Appeals from the Orders of the Court of Common Pleas of Philadelphia County in cases of City of Philadelphia Tax Review Board v. Spruce Hill Court Apartments, No. 4831 May Term, 1972; City of Philadelphia Tax Review Board v. Manuel Meyers, et al., t/a Ri-Sun Industrial Park, No. 4769 June Term, 1973; City of Philadelphia Tax Review Board v. Adams Avenue Associates, a partnership, No. 2005 April Term, 1972; and City of Philadelphia Tax Review Board v. Erie Associates, a partnership, No. 4163 June Term, 1972.
Dennis L. Cohen, with him Joseph E. Murphy, and Wolf, Block, Schorr and Solis-Cohen, for appellants.
Stewart M. Weintraub, Assistant City Solicitor, with him Albert J. Persichetti, Deputy in Charge of Enforcement, Stephen Arinson, Chief Deputy City Solicitor, and Sheldon L. Albert, City Solicitor, for appellee.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by President Judge Bowman. Judge Kramer did not participate in the decision in this case.
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The taxability of general and limited partnerships under the Philadelphia Net Profits Tax Ordinance, The Philadelphia Code § 19-1500 et seq. (1973), and its Merchantile License Tax Ordinance, The Philadelphia Code § 19-1000 et seq. (1973), are the subjects of these consolidated appeals from the court below which sustained the Philadelphia Tax Review Board in finding appellants subject to the payment of both taxes.
Two of the appellants are general partnerships,*fn1 two are limited partnerships*fn2 and all own real estate in the City of Philadelphia for the production of income. Both limited partnerships manage and operate their respective properties, while the general partnerships, because of the terms of the leases entered into with their respective lessees, are represented as the recipients of "passive income", which postures a subsidiary issue as to these appeals.
The enabling legislation by which the City asserts its power and authority to impose the taxes in question is the Act of August 5, 1932, Ex. Sess., P.L. 45, as amended, 53 P.S. § 15971 et seq. (commonly and hereinafter referred to as the Sterling Act). Section 1(a) of the Sterling Act authorizes cities of the first
[ 25 Pa. Commw. Page 382]
class by ordinance, for general revenue purposes, "to levy, assess and collect, or provide for the levying, assessment and collection of, such taxes on persons, transactions, occupations, privileges, subjects and personal property . . . as it shall determine, except that such council shall not have authority to levy, assess and collect . . . any tax on a privilege, transaction, subject or occupation, or on personal property, which is now or may hereafter become subject to a State tax or license fee. . . . It is the intention of this section to confer upon cities of the first class the power to levy, assess and collect taxes upon any and all subjects of taxation which the Commonwealth has power to tax but which it does not . . . tax . . . ." 53 P.S. § 15971(a).
The Philadelphia Net Profits Tax is imposed upon the net profits earned in businesses, professions or other activities conducted by residents and conducted in Philadelphia by nonresidents.*fn3 "Business" is defined to mean any enterprise, activity, profession or undertaking of any nature conducted for profit by an individual, copartnership, association or any other entity.*fn4 The tax imposed by this ordinance has been declared to be a property tax. National Biscuit Co. v. Philadelphia, 374 Pa. 604, 98 A.2d 182 (1953); Murray v. Philadelphia, 364 Pa. 157, 71 A.2d 280 (1950).
The Philadelphia Mercantile License Tax is imposed upon the gross receipts, among others, of persons engaged in business within the City.*fn5 "Business" is defined to mean the carrying on or exercising for gain or profit within the City any trade, business, profession, vocation, or ...