Opinion
May 26, 1966.
June 24, 1966.
Taxation — Municipalities — Philadelphia Mercantile License Tax — Corporations — Corporations with identical shareholders — Lease of apartment building for expenses of operation.
In this case, in which it appeared that corporation A, organized with broad powers to transact business, including the right to buy and lease real estate, took title to an apartment house, which was its only holding; that immediately thereafter A leased the property to corporation B, which entered into separate leases with the individual tenants; that the rental paid by B to A varied each year but was a sum equal to the amount paid by A for taxes, insurance premiums, water and sewer charges, and mortgage interest; and that both corporations had identical shareholders; it was Held that A was subject to the Philadelphia Mercantile License Tax upon the total sum received by it from B.
Argued May 26, 1966. Before BELL, C. J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
Appeal, No. 303, Jan. T., 1966, from order of Superior Court, Oct. T., 1965, No. 153, affirming order of Court of Common Pleas No. 6 of Philadelphia County, Dec. T., 1962, No. 3950, in case of Kungsgaten, Inc. v. City of Philadelphia. Order of Superior Court reversed; reargument refused July 19, 1966.
Same case in Superior Court: 206 Pa. Super. 343.
Appeal by taxpayer from decision of tax review board sustaining mercantile tax assessment.
Appeal sustained, opinion by KELLEY, J. City appealed to Superior Court which affirmed order, opinion by MONTGOMERY, J., WRIGHT, J., concurred in result, concurring opinion by JACOBS, J. Appeal to Supreme Court allowed.
Levy Anderson, First Deputy City Solicitor, with him Edward G. Bauer, Jr., City Solicitor, for City of Philadelphia, appellant.
Judah I. Labovitz, with him Morris Wolf, Joseph H. Lieberman, and Wolf, Block, Schorr and Solis-Cohen, for appellee.
This appeal arises out of an assessment of appellee, Kungsgaten, Inc., a Pennsylvania corporation, by the City of Philadelphia for amounts alleged to have been due under the Philadelphia Mercantile License Tax. Philadelphia Code 19-1003. The assessment was sustained by the Philadelphia Tax Review Board and Kungsgaten appealed to the Court of Common Pleas of Philadelphia County which reversed the board and set aside the assessment. On appeal, the Superior Court affirmed. Kungsgaten, Inc. v. Philadelphia, 206 Pa. Super. 343, 213 A.2d 90 (1965). We allowed the petition of the City of Philadelphia for allocatur.
The essential facts are not in dispute and are set forth in the opinion of the Superior Court. We are of the view that the disposition of this appeal is controlled by our decisions in Shelburne Sportswear, Inc. v. Philadelphia, 422 Pa. 199, 220 A.2d 798 (1966), decided today, and Tax Review Board v. Brine, 414 Pa. 488, 200 A.2d 883 (1964). Under those decisions, the tax was properly imposed and the court of common pleas erred in setting aside the assessment. Accordingly, its decision may not be permitted to stand.
The order of the Superior Court is reversed.