Opinion
No. 41973.
April 8, 1935.
Ralph W. Barbier, of Detroit, Mich. (Raymond H. Berry, Claude H. Stevens, Arthur R. Wood, and Arthur L. Evely, all of Detroit, Mich., on the brief), for plaintiff.
James A. Cosgrove, of Washington, D.C., and Frank J. Wideman, Asst. Atty. Gen. (William W. Scott and John T. Koehler, both of Washington, D.C., on the brief), for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
Suit by the Michigan Iron Land Company against the United States.
Petition dismissed.
This case having been heard by the Court of Claims, the court, upon the evidence and the report of a Commissioner, makes the following special findings of fact:
1. Plaintiff is a Michigan corporation with its principal office in Sault Ste. Marie.
2. During March, 1921, plaintiff duly filed its income and profits tax return for 1920, reflecting in said return a loss of $306,542.49 from the sale to the Michigan Iron, Land Lumber Company (a subsidiary of the Ford Motor Company) in 1920 of certain of its capital assets which had been acquired prior to March 1, 1913. The return also reflected a net loss for the year 1920, and accordingly plaintiff paid no tax upon the filing of the return.
3. June 6, 1924, plaintiff's 1919 and 1920 returns were referred by the Commissioner of Internal Revenue to the Timber Section, Valuation Division of the Income Tax Unit, for a report on the March 1, 1913, value of the land and timber included in the sale referred to in finding 2. They were assigned to George A. Gutches, a valuation engineer, who on September 26, 1924, fixed a March 1, 1913, value on the land and timber in question of $930,015.
4. The return for 1920 was thereafter referred to an audit section, where an audit was made using the March 1, 1913, value for land and timber as fixed by Gutches for the purpose of computing the profit on the sale referred to in finding 2. As a result of the audit, the Commissioner advised plaintiff October 13, 1925, of his determination of an additional tax for 1920 of $535,450.53, and that an assessment of that amount had been made. The additional tax was computed upon a net income of $1,173,457.68. The letter showed a determination that plaintiff had no invested capital, and that accordingly the profits tax of $464,783.07 set out therein was computed under section 302 of the Revenue Act of 1918 ( 40 Stat. 1089). At the time the foregoing determination was made, the Commissioner had a revenue agent's report in which a notation appeared that plaintiff had sold its assets and was "in process of liquidation." In conformity with his practice of making a jeopardy assessment when he had information which indicated that a given taxpayer was in process of liquidation, the Commissioner made a jeopardy assessment on the October, 1925, assessment list for the Fourth Michigan district of the additional tax referred to above. No 60-day letter was issued in connection with the assessment. At the request of plaintiff, and after a showing of plaintiff's financial condition, the assessment was transferred to the First Michigan district. No claim in abatement or bond was furnished to stay the collection of the additional assessment. Later, the Commissioner readjusted the residual value of certain iron deposits which had been sold, and, as a result, issued a certificate of overassessment for 1920 of $73,548.73, thus reducing the additional assessment referred to above to $461,901.80, which was disposed of November, 1928, as set out in finding 13.
5. From November 12, 1925 (which was shortly after the making of the jeopardy assessment), to May 25, 1927, various conferences and informal discussions were had between representatives of plaintiff and of the Commissioner with respect to the additional assessment referred to in finding 4; the principal matter under discussion being the March 1, 1913, value of the land and timber which was involved in the sale heretofore referred to. During the aforementioned period, plaintiff was represented by Raymond H. Berry, counsel of record for plaintiff in this proceeding, and Judge Roberts P. Hudson, and one or the other or both were present at the various conferences and informal discussions. During all of the time mentioned herein, Judge Roberts P. Hudson was president of plaintiff, and Raymond H. Berry was duly authorized to represent plaintiff.
6. At a conference on November 12, 1925, plaintiff's representatives protested the land and timber valuation of Gutches heretofore referred to, and were advised that they should file a forestry questionnaire in the usual form required by the Bureau of Internal Revenue, and that upon its receipt further consideration would be given to their protest. March 19, 1926, plaintiff furnished the questionnaire with supporting information as requested, and therein claimed a March 1, 1913, value for the land and timber in question of $5,287,757.09.
