8/17/2019 Carmelino Pansacola v. CIR

1/2

#37 CARMELINO PANSACOLA v. CIR - LACAPTOPIC: DEDUCTIONS FROM GROSS INCOME

DOCTRINE:

FACTS:1. Pansacola fled his income tax return or the taxable year

1997

• It reected an overpayment o P595!

• "e claimed the increased amounts o personal

and additional exemptions under #ec. $5 o the%I&' althou(h his certifcate o income tax)ithheld on compensation indicated the lesserallo)ed amounts on these exemptions

*. +I& denied the claim or reund$. ',- also denied the reund

• -ccordin( to the tax court it )ould be absurd or

the la) to allo) the deduction rom a taxpayers

(ross income earned on a certain year o exemptions availin( on a di/erent taxable year0

. '- denied the appeal.

P2,I,I3%2&: ar(ued that

• personal and additional exemptions are o a fxed

character based on #ection $5 4- and 4+ o the %I&'and as ruled by this 'ourt in Umali these personal andadditional exemptions are fxed amounts to )hich anindividual taxpayer is entitled

• unli6e other allo)able deductions the availability o 

these exemptions does not depend on the taxpayersproession trade or business or a particular taxableperiod

• he insists that the increased exemptions )ere alreadyavailable on -pril 15 199 the deadline or flin(income tax returns or taxable year 1997 because the%I&' )as already e/ective

3#8:

• counters that the increased exemptions )ere not yet

available or taxable year 1997 because all provisionso the %I&' too6 e/ect on anuary 1 199 only

• that the fxed character o personal and additional

exemptions does not necessarily mean that these )erenot time bound

• petitioners proposition )as contrary to #ection $5 4'o the %I&'

• petitioners exemptions )ere determined as o 

ecember $1 1997 and the e/ectivity o the %I&'

durin( the period o anuary 1 to -pril 15 199 did nota/ect his tax liabilities )ithin the taxable year 1997

ISSUE(S): ;hether increased personal and additionalexemptions under the %I&' can be availed o by thepetitioner or the purpose o computin( his income taxliability or the taxable year 1997 and thus )ill be entitled tothe reund.

3& #,-,2 #I ? )hether the exemptions under #ection$5 o the %I&' )hich too6 e/ect on anuary 1 199 be

availed o or the taxable year 1997.

HELD:1. personal and additional exemptions under #ection $5 o 

the %I&' are fxed amounts to )hich certain individualtaxpayers 4citi@ens resident aliens are entitled

*. P2%-= 2A22-&   means the calendar year upon the

basis o )hich the net income is computed under ,itle IIo the %I&'

. #ection 79 4" reBuires the employer to determine on orbeore the end o the calendar year but prior to thepayment o the compensation or the last payroll periodthe tax due rom each employees taxable compensationincome or the entire taxable year in accordance )ith#ection * 4-

a. ,his is or the purpose o either )ithholdin(rom the employees ecember salary orreundin( to him not later than anuary *5 o 

8/17/2019 Carmelino Pansacola v. CIR

2/2

the succeedin( year the di/erence bet)eenthe tax due and the tax )ithheld.

b. ,"2&2C3&2 the income subDect to incometax is the taxpayers income as derived andcomputed durin( the calendar year histaxable year

5. )hat the la) should consider or the purpose o determinin( the tax due rom an individual taxpayer ishis status and Bualifed dependents at the clos o! ""$%$&l '$ and not at the time the return is fled andthe tax due thereon is paid

E. In the case o petitioner the availability o the deductionsin #ec. $5 i he is thus entitled )ould be reected on histax return fled on or beore the 15th day o -pril 1999 asmandated by #ection 51 4' 41.

7. #ince the %I&' too6 e/ect on anuary 1 199 theincreased amounts o personal and additional exemptionsunder #ection $5 can only be allo)ed as deductions rom

the individual taxpayers (ross or net income as the casemaybe or the taxable year 199 to be fled in 1999. Petitioners reliance in Umali is misplaced.

a. In Fmali the court adDusted the exemptionsor the beneft o the lo)er and middleGincome taxpayers

b. despite bein( (iven authority by #ection *941 4 o the %ational Internal &evenue 'odeo 1977 to adDust these exemptions noadDustments )ere made to cover 199

c. the exemption )as a social le(islationintended to remedy the nonGadDustment in199

9. In the case at bar there is nothin( in the %I&' thatexpresses any such intent.

1!.-t the time petitioner fled his 1997 return and paid thetax due thereon in -pril 199 the increased amounts opersonal and additional exemptions in #ection $5 )erenot yet available.

11.Petitioners taxable income covers his income or thecalendar year 1997. ,he la) cannot be (iven retroactive

e/ect.

I#P3#I,IH2: P2,I,I3% 2%I2. &eund )as not allo)ed.