vermiculite, beryl, feldspar, mica, talc, lepidolite, sapodumene, barite, ball and sagger clay, or rock asphalt mines, and potash mines or deposits.' Revenue Act of 1943, C. 63, 58 Stat. 44, § 124(a), 26 U.S.C.A.Int.Rev.Code, § 114(b)(4). Since most of the mines listed in addition to metal mines are mines from which metals can be extracted, the Government's argument is that the definition of 'metal mine' intended by Congress must be something other than that suggested by the taxpayer.
All the above is suggestive, in varying degree, of Congressional intent to adopt a definition of 'metal mines' similar to that employed by the Commissioner in disallowing percentage depletion in the instant case. This is a situation where experts obviously disagree, as they did at trial, on the definition of the key term, and where, although it is difficult to be positive about Congressional intent on the specific point, the Commissioner's interpretation does not seem unwarranted.
Entirely apart from specific Congressional intent, the taxpayer argues that the Government's 'end use' criterion is impractical, and, therefore, unreasonable, pointing out that if it is adopted a metal mine may be classified as such on one day and as a nonmetal mine on the next, depending upon the ultimate use to which its product is put, and that it may be difficult, even impossible, for a taxpayer to determine what that ultimate use is. From the evidence adduced at trial, both these contingencies would seem improbable and, as far as this taxpayer is concerned, both objections for the years at issue are hypothetical. It has stipulated that the end use of substantially all its products for the years at issue was as refractories. Moreover, the first type of objection is met by the proration formula embodied in the General Counsel's Memorandum, for if the objection means anything, it means that a taxpayer will be unable to foretell his tax liabilities with reasonable certainty, and the formula takes care of that. The second objection would seem equally surmountable by a reasonable effort at inquiry among customers, where price, ore content, and past dealings did not make clear the intended ultimate use. Furthermore, on this plane of administrative efficiency, or practicality, the criterion suggested by taxpayer has practical weaknesses of its own, enough, at any rate, to further the impression that the Commissioner's interpretation of the law in rejecting it is not unreasonable. Thus, during what period would a mine have to be susceptible of producing ore from which metal could be extracted at a profit; during the tax years at issue, or at some future date, during war, during periods of scarcity and emergency stockpiling, or during periods when high grade ore is available at low prices? How much profit is 'profitable'; should the absence or presence of competition matter? Finally, it should be remembered that the subject dealt with here is an exceedingly complex one. Of it, the Supreme Court has said, in Helvering v. Wilshire Oil Co., 308 U.S. 90, 102, 103, 60 S. Ct. 18, 25, 84 L. Ed. 101: 'In its general aspects under revenue acts depletion is a problem on which taxpayers, government and accountants have expressed a contrariety of opinions. * * * Experience and new insight can be expected to produce rather constant change. In sum, the highly technical and involved factors entering into a practical solution of the problem of depletion in administration of the tax laws points to the necessity of interpreting § 23(1) so as to strengthen rather than to weaken the administrative powers to deal with it equitably and reasonably. * * * '
To sustain the Commissioner's interpretation, the court need not find that his construction is the only reasonable one, but only that it has a 'reasonable basis.' See Unemployment Compensation Commission of Territory of Alaska v. Aragan, 329 U.S. 143, 153, 67 S. Ct. 245. The court feels that this requirement has been met, and that taxpayer was correctly allowed to claim depletion on a unit basis only, rather than percentage depletion under 114(b)(4).
Conclusions of Law
1. The Court has jurisdiction of the subject matter and the parties of this action,
2. The Commissioner's disallowance of petitioner's claim for percentage depletion was a reasonable interpretation of Section 114(b)(4).
3. Judgment will be entered in favor of defendant.
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