7. Between May 16 and May 31, 1926, a field examination was made by Gutches of the land and timber in question. He was accompanied in such examination by Berry, Hudson, and others representing plaintiff. At the conclusion of the examination, Gutches told plaintiff's representatives that in his opinion his previous valuation of $930,015 was "all the property was worth" on March 1, 1913, but that after further consideration of all the details of the case, he might raise his valuation to $1,200,000, if he could be assured that in so doing an early settlement of the case could be effected. Plaintiff's representatives vigorously protested the proposed valuation of $1,200,000 and advised Gutches it was not acceptable.
8. The next formal conference was held in Washington September 14, 1926, at which Mr. Berry and Judge Hudson represented plaintiff, and Mr. Gutches and Mr. Lindsay, assistant chief of the timber section, represented the Commissioner. The case was then in the hands of a revenue agent for further investigation. The land and timber valuation was discussed, and plaintiff's representatives continued to protest the valuation as fixed by the Bureau.
9. Shortly prior to January 7, 1927, at a conference in Washington, Gutches offered to fix a value of $1,750,000 for the land and timber as a basis for closing the case, provided such offer was accepted within ten days. January 7, 1927, Gutches met Hudson and Berry in Detroit and, in an informal discussion of the case, told them that they should accept the proposed value within the stated period, as an amount that high would not be offered again to settle the case. The proposed valuation was in the nature of a compromise offer wherein Gutches took into consideration the difficulties and expense to all parties concerned of getting the requisite information to fix a value for a property of that kind, which was located over a large area; much of it being relatively inaccessible. Plaintiff's representatives indicated that they might accept the offer, but stated that they must first obtain the approval of Ex-Governor Chase Osborne, the principal stockholder. Ex-Governor Osborne refused to agree to the offer, and it was accordingly not accepted.
10. The last and final conference was held in Washington, May 25, 1927, at which time plaintiff was represented by Messrs. Berry and Hudson and the Commissioner by Messrs. Gutches, Lindsay, and Hatchett, the last-named being head of the Valuation Division of the Income Tax Unit. The principal item under discussion was the land and timber valuation heretofore referred to, and at the time plaintiff's representatives were contending for a March 1, 1913, value of at least $3,000,000. Gutches was asked for the maximum value he would recommend for allowance, and he stated $1,600,000. At the conclusion of the conference plaintiff's representatives stated they would recommend acceptance of the aforementioned amount to plaintiff's stockholders. They indicated further, however, that they could not acquiesce in the proposal without first securing the approval of at least certain of plaintiff's stockholders. The Commissioner's representatives, however, stated that they would have to have a definite acquiescence in the value proposed before there was any change from the value of $930,015, which was used in determining the additional assessment then outstanding, to $1,600,000.
The valuation of $1,600,000 was a compromise figure, and was not arrived at by any detailed method of valuation.
11. At the time of the conference referred to in finding 10, plaintiff's representatives indicated a desire to have the case considered under the special assessment provisions of the Revenue Act of 1918, and were advised that an application for such consideration was necessary. Plaintiff's representatives accordingly prepared and duly filed the following request:
"Washington, D.C., May 25, 1927.
"Commissioner of Internal Revenue, Washington, D.C.
"Dear Sir: Request is hereby made that the tax liability of this corporation be determined under the provisions of sections 327 and 328 of the Revenue Act of 1918, for the reasons that invested capital under the provisions of section 326 of the Revenue Act of 1918 cannot be determined and the income on which tax is computed was received from the sale of capital assets.
"Respectfully, "Michigan Iron Land Co., "By R.P. Hudson, Prest."
