Tax Appeals Court rules against firm in condominium deposits case

THE Court of Tax Appeals (CTA), sitting en banc, upheld on Wednesday a P559-million tax collection ruling by the Bureau of Internal Revenue (BIR) against Manila-based G&W Architects, Engineers and Project Consultants (G&W).

The 20-page resolution reversed the CTA First Division’s previous decision which cancelled G&W’s expanded withholding tax (EWT) and documentary stamp tax (DST) deficiencies from 2004 that amounted to P559,725,024.90, which had a 25% surcharge for late payment and 20% interest per annum until fully paid.

According to G&W, its use of pooled owner’s funds in the construction of condominium units on behalf of the owners is “tax- exempt because it does not constitute a taxable sale, exchange, or disposition of real property” hence it is “not subject to creditable withholding tax ( CWT), capital gains tax ( CGT), valueadded tax ( VAT) and DST,” except the P15 on its contractual agreement. The CTA en banc, however, agreed with CTA First Division Presiding Justice Roman G. Del Rosario’s dissenting opinion which pointed out the arrangements in the contracts of W&G and its clients are not different from a contract to sell, therefore making their transactions a taxable sale of a condominium unit. “Furthermore, records disclosed petition’s contemporaneous and subsequent acts that point to contract of sale/contract to sell,” the resolution said. It added: “Petitioner even applied for and was granted Licenses to Sell the condominium units by the Housing and Land Use Regulatory Board (HLURB, thereby tacitly admitting that it was engaged in the selling of condominium units.” —