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COMMONWEALTH v. KOPPERS COMPANY (11/24/59)

November 24, 1959

COMMONWEALTH
v.
KOPPERS COMPANY, INC., APPELLANT.



Appeal, No. 56, May T., 1959, from judgment of Court of Common Pleas of Dauphin County, No. 454 Commonwealth Docket, 1956, in case of Commonwealth of Pennsylvania v. Koppers Company, Inc. Judgment affirmed; reargument refused December 31, 1959. Proceedings on appeal by taxpayer from decision of Board of Finance and Revenue refusing to review tax resettlements. Before RICHARDS, P.J., without a jury. Adjudication filed dismissing appeal, defendant's exceptions to adjudication dismissed and final decree entered. Defendant appealed.

COUNSEL

Roy J. Keefer, with him Leon D. Metzger, and Hull, Leiby & Metzger, for appellant.

George W. Keitel, Deputy Attorney General, with him Anne X. Alpern, Attorney General, for appellee.

Before Jones, C.j., Bell, Musmanno, Jones, Cohen and Bok, JJ.

Author: Cohen

[ 397 Pa. Page 525]

OPINION BY MR. JUSTICE COHEN

This appeal is from the decision of the Court of Common Pleas of Dauphin County sustaining the denial by the Board of Finance and Review of the Koppers Company's petition for review of the resettlement of corporate net income tax due by the company for the year 1953 under the provisions of the Corporate Net Income Tax Act of May 16, 1935, P.L. 208, as reenacted and amended by the Act of December 27, 1951, P.L. 1746, 72 P.S. ยง 3420a et seq.

This appeal challenges the makeup of the gross receipts allocation fraction as well as the constitutionality of the tax statute as construed and the tax resettlements made thereunder.

Under section 2 of section 3420b of the Corporate Net Income Tax Act, the net income of a corporation transacting part of its business in Pennsylvania and part of its business outside of Pennsylvania is apportioned to Pennsylvania by the use of three fractions, i.e., tangible property, wages and salaries, and gross receipts. Section 2(a) first provides for the specific

[ 397 Pa. Page 526]

    allocation to Pennsylvania of gains or losses from the sale or exchange of tangible capital assets situated within the Commonwealth. Section 2(b) provides that if such assets are situated without the Commonwealth, that gains or losses therefrom shall not be allocated within Pennsylvania. The remainder of the net income, referred to in tax parlance as "net income to be allocated," is then divided into three equal parts. Section 2(c). To each part is applied one of the three fractions heretofore mentioned.

The exact makeup of the gross receipts fraction is set forth in section 2(c)(3).*fn1 The instant controversy concerns the inclusion of certain items in both the numerator and the denominator of the gross receipts fraction, which inclusion has resulted in a larger allocation percentage and, hence, a greater tax imposed upon the company.

The facts surrounding the present appeal have been stipulated to by the parties and are, in ...


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