12. After the conference of May 25, 1927, referred to in finding 10, Judge Hudson attempted to arrange a conference or meeting of plaintiff's stockholders for the purpose of considering the proposed valuation for land and timber of $1,600,000, but he was never successful. He did discuss the question with plaintiff's principal stockholder, and recommended its acceptance. Thereafter, the following exchange of telegrams was had between representatives of plaintiff and of the Commissioner:
"Detroit, Mich., June 6, 1927.
"Mr. Hatchett, Chief Timber Section, Natural Resource Division, Internal Revenue, Fourteenth Street and Ohio Avenue, Washington:
"Have just concluded conference with Governor Osborne regarding Michigan Iron and Land matter and I will be in Washington next Monday in connection with same. Hold matter in abeyance pending my arrival.
"R.H. Berry." "Detroit, Mich., June 13, 1927.
"Mr. Hatchett, Head Natural Resource Divn., Internal Revenue, Washn.:
"Wired you several days ago I would see you today regarding Michigan Iron and Land. Sorry advise impossible to get away until Wednesday. See you Thursday morning June sixteenth to take up Michigan Iron and Land Company Case.
"R.H. Berry, Detroit Trust Co."
"Detroit, Mich., June 24, 1927.
"Mr. Hatchett, Head Engineering Section, Bureau Internal Revenue, 14 and Ohio, Washington:
"Confirming my telephone conversation with you today advise I have been in touch with Judge Hudson regarding Michigan Iron and Land Co., who just informs me that one of principal stockholders who was touring east from California had been detained in Wyoming on account of bad roads and flood; consequently unable for us to hold conference with this stockholder in St. Paul or Minneapolis around June twenty-fifth as I had told Mr. Lindsay. Judge Hudson requested I inform you of our inability to meet the stockholder and request that you proceed with case on valuation basis discussed at our last joint conference.
"R.H. Berry."
"Washington, D.C., June 27, 1927.
"R.H. Berry, Care of Detroit Trust Company, Detroit, Mich.:
"Retel twenty-fourth acquiescence in value required before action can be taken looking toward special assessment. If value proposed in last conference is agreed to, advise by wire then procedure outlined in that conference will be followed.
"C.B. Allen, "Acting Deputy Commissioner." "Detroit, Mich., July 6, 1927.
"Mr. Hatchett, Head Natural Resource Divn., Internal Revenue, Washn.:
"Upon my return find your telegram regarding Michigan Iron and Land Company. Compute tax under special assessment on valuation of timber one million six hundred thousand dollars as agreed to in conference and per my telegram of June twenty-fourth. Can matter be disposed of before July sixteenth before I leave office for three weeks?
"R.H. Berry, Detroit Trust Co." "Washington, July 8, 1927.
"R.H. Berry, Detroit Trust Company. (An answer 6, c/o Postal, Detroit, Mich.):
"Retel sixth Michigan Iron and Land Company case will be audited on basis of agreed value and will probably not be disposed of until after your return to office.
"C.B. Allen, "Acting Deputy Commissioner."
13. The plaintiff having definitely and finally agreed to the March 1, 1913, value of land and timber of $1,600,000, as proposed by the Commissioner, the case was immediately referred to a valuation engineer for the purpose of preparing a valuation report in conformity with the amount agreed upon. After the preparation of the report and its approval the case was transferred to a section of an audit division for a determination of plaintiff's net income. The audit section determined a net income of $333,173.98 in lieu of the net income of $1,173,457.68, as set out in the letter of October 13, 1925, referred to in finding 4. The principal change from the prior audit resulted from the use of a March 1, 1913, value for the land and timber in question of $1,600,000 instead of $930,015.
After the determination of net income, as set out above, the case was transferred to the special assessment section, where plaintiff's application under the provisions of section 327 of the Revenue Act of 1918 for the assessment of its profits tax as prescribed by section 328 of the same act was allowed, and the profits tax was accordingly computed under the latter section. As a result, the Commissioner determined a profits tax liability for 1920 of $94,330.71, and a total tax liability for the year of $118,015.04, and advised plaintiff of that determination by letter dated June 7, 1928, which read, in part, as follows: "You are advised that after careful consideration and review your application under the provisions of section 327 for assessment of your profits tax, as prescribed by section 328 of the Revenue Act of 1918, has been allowed. Your profits tax is based upon a comparison with a group of representative concerns which in the aggregate may be said to be engaged in a like or similar trade or business to that of your company."
