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FIRST FEDERAL SAVINGS & LOAN ASSOCIATION PHILADELPHIA v. COMMONWEALTH PENNSYLVANIA (09/13/85)

decided: September 13, 1985.

FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF PHILADELPHIA, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT. COMMONWEALTH OF PENNSYLVANIA V. FIRST FEDERAL SAVINGS & LOAN ASSOCIATION, APPELLANT



Appeals from the Orders of the Board of Finance and Revenue in case of In Re: First Federal Savings & Loan Association, No. R-745, dated November 20, 1974, and in case of In Re: First Federal Savings & Loan Association, No. R-1370, dated July 2, 1982.

COUNSEL

John F. Stoviak, with him, Timothy W. Callahan, II, Of Counsel: Dilworth, Paxson, Kalish & Kauffman, for petitioner/appellant.

Vincent J. Dopko, Deputy Attorney General, for respondent/appellee.

President Judge Crumlish, Jr., and Judges Rogers, MacPhail, Doyle, Barry and Palladino. Opinion in Support of Affirmance by Judge MacPhail. Judge Colins did not participate in the decision in this case. President Judge Crumlish, Jr. and Judge Barry join this opinion in support of affirmance. Opinion in Support of Reversal by Judge Doyle. Judge Rogers and Judge Palladino join this opinion in support of reversal. Judge Colins did not participate in the decision in this case.

The Opinion of the Board of Finance was Affirmed Without Written Opinion.

Disposition

Orders of Board of Finance and Revenue left standing by equally divided court.

Opinion in Support of Affirmance by Judge MacPhail.

In this case, the sole issue presented for our determination is whether the orders of the Board of Finance and Revenue (Board) denying petitions for resettlement by First Federal Savings & Loan Association of Philadelphia (Petitioner) should be upheld insofar as they affirm the action of the Department of Revenue (Department) assessing taxes against the Petitioner under the provisions of the Mutual Thrift Institutions Tax Act (MTIT), Act of June 22, 1964, P.L. 16, as amended, 72 P.S. §§ 1986.1-1986.6 based upon interest income received by Petitioner from its holdings of various obligations issued by the Commonwealth of Pennsylvania, its agencies or political subdivisions.

The parties have entered into stipulations of fact which we adopt as our own. Inasmuch as the narrow issue before us is purely a question of law, we deem it unnecessary to restate the agreed upon facts seriatim. The tax years in question are those ending December 31, 1972 and September 30, 1973. There is no dispute that the income which the Department has taxed is interest income which Petitioner claims is

[ 91 Pa. Commw. Page 636]

    exempt under the provisions of Section 2 of the Act of August 31, 1971 (Act 94), P.L. 395, 72 P.S. § 4752-2.*fn1

Our Court has uniformly upheld the Department's position in this matter, our most recent decision being Philadelphia Saving Fund Society v. Commonwealth, 78 Pa. Commonwealth Ct. 283, 467 A.2d 420 (1983). There we held that the MTIT is an excise or franchise tax where the legislature has provided that the net income of a taxpayer from all sources is the measure of the tax due on the privilege of doing business in the Commonwealth. There, as here, the taxpayer argued that Act 94 exempts certain governmental and authority obligations from all taxes except inheritance and estate taxes. We rejected that argument and do so again for the reasons set forth in Philadelphia Saving Fund Society.

The Petitioner acknowledges, as did the taxpayer in the Philadelphia Saving Fund Society, that to prevail, we must be convinced that we should reverse our prior decisions. The Petitioner contends that we now have strong support in a recent case of our own Court

[ 91 Pa. Commw. Page 637]

    to do so. C. C. Collings & Co., Inc. v. Commonwealth of Pennsylvania, 88 Pa. Commonwealth Ct. 184, 488 A.2d 1187 (1985) held that Act 94 did exempt from the provisions of the corporate net income tax provisions of the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7401-7408 (CNIT), income derived from Commonwealth and municipal Bonds. What Petitioner overlooks is that our Court, in the opinion authored by Judge Rogers, took great pains to point out that we did not attempt to rule upon the CNIT in Philadelphia Saving Fund Society nor did we infer that our decision in C. C. Collings & Co., Inc. in any way detracted from what we decided with respect to the MTIT in Philadelphia Saving Fund Society. Indeed, Judge Rogers reiterated in C. C. Collings & Co., Inc., 88 Pa. Commonwealth Ct. at 198, 488 A.2d at 1193 what we said in Philadelphia Saving Fund Society, "differently worded statutes and ordinances require individualized interpretation. . . ." 78 Pa. Commonwealth Ct. at 288 n. ...


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