Documente Academic
Documente Profesional
Documente Cultură
incurred) by a company within a taxable year not provided under Section 29 of the Tax Code
allowed as deduction - (a) BIR is prohibited from of 1997 for taxable year 1997 and prior
issuing further comments on Questions Nos. 1, 2, 3, years but for taxable year 1998, Section 34
7 and 8 issued by the Energy Regulatory Board in of the Tax Code of 1997 governs.
relation to ERB Case No. 93-118 entitled "Meralco
vs. Energy Regulatory Board, et. al." in so far as the (e) Pursuant to then Section 117 of the Tax
rate fixing issue is concerned considering that the Code of 1997, as amended by RA 8241, the
issues are all sub judice pending before the Court 2% franchise tax of electric, gas and water
of Appeals. With regard to the question of whether utilities is based on gross receipts derived
the appraisal increase of property, plant and from the business covered by the law
equipment of electric utilities is taxable, the granting the franchise. (BIR Ruling No. 029-
general rule is that, mere increase in the value of 98 dated March 19, 1998)
property without actual realization, either through
sale or other disposition, is not taxable. However, if
by reason of appraisal, the cost basis of property is
increased and the resulting basis is used as the new
tax base for purposes of computing the allowable
depreciation expense, the net difference between
the original cost basis and new basis due to
appraisal is taxable under the economic benefit
principle.