This was the first advice received by plaintiff from the Commissioner subsequent to the telegram of July 8, 1927, as to the determination of its net income and tax liability. Since, as shown in finding 4, there was then outstanding $461,901.80 of the additional assessment made in October 1925, the Commissioner issued a certificate of overassessment for $343,886.76 ($461,901.80 less $118,015.04), and shortly thereafter abated that amount. After the application of a credit of $1,955.20, plaintiff paid the balance, $116,059.84, under protest on November 13, 1928.
14. Shortly prior to the payment of November 13, 1928 (referred to in finding 13), namely, on or about October 10, 1928, a form for the final closing of plaintiff's case for 1920 under section 1106(b) of the Revenue Act of 1926 was forwarded by the Commissioner to plaintiff's representatives, but such form was not executed by plaintiff. A formal closing agreement under the foregoing section was not requested of plaintiff prior to October 10, 1928, nor was any such agreement ever executed by or on behalf of plaintiff.
15. At no time subsequent to the conference of May 25, 1927 (referred to in finding 10), and prior to the filing of a claim for refund October 30, 1929 (referred to in finding 16), did plaintiff's representatives make any protest to the Commissioner or his representatives with respect to the use of the land and timber valuation of $1,600,000 heretofore referred to in determining its net income.
16. October 30, 1929, plaintiff filed a claim for refund for 1920 of $118,015.04 and assigned as a basis therefor that the March 1, 1913, value of the land and timber heretofore referred to as having been sold in 1920, and upon which the Commissioner had fixed the value of $1,600,000, was in excess of the consideration received therefor, and that accordingly plaintiff sustained a loss instead of a gain as computed by the Commissioner. The alleged loss sustained was reflected in a statement setting forth the difference between the alleged March 1, 1913, value of the assets sold and the sale price. No attempt was made in the claim to compare the March 1, 1913, value with the valuation figure used by the Commissioner in his determination, for the reason, as stated in the claim, that the certificate of overassessment by which plaintiff had been advised of the Commissioner's determination did not state "how the additional tax was arrived at" or "by what method the valuation was placed upon the assets."
Plaintiff was advised by letter of May 8, 1931, that the claim would be rejected. The letter of rejection stated, among other things, that: "The case was audited upon the basis of the March 1, 1913, value agreed upon in conference with your representative, Mr. R.H. Berry." Attached to the foregoing letter was a statement setting out in detail the computation by which the Commissioner arrived at the net income of $333,173.98 (using in connection therewith the March 1, 1913, value of $1,600,000 for land and timber heretofore referred to), the total tax liability of $118,015.04, and an overassessment of $343,886.76, as set out in finding 13. The statement further showed an invested capital as corrected of $206,565.20 instead of no invested capital as shown in the letter of October 13, 1925 (referred to in finding 4), and that plaintiff's profits tax liability had been computed under section 328 of the Revenue Act of 1918 in the amount shown in letter of June 7, 1928 (referred to in finding 13). Plaintiff was given 30 days in which to apply for a hearing on the rejection of the claim, and advised that at the expiration of such period, and in the absence of a formal request for a hearing, the rejection would be officially scheduled. The claim was formally rejected on a schedule dated June 26, 1931.
17. November 7, 1931, plaintiff filed a request for the reopening of the claim for refund referred to in finding 16, together with an amended claim. The request for reopening was based upon the representation that counsel for plaintiff had not received the rejection letter of May 8, 1931, until after the expiration of the 30-day period provided therein and the official scheduling of rejection on June 26, 1931.
The request for reopening of the original claim for refund was denied by letter of March 12, 1932, which assigned in part the following reasons therefor:
"The claim, filed November 14, 1929, and officially rejected by the Bureau on June 26, 1931, was based upon the contention that the March 1, 1913, value of assets sold in 1920 was in excess of the consideration received and that the taxpayer sustained a loss.
