OPINION
Tietjens, Judge:
As indicated in the findings of fact petitioner’s average base period net income for the purposes of computing its excess profits credit for the years at issue averaged, in round numbers, $8,277,975.
Petitioner contends on brief that the following constructive average base period net incomes (cabpni) are fair and just amounts to be used instead of the above actual figures:
1940_ $9, 674, 810
1941_ 10, 567,454
1942- 11, 211,715
1943_ $11,409, 024
1944- 11, 418, 396
1945_ 11,432,158
An average cabpni of $10,952,260 would be the result of using petitioner’s reconstructed figures.
In his opening statement counsel for the Commissioner stated that he agreed “that the increase in capacity is a qualifying factor under Section 722(b) (4)” but disagreed that “it entitles petitioner to relief under that section.” The Commissioner argued that this apparent concession of qualification was confined to the new generating plants and transmission lines and excluded any distribution lines. To meet this argument petitioner, at the close of the trial, moved to amend the petition so that it would make clear that the claim for relief included Riverbend Unit No. 3, Cliffside, and Buck Unit No. 3, and extensions and commitments to extend transmission and distribution lines. The Court permitted the amendment and we think properly so. The applications for relief, the stipulation of facts, and the evidence received at trial all contained facts with reference to the transmission and distribution lines as well as the generating plants. They were inextricably intertwined and we do not think this was introducing for the first time a new and separate claim for relief. If authority for permitting the so-called clarifying amendment is needed, reference is made to similar action taken by the Court in Connecticut Light & Power Co., 40 T.C. 597, at pages 504-505 of the transcript in that case.
The Commissioner has allowed no relief based upon any increased capacity for production or change in the operation of the electric business of the petitioner and he argues that no basis for any such relief has been proven in this case. However, the stipulation shows that the three new generating plants could produce electric power considerably cheaper and in greater quantity than several of the plants being used in the base period and that the locations of the new plants would have reduced loss of power in the base period due to the new shorter transportation distances involved. It is also clear that large additional sales could have been made during the base period on secondary and dump contracts if the production of the three new generating plants had then been available. This evidence shows clearly that costs of the amount of electric power actually sold in the latter half of the base period could have been reduced by the use of the new plants in lieu of some of the older less efficient ones and that sales could have been increased. The record also shows that additional customers were gained through the extension of distribution lines. We think the record justifies the allowance for some relief. The difficult question is the amount to be granted.
The Commissioner, relying upon a failure of proof, and claiming that no basis for relief has been proven, has called no witness, has offered no really helpful evidence beyond the stipulation, and has suggested no computation to show or limit relief. The petitioner, claiming relief, has offered evidence by stipulation and uncontradicted testimony of three qualified witnesses to support that claim and has produced the complicated computations necessary to establish a basis for reconstructing a fair and just average base period net income leading to relief for each of the years involved herein. Cf. Connecticut Light & Power Co., 40 T.C. 597.
It is essential to the petitioner’s claim that the changes in the character of its business, relied on by the petitioner, proven herein and properly before'the Court for consideration, would have resulted in the additional base period sales leading to the amount of relief claimed. No one can say for certain just how much more of the new electric power from the new generating plants could have been sold had it been available during parts of the base period as assumed under the pushback rule. The actual results and experiences of the petitioner during the base period are helpful to some extent and have been taken into account by the pétitioner’s witnesses and by the Court. Some estimates and approximations are necessary and have been made by the petitioner’s witnessesi and have, been considered by the Court. Cf. Peter J. Schweitzer, Inc., 30 T.C. 42; Davenport Hosiery Mills, Inc., 28 T.C. 201; N. Hess' Sons, Inc., 31 T.C. 385. These courses are necessary and should not be avoided in a case like this one. The evidence contains no opinions on this point by others than the witnesses called by the petitioner. The Commissioner has advanced arguments against accepting the evidence presented as proof of the amount of constructive base period net income. The burden of proof of increased sales is still upon the petitioner. However, the case must be decided upon the evidence presented. That evidence in places may be less convincing than one might hope but, perhaps, not less than one might expect on such a difficult problem.
The witnesses for the petitioner, called to support its claimed constructive average base period net income, were D. W. Jones, executive vice president in charge of all retail operations, a director and member of the executive committee; L. P. Julian, manager of operations, including coordination of generation and transmission of power from the various sources to supply the system requirements; and Duncan Lennon, a certified public accountant and lawyer, head of Duke’s tax department. Jones had been employed by Duke since 1927 and Julian had been employed by Duke since 1935. Lennon had been employed by Duke since 1963.
Jones testified in regard to the increase in sales in terms of kilowatt hours under the pushback rule. Julian testified how the generating facilities would have been used to supply those kilowatt hours. Lennon made computations to show the resulting dollars of gross income less cost and expenses would result in the additional 1939 electric department net income and went on to show the cabpNi’s applicable to the years 1940 through 1945.
