'3% if prepaid thereafter and on or before August 1, 1951 * * *'
With a decreasing 1/4% annually.
7. As a condition of this borrowing, taxpayer undertook to observe the following covenants and restrictions:
(a) Promptly pay and discharge all state and federal tax charges;
(b) Conserve and keep in proper working condition all property necessary in the conduct of its business;
(c) Keep its properties adequately insured;
(d) Except under specified conditions, not to undertake any further corporate borrowing, or otherwise dispose of its tangible or intangible assets;
(e) Not to pay any dividends to its stockholders unless certain 'conditions shall be fulfilled;'
(f) Not to merge, consolidate or dispose of all or substantially all of its property; and
(g) Not to lend money or invest money in any other business, with certain stated exceptions.
8. The parties to this loan transaction had not previously engaged in a similar transaction though the money borrowed in this instance was for use by plaintiff in the ordinary course of its business.
9. On or about January, 1951, the Commissioner of Internal Revenue assessed against plaintiff a documentary stamp tax deficiency in the amount of $ 6,600 in respect of the promissory note described in paragraph 2. The action of the Commissioner of Internal Revenue in assessing said deficiency was based upon his determination that the said promissory note was within the class of corporate securities which are taxable under Section 1801 of the Internal Revenue Code.
10. On or about February 12, 1951, the Collector of Internal Revenue for the Twenty-third Collection District of Pennsylvania issued a notice and demand to plaintiff for the payment of the said deficiency of $ 6,600. In the said notice and demand it was stated that if the said deficiency was not paid within ten days from the date thereof, interest and penalties would be assessed thereon.
11. On or about February 19, 1951, plaintiff, in compliance with the demand made upon it by the Commissioner, and, in order to avoid interest and penalties, made payment under protest to the Collector of Internal Revenue for the Twenty-third Collection District of Pennsylvania, in the amount of $ 6,600.
12. On or about August 22, 1951, plaintiff filed with the Collector of Revenue for the Twenty-third Collection District of Pennsylvania, a claim for refund of $ 6,600.
Conclusions of Law
1. The Court has jurisdiction over the parties to the action and the subject matter thereof.
2. The instrument delivered by the plaintiff, Sharon Steel Corporation, to Metropolitan Life Insurance Company on which stamp tax was assessed and paid was a debenture within the meaning of and subject to tax under Section 1801 of the Internal Revenue Code.
3. The stamp tax on the said instrument was legally assessed and collected by the defendant.
4. Defendant is entitled to judgment.
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