"An examination of the file in the case discloses that careful consideration was given to all of the information heretofore submitted in connection with this issue, and a March 1, 1913, value agreed upon at a conference attended by you. This agreed value was used in determining that the correct tax liability of the taxpayer was $118,015.04."
18. The amended claim for refund for 1920, referred to in finding 17, assigned as a basis therefor not only the issues set out in the original claim with respect to the March 1, 1913, value of the land and timber referred to in the original claim, but also assigned an additional ground relating to the reorganization of plaintiff in July, 1920. The claim was rejected by the Commissioner on a schedule dated March 25, 1932.
In advising plaintiff that the claim would be rejected, the Commissioner stated in part that: "Your contention relative to the March 1, 1913, value of assets sold in 1920 was previously rejected in connection with a claim filed by you under date of November 14, 1929. Application for reopening of this claim, filed by your representative, Mr. R.H. Berry, under date of November 7, 1931, was denied as of the date of this letter. This issue, therefore, will not be given further consideration."
The case presents the questions whether, where the Commissioner of Internal Revenue has granted a special assessment of profit taxes pursuant to sections 327 and 328 of the Revenue Act of 1918 ( 40 Stat. 1093), a court may in an action for a refund review the Commissioner's determination of the taxpayer's net income, and (2) whether, if such power of review exists, the Commissioner properly valued the taxpayer's real property holdings as of March 1, 1913.
The plaintiff is a Michigan corporation and possessed large timber and land holdings which had been acquired before the income tax laws had been passed. These holdings were sold in 1920 for the sum of $2,700,000.
In March, 1921, the plaintiff filed returns for income and profits taxes for 1920 which placed the value of these holdings as of March 1, 1913, at approximately $3,000,000, which reflected a loss of some $300,000 from the sale price. A loss and not a profit being shown by the return, no taxes were payable or paid. The Commissioner, upon an audit of the return, proposed certain changes, resulting from a change in the March 1, 1913, valuation of these holdings. The Commissioner fixed the March 1, 1913, value of these holdings at $930,000 instead of $3,000,000, as stated in the return, and with this valuation a large profit was determined on the sale and not a loss. As a result of this audit, the Commissioner made a jeopardy assessment in October, 1925, of approximately $535,000 for taxes due for 1920. Subsequently this amount was reduced to $462,000 by the allowance of certain items not now in dispute. Notwithstanding the jeopardy assessment, the Bureau of Internal Revenue allowed this amount to remain open and unpaid during the period hereinafter mentioned.
The plaintiff protested the assessment on the ground that the 1913 timber valuation as fixed by the Commissioner was too low, and as a result of this protest many conferences and negotiations were had looking to an agreement or settlement of this disputed valuation. A forestry questionnaire was submitted by plaintiff, a field examination was made by engineers of the Commissioner, and numerous conferences were held for the purpose of arriving at a March 1, 1913, valuation of the property. That factor was alone in dispute. The plaintiff was represented at all of these conferences by its president and attorney, who had full power and authority to act for it.
On May 25, 1927, the plaintiff filed with the Commissioner the following request signed by its president, R.P. Hudson, and drawn by its attorney, Raymond H. Berry; "Request is hereby made that the tax liability of this corporation be determined under the provisions of sections 327 and 328 of the Revenue Act of 1918, for the reasons that invested capital under the provisions of section 326 of the Revenue Act of 1918 cannot be determined and the income on which tax is computed was received from the sale of capital assets."
