Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of Penn Center House, Inc. v. City of Philadelphia Tax Review Board, No. 1258 January Term, 1976.
Gayle R. Smith, Assistant City Solicitor, with her Augustus L. Pasquerella, Assistant City Solicitor, and Mark A. Aronchick, Acting City Solicitor, for appellant.
Peter J. Picotte, II, Dilworth, Paxson, Kalish & Kauffman, for appellee.
President Judge Crumlish, Jr., and Judges Doyle and Barbieri, sitting as a panel of three. Opinion by President Judge Crumlish, Jr.
City of Philadelphia Tax Review Board appeals a Philadelphia County Court of Common Pleas decision holding that Penn Center House, Inc., is not subject to the city's mercantile license tax on carrying charges it receives from member-tenants.*fn1 We affirm.
The record discloses that Penn Center House, Inc., is a cooperative housing corporation which owns a multi-story apartment building containing 432 apartment units. The trial court found that Penn Center House, Inc., is a Maryland corporation organized and established for the purpose of providing rental housing on a cooperative basis.
The evidence further reveals the following: Each member-tenant, after executing an occupancy agreement, pays a lump sum capital contribution which varies according to size of the apartment. The member-tenants also pay a monthly carrying charge to
reimburse Penn Center House, Inc., for their proportionate share of the corporation's expenses for operations, management, taxes, insurance, utilities, reserve funds, and mortgage principal and interest. The corporation refunds to its members any excess from carrying charges paid in over actual expenses at the end of the fiscal year.*fn2 The Tax Review Board contends that the collection of carrying charges results in pecuniary benefits to the housing cooperative corporation.
The issue presented in this appeal is whether the trial court committed an error of law in determining that carrying charges paid by member-tenants are not subject to Philadelphia's mercantile license tax. Accordingly, we must decide whether Penn Center House, Inc., is "engaged in business" within the meaning of Sections 19-1001 -- 19-1005 of the Code of General Ordinances of the City of Philadelphia [Mercantile License Tax]. The ordinance provides: "Every person*fn3 engaging in any of the following businesses in the City shall . . . pay an annual mercantile license tax . . . ." § 19-1003. The persons listed do not include cooperatives but embody wholesalers, retailers, dealers, vendors, manufacturers and all other persons engaged in business. In § 19-1001, the term "business" is defined as:
The carrying on or exercising for gain or profit within the City any trade, business, profession, vocation, or making sales to persons within the City, or any manufacturing, commercial or financial activity, service or business, including but not limited to manufacturers, ...