J. Allen Smith & Co. v. United States

36 F. Supp. 1016, 93 Ct. Cl. 227, 26 A.F.T.R. (P-H) 604, 1941 U.S. Ct. Cl. LEXIS 117

• Court: United States Court of Claims
• Decided: March 3, 1941
• Docket: No. 44780
• Status: Published

Opinion

OPINION

per curiam:

Plaintiff is a corporation. On July 19, 1932, it declared a dividend of not to exceed 25 percent of its capital stock to be paid during the fiscal year ending June 30, 1933. Pursuant to this declaration, plaintiff paid dividends in the sum of $40,000 on June 30,1933.

In 1937 the Commissioner of Internal Revenue, purporting to act under Section 213 (a) of the National Industrial Recovery Act, assessed a tax of 5 percent, or $2,000, on the amount of dividends so declared together with interest in the sum of $734.32. The total sum of $2,734.32 was paid by the plaintiff on August 23, 1937.

Section 213 (a) of the National Industrial Recovery Act, 48 Stat. 195, 206, provides:

Sec. 213. (a) There is hereby imposed upon the receipt of dividends (required to be included in the gross income of the recipient under the provisions of the Revenue Act of 1932) by any person other than a domestic corporation, an excise tax equal to 5 per centum of the amount thereof, such tax.to be deducted and withheld from such dividends by the payor corporation. The tax imposed by this section shall not apply to dividends declared before the date of the enactment of this Act. [Italics inserted.]

The findings of fact show that the dividends so taxed were declared on July 19, 1932, and distributed on June 30, 1933. The National Industrial Recovery Act became effective on June 16, 1933, and consequently the dividends in question are exempt from tax under the last sentence of Section 213 (a) as set out above. This is practically conceded in the brief filed for the defendant.

Judgment will accordingly be rendered in favor of the plaintiff for $2,734.32 with interest as provided by law. It is so ordered.