At the time this request was made the representatives of plaintiff above named were informed that $1,600,000 was the maximum amount which would be allowed for the March 1, 1913, value, and they would have to agree to that valuation before special assessment would be granted. Subsequently, various telegrams, which are fully set out in the findings and which will be referred to hereafter in the discussion of another feature of this case, passed between the plaintiff and the Bureau which resulted in the plaintiff agreeing to the March 1, 1913, value of $1,600,000, as proposed by the Commissioner. The testimony of both Hudson, the president, and Berry, the attorney, clearly establishes that they agreed to this amount, and the clear intent of the telegrams was to settle that question so that the Commissioner could proceed under the special assessment provision in arriving at the tax liability. Both were fully informed and understood that their agreement to the March 1, 1913, valuation was a condition precedent to the granting of the request for special assessment.
Upon reaching an agreement as to the March 1, 1913, value, the Commissioner granted special assessment and proceeded with the determination of plaintiff's liability under the special assessment provisions, and the tax was reduced from approximately $462,000 to $116,000. Upon receipt of the notice and demand, plaintiff paid the tax so assessed.
Approximately a year later plaintiff filed a claim for refund of the entire amount paid, with interest, on the ground that the March 1, 1913, value of $1,600,000 allowed was much less than the correct value, and that a proper determination of such value would show a loss which, in turn, would result in the elimination of all taxable income for 1920. Upon the claim being rejected in 1931, plaintiff filed this suit in May, 1932.
The defendant has filed a special answer raising the issue of estoppel. The plaintiff claims a revision by this court of the values of the property as of March 1, 1913, but the statute of limitation has interposed a bar for the collection of any greater amount than that assessed and collected by the Commissioner in special assessment, so retraction would work an unfair hardship on the defendant were the values of 1913 found smaller than those agreed upon. Having agreed to the value, having had special assessment granted, and the statute having run, it is too late to retract now. United States v. Prentiss Co., 288 U.S. 73, 88, 53 S. Ct. 283, 285, 77 L. Ed. 626. In passing, we think it imperative to remark that, if the doctrine of estoppel is ever to be applied to special assessment cases, this case falls fully under that doctrine of the law. However, we do not desire to rest the case on this point as we feel there is a more fundamental principle that precludes our consideration of the case.
The more serious question relates to our jurisdiction of the case on its merits after the Commissioner had made, upon written request of plaintiff, a special assessment determination. In its application for special assessment the plaintiff had stated its invested capital could not be computed under section 326 of the Revenue Act of 1918 ( 40 Stat. 1092), and its income was received from the sale of capital assets. The sale price of the capital assets was known, but as the assets had been acquired before the income tax laws were enacted, it was necessary to know the value of these assets on March 1, 1913, in order to ascertain what income had been gained on which to compute the tax. The Commissioner required as a condition precedent to passing on the special assessment request that the plaintiff agree to the March 1, 1913, valuation of $1,600,000 of its capital assets. This condition is considered a reasonable requirement and one the Commissioner has a right to impose. See Prentiss Case, supra. The Commissioner, in answer to a telegram requesting "* * * you proceed with case on valuation basis discussed at our last joint conference," replied "* * * acquiescence in value required before action can be taken looking toward special assessment. If value proposed in last conference is agreed to, advise by wire, then procedure outlined in that conference will be followed."
To this telegram plaintiff replied, "Compute tax under special assessment on valuation of timber one million six hundred thousand dollars as agreed to in conference. * * *"
The contention is now made by the plaintiff that there was no agreement as to timber valuation because plaintiff's attorney had not received the consent of certain stockholders. The attorney had full power to bind the taxpayer, and the evidence shows that the full consent of the president of the company was given before the telegrams were sent. In our opinion, there was a clear and unmistakable agreement to the March 1, 1913, valuation. Any other construction of these telegrams to the Commissioner would necessarily imply bad faith on the part of the parties dealing with the Commissioner, which we are not willing to impute. We are unwilling to say that the attorney for the plaintiff so artfully drew these telegrams that the Commissioner would be misled into believing a definite agreement had been reached whereas an avenue of escape had been provided if the tax imposed did not meet with plaintiff's idea of what should be paid. The evidence discloses that the attorney knew approximately what the tax would be when he agreed to the valuation proposed. After this valuation had been agreed to, the Commissioner computed the net income and granted special assessment under sections 327 and 328 of the Revenue Act of 1918. The granting of special assessment "is discretionary and administrative, not subject to be challenged in any court, at least in the absence of fraud or other irregularities. Williamsport Co. v. United States, 277 U.S. 551, 562, 48 S. Ct. 587, 72 L. Ed. 985." United States v. Prentiss Co., supra. No fraud or other irregularities are alleged or proved.
