(308 U.S. at page 395, 60 S. Ct. at page 340).
'* * * A timely amended return is as much a 'first return' for the purpose of fixing the capital stock value in contradistinction to returns for subsequent years, as is a single return filed by the taxpayer for the first tax year. * * *'
Further, (308 U.S. at page 396, 60 S. Ct. at page 340)
'* * * To construe 'first return' as meaning the first paper filed as a return, as distinguished from the paper containing a timely amendment, which, when filed is commonly known as the return for the year for which it is filed, is to defeat the purposes of the statute by dissociating the phrase from its context and from the legislative purpose in violation of the most elementary principles of statutory construction.'
The amount involved in the present claim for refund has no reference to the return originally filed. The particular item was a matter of dispute in connection with the income tax return of Walter H. and Irene C. Kaltreider as individuals, as to which item their liability was established. See Kaltreider v. Commissioner of Internal Revenue, supra. Pending such determination, the corporation took the precautionary step of filing a supplemental corporate return, setting up this additional item and paying the tax thereon. It is this amount only for which a claim for refund was filed.
The Government's contention is that the three year statute of limitation began to run from the filing of what it terms the 'original' return. In support of its contention it cites Zellerbach Paper Co. v. Helvering, 293 U.S. 172, 55 S. Ct. 127, 79 L. Ed. 264. That case involved a deficiency assessment and dealt with an increase in tax liability under an intervening income tax act and the Court held that the period of limitation began to run against the making of a deficiency assessment against the taxpayer, from the filing of the original return. Such holding, however, was based upon the fact that any increase of tax liability was ascertainable by simple computations from the original return and that the deficiency assessments in large amounts were based mainly on grounds unrelated to any changes in the law by reason of which the subsequent return was filed. It merely held that an amendment or supplement of a return already filed would not toll a limitation which had once begun to run.
Were we dealing here with matters disclosed by and moneys paid under the 'original' return, this reasoning might well apply. However, the later Haggar case, quoted, supra, makes it evident that there was no intent to establish an inflexible rule that the period of limitation begins to run both as to assessments and claims for refund from the 'original' return. The Haggar case specifically points out that an 'amended' return may be a 'first' return. It should also be noted that the statute as to the three year limitation on claim for refund does not say 'original' return but merely 'the' return. Likewise, Mertens Law of Federal Income Taxation, supra, cautions that 'It is not always easy to determine whether the problem involves a 'tentative,' 'defective,' 'amended' or 'original' return.' Certainly it is difficult to justify a statement that the period of limitation must run from the 'original' return as to a claim for refund of a sum which has neither been paid pursuant to nor set forth or revealed in such return. This would appear to be one of the absurd results to which Haggar, supra, refers.
The Government has submitted nothing as to Congressional intent which would require the words 'the return' in the statute to be interpreted as 'the original return.' The Government has received the tax both from the individuals and from the corporation. As far as the corporation is concerned, it is an overpayment. Even so, were it clear that the words of the statute were referable only to the original return in a situation such as now before us, of course, as the Court stated in Kavanagh v. Noble, 332 U.S. 535, 538, 68 S. Ct. 235, 237, 92 L. Ed. 150,
'assuming that the Janney decision ( Helvering v. Janney, 311 U.S. 189, 61 S. Ct. 241, 85 L. Ed. 118) makes clear that the taxpayer here made an overpayment, the loss which he now suffers from an application of § 322(b) (1) is a loss which is inherent in the application of any period of limitation. Such periods are established to cut off rights, justifiable or not, that might otherwise be asserted and they must be strictly adhered to by the judiciary. * * * Remedies for resulting inequities are to be provided by Congress, not the courts.' Nothing has been submitted which seems to justify such a result in the instant case.
In Rittenbaum v. United States, D.C.N.D.Ga., 109 F.Supp. 480, 483, the Court said:
'The opinion of Judge McCord in Allen v. South Atlantic S.S. Co. of Delaware, 5 Cir., 177 F.2d 257, 259, that
"It is without dispute that this taxpayer overpaid its tax for the year 1940 in a substantial amount. * * * and now the Government seeks to escape paying a just claim by pleading the statute of limitations. Under such circumstances, unless the mandate of the enactment inexorably requires such a construction, it would be manifestly unjust and inequitable to permit the Government to retain this tax. * * *', is applicable here.'
Equally pertinent are the Court's remarks in Dubuque Packing Company v. United States, D.C.N.D. Iowa, 126 F.Supp. 796, 799:
'The purpose of a statute of limitations is to compel the exercise of rights within a reasonable time after they accrue. A limitation is regarded as unreasonable that does not afford full opportunity to sue before the bar takes effect. * * * This concept of fair opportunity to sue is incorporated into Section 322(b)(1) through the medium of the tax return. A tax return which does not disclose the requisite information necessary for the taxing authorities to determine tax liability does not start the statute of limitation running because the taxing authorities have not had a fair opportunity to determine whether a claim against the taxpayer exists. * * * Likewise even in the face of a retroactive tax act requiring an additional return, the old return will commence the statute of limitations where it gave all the information necessary for the computation of the new tax. (Citing Zellerbach Paper Co. v. Helvering, supra.) * * *
'* * * As heretofore noted, a 'return' or 'payment' will start the statute running. To do so the return must define the tax obligation or give sufficient information to define the tax obligation. * * * In the case of a proper tax return the return itself defines the tax obligation. * * * In that case ( Thomas v. Mercantile Nat. Bank, 5 Cir., 1953, 204 F.2d 943) the Court said, 204 F.2d at page 944:
"It would be illogical to hold * * * that the statute of limitation began to run against a claim for refund before the deficiency itself came into existence, and before the fact that there was an overpayment, and if so the amount thereof, became ascertainable."
The principle is applicable whether it be a deficiency as in Dubuque Packing Company, supra, or a claim for refund of an overpayment. Certainly the 'return' which gave the information necessary for the computation of the tax here involved and gave sufficient information to define the tax obligation and furnish a basis of a tax refund claim was 'the return' spoken of as the amended return of March 16, 1956, and started the three year period of the statute running. The claim for refund was therefore filed within time.
Let order be submitted in accordance with this opinion.