Cir v.

mirant

FACTS:

Mirant filed its final adjusted Annual Income Tax Return for fiscal year ending 1999 declaring a
net loss. It then amended the said return this time reflecting an increased net loss and showing
that it opted to carry over as tax credit its overpayment to the succeeding taxable year. This
excess tax credit was unutilized in 2000 as Mirant still reported a net loss. Mirant then filed a
claim for refund of its excess creditable income tax for 1999.

ISSUE:

Can Mirant claim for refund its excess credits from 1999?

HELD:

NO. Mirants choice to carry over its 1999 excess income tax credit to succeeding taxable years
is irrevocable, regardless of whether it was able to actually apply the said amount to a tax
liability. It is a mistake to understand the phrase "for that taxable period" as a prescriptive period
for the irrevocability rule i.e., that since the tax credit in this case was acquired in 1999, and
Respondent opted to carry it over to 2000, then the irrevocability of the option to carry over
expired by the end of 2000, leaving Respondent free to again take another option as regards its
1999 excess income tax credit. The Court ruled that this interpretation effectively renders
nugatory the irrevocability rule.