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COMMONWEALTH v. NATIONAL ADVERTISING COMPANY (10/04/72)

decided: October 4, 1972.

COMMONWEALTH
v.
NATIONAL ADVERTISING COMPANY, APPELLANT



Appeal from judgment of Court of Common Pleas of Dauphin County, No. 418 Commonwealth Docket, 1967, in case of Commonwealth of Pennsylvania v. National Advertising Company.

COUNSEL

Walter K. Swartzkopf, Jr., with him Frank A. Sinon, and Rhoads, Sinon & Reader, for appellant.

Vincent X. Yakowicz, Deputy Secretary of Revenue and Special Deputy Attorney General, with him J. Shane Creamer, Attorney General, for Commonwealth, appellee.

Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Roberts. Mr. Chief Justice Jones took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Pomeroy.

Author: Roberts

[ 449 Pa. Page 60]

This is an appeal*fn1 from the judgment of the Common Pleas Court of Dauphin County, sitting as the Commonwealth Court,*fn2 affirming the Board of Finance and Revenue's settlement of appellant's liability under the

[ 449 Pa. Page 61]

Corporate Net Income Tax*fn3 for the tax year which terminated December 31, 1963.

The sole question involved here is whether appellant's receipts from its contracts with advertisers whose advertisements were placed on outdoor billboards situated in this Commonwealth are to be regarded as "rentals . . . from property situated . . . within this Commonwealth" for purposes of the Corporate Net Income Tax.*fn4 If the receipts are regarded as such "rentals," the receipts must be included in the numerator of the third fraction, better known as the "gross receipts" fraction, of the formula that was employed under the Corporate Net Income Tax Act to determine the tax liability of those corporations whose entire business is not transacted in Pennsylvania.*fn5 We believe that appellant has not met its burden of establishing the invalidity of the Board of Finance and Revenue's settlement of its tax liability. Accordingly we affirm the order of the Common Pleas Court of Dauphin County.

Appellant and the Commonwealth submitted this case to the court below on a stipulation of facts. That stipulation reveals that appellant owns certain road signs and leases as lessee certain other road signs [apparently referred to in the trade as bulletins] and locations therefore in Pennsylvania. Appellant, during the year in question, made contracts with advertisers

[ 449 Pa. Page 62]

    for the placement of advertisements on billboards located in Pennsylvania. According to these contracts, appellant agreed to take all actions necessary to place and maintain the advertisements on the bulletins, including the payment of all lease rentals, taxes, and license fees.

In addition to the activities specified in the contracts, it was stipulated that appellant also performs the ...


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