Two of Import's witnesses testified that there were some large purchases of bulk whisky even after the organization of Bonnie and Kentucky. It is true, as Import points out in its brief, that a change in the character of the business such as a change in the method of operations or a change in the capacity for operations can be accomplished not only by a change in the physical assets of the taxpayer or in the physical operations conducted by the taxpayer within its own business structure by its own personnel, Neilson Lithographing Co., 19 T.C. 605 (1952); Schneider's Modern Baking, Inc., 19 T.C. 763 (1953); Brown Paper Mill Co., 23 T.C. 47 (1954); Fanner Manufacturing Co., 29 T.C. 587 (1957); Crowell-Collier Publishing Co., 25 T.C. 1268 (1956), but also by arrangements with others which change the normal operating conditions of the taxpayer. Wisconsin Farmer Co., 14 T.C. 1021 (1950); Beringer Bros., Inc., 18 T.C. 615 (1952); Flotill Products, Inc., 26 T.C. 222 (1956).
Two of Import's witnesses testified that there were some large purchases of bulk whisky even after the organization of Bonnie and Kentucky. It is true, as Import points out in its brief, that a change in the character of the business such as a change in the method of operations or a change in the capacity for operations can be accomplished not only by a change in the physical assets of the taxpayer or in the physical operations conducted by the taxpayer within its own business structure by its own personnel, Neilson Lithographing Co., 19 T.C. 605 (1952); Schneider's Modern Baking, Inc., 19 T.C. 763 (1953); Brown Paper Mill Co., 23 T.C. 47 (1954); Fanner Manufacturing Co., 29 T.C. 587 (1957); Crowell-Collier Publishing Co., 25 T.C. 1268 (1956), but also by arrangements with others which change the normal operating conditions of the taxpayer. Wisconsin Farmer Co., 14 T.C. 1021 (1950); Beringer Bros., Inc., 18 T.C. 615 (1952); Flotill Products, Inc., 26 T.C. 222 (1956).
The existence of a general business recession in 1938 is not sufficient to justify excess profits tax relief under section 722(b)(2). Brown Paper Mill Co., 23 T.C. 47; Industrial Yarn Corporation, 16 T.C. 681; Bulletin on Section 722, p. 17. Petitioner served a diversified group of customers, there being no one or few customers upon whom it was especially dependent.
The existence of a general business recession in 1938 is not sufficient to justify excess profits tax relief under section 722(b)(2). Brown Paper Mill Co., 23 T.C. 47; Industrial Yarn Corporation, 16 T.C. 681; Bulletin on Section 722, p. 17. Petitioner served a diversified group of customers, there being no one or few customers upon whom it was especially dependent.
Schneider's Modern Bakery, Inc., 19 T.C. 763. See also Crowell-Collier Publishing Co., 25 T.C. 1268, 1272, affd. 259 F.2d 860; Brown Paper Mill Co., 23 T.C. 47, 70, 71. We cannot agree, however, that the dry kiln substantially changed the products furnished by petitioner.
The existence of a general business recession in 1938 is not sufficient to justify excess profits tax relief under section 722(b)(2). Brown Paper Mill Co., 23 T.C. 47; Industrial Yarn Corporation, 16 T.C. 681; Bulletin on Section 722, p. 17. Petitioner further contends that it commenced business on August 20, 1936, within the meaning of section 722(b)(4), as a result of which its average base period net income is an inadequate standard of normal earnings.
We have heretofore, on numerous occasions, taken the position that competition, even keen competition, is not a ground for relief under section 722(b)(2), since competition is present in almost any business and, instead of being unusual, is quite common, and is the very essence of our capitalistic system. Lamar Creamery Co., 8 T.C. 928; Harlan Bourbon & Wine Co., 14 T.C. 97; Winter Paper Stock Co., 14 T.C. 1312; Constitution Publishing Co., 23 T.C. 19; and Brown Paper Mill Co., 23 T.C. 47, appeal dismissed (C.A. 5) 255 F.2d 77; Ainsworth Manufacturing Corporation, 23 T.C. 372; Democrat Publishing Co., 26 T.C. 337; and Seggerman Nixon Corporation, 26 T.C. 442. The record establishes that the flour-milling industry, including the specific business of the petitioner, was competitive.
Assuming again that hatlessness may be accepted as an economic circumstance or event, the evidence is conclusive that it was not unusual nor temporary. See Acme Breweries, 14 T.C. 1034; Packer Publishing Co., 17 T.C. 882, revd. (C.A. 8) 211 F.2d 612; Brown Paper Mill Co., 23 T.C. 47, appeal dismissed (C.A. 5) 255 F.2d 77, certiorari denied 358 U.S. 906. Hatlessness is clearly a function of style, or fashion, an element that is always present in the clothing industries, and is no more entitled to be viewed as unexpected or unusual than normal competition. See Lamar Creamery Co., supra; Constitution Publishing Co., 23 T.C. 19.
’ Lamar Creamery Co., 8 T.C. 928, 939. * * * See also Winter Paper Stock Co., 14 T.C. 1312, 1319 (1950); Brown Paper Mill Co., 23 T.C. 47, 68 (1954); Democrat Publishing Co., 26 T.C. 377, 382 (1956); Seggerman Nixon Corporation, 26 T.C. 442, 453 (1956); Tri-State Beverage Distributors, Inc., 27 T.C. 1026, 1032 (1957). We hold on the basis of the foregoing that neither bituminous coal sales prices nor value of such coal at the mine may be considered as a basis for 722(b)(2) relief since the significant control factor was competition which was neither temporary nor unusual for petitioner or its industry.
Thus, we do not regard as determinative the fact that in the original applications relief was sought under, inter alia, section 722(b)(4), and that the same provision was relied upon with respect to the new assertions made at the conference of May 19, 1949. Cf. Brown Paper Mill Co., 23 T.C. 47,64. The original applications claimed as a basis for relief under section 722(b) (4) that petitioner had changed its product from Ford to Chevrolet.