The cabpNi’s as computed by Lennon are as follows:
Year Amount
1940 $9,674, 810
1941 10,567,454
1942 11,211,715
Year Amount
1943 11,409, 024
1944 11,418,396
1945 11,432,158
These computations are based upon an estimate that, with the aid of the pushback rule, petitioner would have received additional electric department net income of $3,119,269 for the year 1939.
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OPINION
Tietjens, Judge:
As indicated in the findings of fact petitioner’s average base period net income for the purposes of computing its excess profits credit for the years at issue averaged, in round numbers, $8,277,975.
Petitioner contends on brief that the following constructive average base period net incomes (cabpni) are fair and just amounts to be used instead of the above actual figures:
1940_ $9, 674, 810
1941_ 10, 567,454
1942- 11, 211,715
1943_ $11,409, 024
1944- 11, 418, 396
1945_ 11,432,158
An average cabpni of $10,952,260 would be the result of using petitioner’s reconstructed figures.
In his opening statement counsel for the Commissioner stated that he agreed “that the increase in capacity is a qualifying factor under Section 722(b) (4)” but disagreed that “it entitles petitioner to relief under that section.” The Commissioner argued that this apparent concession of qualification was confined to the new generating plants and transmission lines and excluded any distribution lines. To meet this argument petitioner, at the close of the trial, moved to amend the petition so that it would make clear that the claim for relief included Riverbend Unit No. 3, Cliffside, and Buck Unit No. 3, and extensions and commitments to extend transmission and distribution lines. The Court permitted the amendment and we think properly so. The applications for relief, the stipulation of facts, and the evidence received at trial all contained facts with reference to the transmission and distribution lines as well as the generating plants. They were inextricably intertwined and we do not think this was introducing for the first time a new and separate claim for relief. If authority for permitting the so-called clarifying amendment is needed, reference is made to similar action taken by the Court in Connecticut Light & Power Co., 40 T.C. 597, at pages 504-505 of the transcript in that case.
The Commissioner has allowed no relief based upon any increased capacity for production or change in the operation of the electric business of the petitioner and he argues that no basis for any such relief has been proven in this case. However, the stipulation shows that the three new generating plants could produce electric power considerably cheaper and in greater quantity than several of the plants being used in the base period and that the locations of the new plants would have reduced loss of power in the base period due to the new shorter transportation distances involved. It is also clear that large additional sales could have been made during the base period on secondary and dump contracts if the production of the three new generating plants had then been available. This evidence shows clearly that costs of the amount of electric power actually sold in the latter half of the base period could have been reduced by the use of the new plants in lieu of some of the older less efficient ones and that sales could have been increased. The record also shows that additional customers were gained through the extension of distribution lines. We think the record justifies the allowance for some relief. The difficult question is the amount to be granted.
The Commissioner, relying upon a failure of proof, and claiming that no basis for relief has been proven, has called no witness, has offered no really helpful evidence beyond the stipulation, and has suggested no computation to show or limit relief. The petitioner, claiming relief, has offered evidence by stipulation and uncontradicted testimony of three qualified witnesses to support that claim and has produced the complicated computations necessary to establish a basis for reconstructing a fair and just average base period net income leading to relief for each of the years involved herein. Cf. Connecticut Light & Power Co., 40 T.C. 597.
It is essential to the petitioner’s claim that the changes in the character of its business, relied on by the petitioner, proven herein and properly before'the Court for consideration, would have resulted in the additional base period sales leading to the amount of relief claimed. No one can say for certain just how much more of the new electric power from the new generating plants could have been sold had it been available during parts of the base period as assumed under the pushback rule. The actual results and experiences of the petitioner during the base period are helpful to some extent and have been taken into account by the pétitioner’s witnesses and by the Court. Some estimates and approximations are necessary and have been made by the petitioner’s witnessesi and have, been considered by the Court. Cf. Peter J. Schweitzer, Inc., 30 T.C. 42; Davenport Hosiery Mills, Inc., 28 T.C. 201; N. Hess' Sons, Inc., 31 T.C. 385. These courses are necessary and should not be avoided in a case like this one. The evidence contains no opinions on this point by others than the witnesses called by the petitioner. The Commissioner has advanced arguments against accepting the evidence presented as proof of the amount of constructive base period net income. The burden of proof of increased sales is still upon the petitioner. However, the case must be decided upon the evidence presented. That evidence in places may be less convincing than one might hope but, perhaps, not less than one might expect on such a difficult problem.
The witnesses for the petitioner, called to support its claimed constructive average base period net income, were D. W. Jones, executive vice president in charge of all retail operations, a director and member of the executive committee; L. P. Julian, manager of operations, including coordination of generation and transmission of power from the various sources to supply the system requirements; and Duncan Lennon, a certified public accountant and lawyer, head of Duke’s tax department. Jones had been employed by Duke since 1927 and Julian had been employed by Duke since 1935. Lennon had been employed by Duke since 1963.
