2, 2001, BIR Operations Group Dep. Comm. Lilian Hefti issued Letters of Authority Nos. 63222 and 63223, which authorized an inspection of petitioner’s books and ing records for internal revenue taxes for the years 1999 and 2000. On June 26, 2002, and October 16, 2002, petitioner received four Pre-Assessment Notices for deficiency withholding taxes for 1999 and 2000. The said taxes covered the honorarium of the Board of Directors, security and janitorial services, legal and professional fees, and interest on savings and time deposits of its . Petitioner informed BIR Regional Dir. Sonia Flores and Assistant Regional Dir. Rogelio Zambarrano that it would pay the withholding taxes for the first three categories., On April 24, 2003, petitioner received Letters of Demand Nos. 00027-2003 and 00026-2003. On May 9, 2003, petitioner protested the Letters of Demand and Assessment Notices with the Commissioner of Internal Revenue (CIR). After the latter failed to act, petitioner filed a Petition for Review before the CTA on December 3, 2003. The CTA partially granted the petition, ordering petitioner to pay deficiency withholding taxes on interest from savings and time deposits of its . Petitioner then filed another Petition for Review with the CTA En Banc, which the latter denied. ISSUE: Whether petitioner is liable to pay the deficiency withholding taxes on interest from savings and time deposits of its for the years 1999 and 2000. HELD: NO. In BIR Ruling No. 551-888, the BIR stated that, unlike banks, cooperatives are not required to withhold taxes on interest from savings and time deposits of their . The BIR reiterated this in BIR Ruling [DA-591-2006], where it said that Sec. 24(B)(1) and Sec. 27(D)(1) of the National Internal Revenue Code of 1997 (NIRC) do not apply to of cooperatives. Furthermore, under Art. 2 of R.A. 6938, as amended by R.A. 9520, the State provides cooperatives preferential tax treatment. The Court held that the legislative intent behind Articles 61 and 62 of R.A. 6938 meant that preferential tax treatment, which expressly applied to cooperatives, was extended to of cooperatives as well. Thus, petitioners’ interpretation of Sec. 24(B)(1) of the NIRC as not applying to cooperatives is affirmed. RESULT: Petition is granted.