Feilbach Co. v. Niles

21 F.2d 495, 5 U.S. Tax Cas. (CCH) 1607, 6 A.F.T.R. (P-H) 6963, 1927 U.S. Dist. LEXIS 1402

• Court: District Court, N.D. Ohio
• Decided: March 25, 1927
• Docket: No. 3185
• Status: Published

Opinion

KILLITS, District Judge.

Section 210 of the Eevenue Act of 1917 (Comp. St. § 6336%k) must be considered to be an administrative provision for the guidance of the Commissioner of Internal Eevenue in the determination of invested capital, upon which computation of excess profits tax may he made in those somewhat unusual occasions when the very definitive section (207 [Comp. St. § 633 6%h]) cannot be applied. It seems obvious that the circumstances which would' clothe the Commissioner with the discretion to apply section 210 would occur somewhat rarely in the administration of the law, because Congress was somewhat meticulous in- its definition of -what invested capital should be considered to be, and how it should be ascertained, in the writing of section 207, whose terms manifestly would meet the conditions in a vast majority of cases.

The section under consideration, 210, is one whose provisions are to be invoked primarily and most generally by : the Commissioner alone. Very, very rarely, and under quite extraordinary circumstances, it would seem, can the section be resorted to as a mode of relief by the taxpayer. The statute limits resort to it to only when the -Commissioner finds that he cannot “satisfactorily” ascertain invested capital for the computation of excess profits tax under section 207. It would follow that, if the Commissioner or his agents actually computes capital under 207, his action should be presumed to exclude any application of section 210; the burden then being upon a claimant to relief under the provisions of the latter section to show that the Commissioner acted arbitrarily and without justification. It would be a rare case indeed wherein a court would be justified in concluding that the Commissioner could not '“satisfactorily” apply the provisions of section-207 to a determination of the question, when, in fact, the Commissioner satisfied himself that he could so do.

Reading the allegations of the petition in light of this consideration of the statutes in question and the Commissioner’s action thereon, we find no reason for the interposition of the court in the form, of a review of his judgment.

It is evident that Congress, in framing section 207, intended, not only to prevent vague and difficult determinations through the examination of circumstances hard to establish, but to set up standards of determination so rigid and so easily applicable that only' a very extraordinary condition would justify a finding that the section was not workable. Cartier v. Doyle (C. C. A.) 277 F, 150; La Belle Iron Works v. United States, 256 U. S. 377, 41 S. Ct. 528, 65 L. Ed. 998. Applying the authorities just cited and going to the four reasons set up as indicating that the Secretary of the Treasury in the instant ease could not satisfactorily determine invested capital, we are unable to find that such a conclusion is a proper deduction. Section 207 seems to this court to read to the exclusion of any one of these four alleged facts; nor do the four of them cuinulated tend to take the present situation out of the operation of the section in question, .and therefore afford the plaintiff relief. On the contrary, as we read section 207, it negatives the ability of the taxpayer to resort to any of these reasons to exonerate it from the provisions of that section.

The demurrer, therefore, to the petition is sustained,