Jones testified in regard to the increase in sales in terms of kilowatt hours under the pushback rule. Julian testified how the generating facilities would have been used to supply those kilowatt hours. Lennon made computations to show the resulting dollars of gross income less cost and expenses would result in the additional 1939 electric department net income and went on to show the cabpNi’s applicable to the years 1940 through 1945.
The cabpNi’s as computed by Lennon are as follows:
Year Amount
1940 $9,674, 810
1941 10,567,454
1942 11,211,715
Year Amount
1943 11,409, 024
1944 11,418,396
1945 11,432,158
These computations are based upon an estimate that, with the aid of the pushback rule, petitioner would have received additional electric department net income of $3,119,269 for the year 1939.
As previously stated, the Commissioner denied any section 722 relief for the committed increase in capacity for production and distribution of electric power. Petitioner, of necessity, based its claims on assumptions and projections grounded on the stipulated facts and supported by computations and oral explanations made by its own witnesses, employees or former employees of petitioner. The Commissioner proffered no cabpNi of his own and called no witnesses. In such cases we have not hesitated to substitute a cabpNi of our own, based on the evidence of record. We have done this many times, when one or both parties have produced cabpNi’s which we judged were unacceptable. Del Mar Turj Club, 16 T.C. 749; Rand Beverage Co., 18 T.C. 275; Superior Valve & Fittings Co., 18 T.C. 931; Schneider's Modern Bakery, Inc., 19 T.C. 763. As early in section 722 case history as National Grinding Wheel Co., 8 T.C. 1278 (1947), we adopted the principle of Cohan v. Commissioner, 39 F.2d 540, in establishing a cabpNI as a substitute for that argued for by the parties.
Tire cited cases indicate that we are not bound to accept the cabpNi’s submitted by the parties. Nor are we bound by the opinion testimony of witnesses based on assumptions and projections which leave us unconvinced.
Petitioner’s claim is that its profits would have been increased if it had had its new plants and distribution facilities in operation 2 years earlier than it did. The record is not convincing to us that a lack of capacity or high-cost operations were limiting factors on petitioner’s business to the extent claimed by petitioner. The Commissioner makes a strong argument that they were not limiting factors at all. Even before the new facilities were operational petitioner was pursuing an effective sales and promotional program which was not curtailed by any limitation on the capacity to produce and deliver power. The market was not one which necessarily called for new and increased power capacity over and above the normal growth of market and expansion of productive capacity which could be expected of an aggressive and alert public utility. The Commissioner argues that the record shows no causal connection between increased revenues and increased capacity. Nevertheless, our judgment is that the new plants and additional distribution facilities would have led to some increase, though not to the extent contended for by petitioner and our finding reflects that judgment.
Most of the petitioner’s income came from industrial consumers. Domestic and commercial consumers furnished the smaller part of petitioner’s income and the increased distribution facilities would have had a nominal impact on overall earnings.
There is no direct testimony from any putative new industrial consumers that any increase in petitioner’s capacity for production and distribution of power would have led them to become consumers for petitioner’s product. We have allowed as best we can in the exercise of our judgment for that factor in arriving at our figure as to possibly increased profits.
The area in which petitioner operated, as shown by the stipulated facts, was not nearly so depressed as the rest of the nation by the business depression of the thirties. Consequently, economic recovery in this area was not so pronounced during the late 1930’s as it was in other areas. This has been given consideration in our discounting of petitioner’s rosy predictions for its business.
The Court recognizes that no exact criteria can be prescribed for a reconstruction under section 722, and that the statute does not contemplate the determination of a figure that can be supported with mathematical exactness. Superior Vahe & Fittings Co., supra at 938. Here, as in Southland Industries, Inc., 17 T.C. 1551, 1562, “The parties have stipulated statistical data from which, normal earnings for 1939 may be reconstructed. Some such reconstruction, subject to error as it probably is, must be used and has been used by the Court in arriving at a ‘fair and just amount to be used as constructive average base period net income’.”
All in all, it is our considered judgment that the figure of $1 mil-' lion arrived at for the increased income from the new facilities is fair and just.
The Commissioner determined that income of the base period for income tax purposes should not be reduced by abnormal deductions within the meaning of section 711(b) (1) (J) but income of the base period should be reduced by certain of those abnormal reductions for section 722 purposes. The petitioner contends that a claim for relief under section 722 does not justify the reduction of the base period net income by these abnormal deductions. The Tax Court has already decided this question in favor of the petitioner'. Jefferson Amusement Co., 18 T.C. 44.
Reviewed by the Special Division.
Decision will ~be entered wnderBule 50.