J. E. Riley Inv. Co. v. Commissioner

The case is here on petition to review a decision of the Board of Tax Appeals. It involves the construction of a provision of §114 (b) (4) of the Revenue Act of 1934, 26 U.S.C.A. Int.Rev.Acts.

That act (§ 23 (m), 26 U.S.C.A. Int.Rev. Acts, provides that in computing net income there shall be allowed as deductions in the case of mines and other natural deposits a reasonable allowance for depletion, according to the peculiar conditions in each case. Section 114 (b) (4) allows a depletion of 15% in the case of metal mines, subject to the condition that the taxpayer shall state *656 in his. first return under the act that he desires depletion computed on that basis. The statute is shown on the margin.

In its income tax return for 1934 petitioner, whose business is the mining of gold, made no statement of its election in respect of depletion allowance. The return was made out and filed in January, 1935. On March 3, 1936, petitioner filed an amended return claiming percentage depletion, and also claimed a refund.

Petitioner is a Nevada corporation with its principal office and place of business at Flat, Alaska. Flat is in a remote part of the territory, and conditions of travel are…

(dissenting).

Respondent disallowed the depletion deduction claimed by petitioner because, as stated by respondent, the claim was “based upon an amended return” instead of an original return. On that ground and no other, respondent defended and sought to justify his action. He did not, before the Board of Tax Appeals or in this court, claim or suggest that the amended return was not timely. His sole contention, before the Board and here, was that the amended return was not a “first return”, within the meaning of § 114 (b) (4) of the Revenue Act of 1934, 48 Stat. 710 , 26 U.S.C.A. Int. Rev.Acts, § 114 (b) (4), and that, therefore, the claimed deduction could not be allowed. This contention which the Board upheld, should be rejected. Haggar Co. v. Helvering, 60 S.Ct. 337 , 84 L.Ed. -, decided January 2, 1940; 1 C. H. Mead Coal Co. v. Commissioner, 4 Cir., 106 F.2d 388, 390 . Since respondent has raised no question as to the timeliness of the amended return, this court cannot, with propriety, consider or decide any such question.

The decision should be reversed.

Reversing Haggar Co. v. Commissioner, 5 Cir., 104 F.2d 24 , relied on by respondent.