The opinion of the court was delivered by: MILLER
These are suits to recover alleged overpayments of excess profits taxes, declared value excess profits taxes, and income taxes for the taxpayer's fiscal years 1945 and 1946. The cases were tried together before the court without a jury and involve the single question whether subsidies based upon certain sales paid to the taxpayer pursuant to contracts negotiated between it and Commodity Credit Corporation were properly accrued in the fiscal years in which the sales were made, or, as contended by the taxpayer, when the respective claims for subsidy payments were audited and approved by Commodity Credit Corporation.
1. The facts stipulated, so far as pertinent, are found and are incorporated herein.
2. Plaintiff is, and during the years involved was, engaged in the purchase and canning of vegetables and vegetable products and in the sale of canned vegetables, soups, and other like products. It maintained various plants in which such vegetables were canned and/or manufactured or blended into other canned products.
3. Prior and subsequent to the periods involved, the plaintiff kept its books and filed its federal tax returns upon the accrual basis of accounting and on the basis of a fiscal year beginning May 1st and ending April 30th.
4. During the years in question, the United States Government operated a program to assure the maximum production of certain canned foods and to make such canned foods available for civilian consumption at prices no higher than prices set by the Office of Price Administration.
5. The plaintiff participated in this program and on or about October 23, 1944, and as of March 1, 1944, entered into an agreement with the Commodity Credit Corporation, referred to herein as Commodity, a corporate agency of the United States of America, which administered the program relating to maximized production of canned foods pursuant to the direction of the Director of Economic Stabilization and Executive Orders 9250, 9301 and 9328 issued by the President of the United States on October 3, 1942, February 11, 1943, and April 8, 1943. A further similar agreement was negotiated between the plaintiff and Commodity on October 23, 1945, as of May 1, 1945.
6. The 1944 agreement related to the plaintiff's 1944 pack and in general provided that the plaintiff in making purchases of designated vegetables would pay the grower the appropriate grower's support price as determined in the grower support price program. Commodity, in turn, agreed to pay the plaintiff subsidies based on the sales of certain specified canned products provided the plaintiff had paid the grower support price applicable at the place of delivery of the vegetables used in making the canned products and met certain conditions including those relating to 'eligible sales.'
7. In order for a sale to qualify as an eligible sale, it must have been an absolute sale of a designated canned food at a determined price accompanied by transfer of title to the purchaser other than a Government procurement agency; provided however, the product had not been packed, sold or delivered:
a. in violation of any applicable order or regulation of the Office of Price Administration;
b. in violation of any provision of War Food Order 22-6 requiring percentages of the pack at each of the plaintiff's plants to be set aside for purchase by the Government;
c. in violation of War Production Board Orders imposing detailed restrictions on the production and use of tin plate cans.
Moreover, the sale of a product previously sold to and thereafter purchased from a Government procurement agency did not qualify as an eligible sale.
9. The plaintiff's right to receive subsidies was further dependent upon the following conditions:
a. Compliance with Executive Order 9301 establishing a minimum work week of forty-eight hours;
b. Compliance with a contractual provision forbidding discrimination against workers because of race, creed, color or national origin;
c. Compliance with wage, salary and price stabilization orders and regulations;
d. Obtaining and retention of certifications by State Agricultural Conservation Committees of its numerous plants and with respect to foods to be processed at such plants.
10. Payment of subsidies based on eligible sales was to be made by Commodity after receipt of an application, subject to the terms and conditions of the agreement and on the basis of a preliminary audit of the application, with reductions for the amount of offset attributable to ...