As a result of the granting of special assessment, the plaintiff's taxes were reduced from $462,000 to $116,000. No appeal was taken to the Board of Tax Appeals from that determination, and the taxes were assessed and paid. It is now proposed by the plaintiff that this court set aside this discretionary act of the Commissioner and find a different value for the timberlands as of March 1, 1913. This would entail going into one of the factors which entered into the exercise by the Commissioner of his discretionary power. In Heiner v. Diamond Alkali Co., 288 U.S. 502, 507, 53 S. Ct. 413, 415, 77 L. Ed. 921, the Supreme Court holds: "It is beyond the power of a court to usurp the Commissioner's function of finding that special assessment should be accorded, and equally so to substitute its discretion for his as to the factors to be used in computing the tax." (Italics ours.)
When the taxpayer has asked for and received the benefits of the discretionary action of the Commissioner, there can be no revision or alteration of the computation of the tax by judicial review.
In Central Iron Steel Company v. United States, 6 F. Supp. 115, 116, 79 Ct. Cl. 56, certiorari denied 293 U.S. 563, 55 S. Ct. 75, 79 L. Ed. ___, we held: "When the taxpayer upon application obtains a determination of his tax under the special assessment provisions, he surrenders the right further to contest in court the correctness of the Commissioner's determination with respect to any of the factors necessary to his discretionary findings and the computation of the tax. The system provided by law for a judicial review of the Commissioner's actions in tax cases contemplates that the court shall render final judgment, and, since the court is without jurisdiction to substitute its decision for that of the Commissioner as to the factors to be used in computing the tax, it cannot proceed with a case as though special assessment had not been applied, and the court is likewise without jurisdiction to decide the question presented and remand the case to the Commissioner for further exercise of his discretionary powers to determine whether or not the change in net income results in a greater or less profits tax."
See, also, Bradford v. United States, 6 F. Supp. 117, 79 Ct. Cl. 89, certiorari denied 293 U.S. 564, 55 S. Ct. 101, 79 L. Ed. ___.
The plaintiff contends that these decisions do not apply in this case for the reason it is not asking for the retention of special assessment and that when this decision of the Commissioner is opened up and the case tried by this court on the merits the March 1, 1913, value of the land will be so much increased that no tax will be due. We cannot indulge in an anticipatory hope which is subject to vanishment should the evidence in the trial on the merits reveal a lower valuation than that agreed to by the parties. In such a contingency the increased tax could not be collected because of the bar of the statute. In other words, should the court turn a nonjudicable matter into a judicable matter, which it has no power to do, the result could only benefit the plaintiff, and the defendant could not benefit no matter what the evidence showed. The application of plaintiff was for the computation of its tax under section 328, and having received that discretionary privilege, and the results not meeting with what was expected, the plaintiff now asks this court to compute its tax under section 301 ( 40 Stat. 1088), which is the statute the plaintiff asked the Commissioner not to apply in computing its tax. A taxpayer cannot play fast and loose, blow hot and cold, when requesting the exercise of discretionary powers. A disappointing resultant does not justify retroversion of the written request for discretionary action which has been accorded. Having applied for and been granted the extraordinary relief these sections afford, he has by his own act removed himself from juridical relief. Cleveland Automobile Co. v. United States (C.C.A.) 70 F.2d 365.
When the plaintiff applied for relief under sections 327 and 328, it was for the purpose of being relieved of the tax which would have been imposed under section 301. As a matter of fact, under special assessment the total tax was greatly reduced.
We have no concern with the results, but only with the application of the legal provisions which the Commissioner has used.
The plaintiff is not entitled to relief. The petition is dismissed. It is so ordered.