showing as to the extent by which the producing potential of the plant was increased by the said changes and improvements, we are satisfied that there was a change in petitioner's capacity "for production or operation," which in turn was a change in the character of its business, within the meaning of section 722 (b) (4). Even so, however, petitioner, to be entitled to relief under section 722, must show not only that its average base period net income is an inadequate standard of normal earnings, but must establish what would be a fair and just amount representing normal earnings, and there is still no relief under section 722 unless the excess profits credit, based upon the constructive average base period net income which is established, is greater than the excess profits credit computed without the benefit of section 722. Green Spring Dairy, Inc., 18 T. C. 217, 237; Lamport Co., 17 T. C. 1079, 1084, 1085; General Metalware Co., 17 T. C. 286, 292; and Trunz, Inc., 15 T. C. 99, 105. The facts show that the excess profits credits for the various taxable years herein computed by the invested capital method are substantially in excess of the excess profits credits which could be computed on the basis of petitioner's actual average base period net income, and the petitioner has not only failed to establish an amount to be used as its constructive average base period net income, which would produce excess profits credits for the said years greater than the credits which have been computed by the invested capital method, and used, but it has failed to prove or establish any amount whatever to be used as its constructive average base period net income. In fact, we are unable to say with certainty what the amount is which petitioner now claims. as a fair amount to be used as its constructive average base period net income, for the purposes herein. In its applications for relief and claims for the refund of excess profits taxes paid, constructive average base period net income was claimed in the amount of $30,930. Its brief, filed in this proceeding, concludes with the following sentence: "It is submitted that the petitioner is eligible to receive the relief prayed for pursuant to law and the findings of the agent of the Commissioner, except to amount, and that the Court should find so accordingly." The brief contained no proposed findings of fact, and our examination fails to disclose any amount as the constructive average base period net income now contended for. Aside from some evidence apparently offered for the purpose of settling certain differences between petitioner's books and certain statements or computations with respect thereto made in the course of the administrative proceedings in processing the applications for relief herein in the Bureau of Internal Revenue, the petitioner seemingly relies on unproven representations made and schedules filed as part of its claims for relief and on computations and recommendations made by an internal revenue agent, which computations and recommendations were rejected both by the Excess Profits Tax Council, when the claims were being considered by it, and by the respondent in his determinations herein. There being no showing of any amount to be used as a constructive average base period net income which would produce excess profits credits for the years herein in excess of those computed by the invested capital method and actually used in the respondent's determinations, the claims and contentions of the petitioner must be rejected. Godfrey Food Co., 18 T. C. 1083; Industrial Supplies, Inc., 18 T. C. 1067; and Green Spring Dairy, Inc., supra. Reviewed by the Special Division. Decision will be entered for the respondent. THE CONSTITUTION PUBLISHING COMPANY, BY ATLANTA NEWSPAPERS, INC., SUCCESSOR ON CONSOLIDATION, PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Docket No. 37709. Filed October 8, 1954. 1. Claims for excess profits tax relief under section 722 (b) (2), (4), and (5) of the Internal Revenue Code of 1939, based upon an alleged depression of base period income due to intense competition among petitioner and two other Atlanta, Georgia, daily newspapers denied where the evidence fails to show that there were depressed base period earnings because of a temporary or unusual circumstance in petitioner's experience. 2. There was no substantial change in the character of petitioner's business or other factors entitling petitioner to relief under section 722. John E. McClure, Esq., Allen Post, Esq., Edward L. Updike, Esq., and William P. McClure, Esq., for the petitioner. George J. LeBlanc, Esq., for the respondent. These proceedings are before this Court by reason of respondent's rejection of petitioner's application for relief and claims for refund under section 722 of the Internal Revenue Code of 1939. The testimony was taken before a commissioner of this Court and his findings of fact were duly served on the parties. After a consideration of the objections to the commissioner's report as made by counsel for the respective parties, we make the following: FINDINGS OF FACT. Petitioner was organized under the laws of the State of Georgia, on November 13, 1899. From that date it was owned and controlled by local Atlanta interests, particularly Clark Howell, Sr., until November 14, 1936, and Clark Howell, Jr., from November 14, 1936 to 1950. On the latter date, the taxpayer consolidated with the Atlanta Journal Company under the corporate name of Atlanta Newspapers, Inc. From the date of incorporation until 1950, petitioner's principal business was the publication of a morning and Sunday newspaper— the Atlanta Constitution-in the city of Atlanta. In addition to publishing the Constitution, the petitioner operated, as a division of its business, the Southern Engraving Company, which made all the engravings used by the Constitution, and also made engravings for other customers. Between the years 1929 and 1935, the petitioner published the Southern Cultivator, a rural newspaper. Clark Howell, Jr., became petitioner's president to succeed his father, who died November 14, 1936, and continued as president and principal stockholder until the consolidation in 1950. Shortly after the death of Clark Howell, Sr., petitioner received $204,204.04 in cash under insurance policies which it carried on his life. Throughout 1936, 1937, and 1938 and until December 16, 1939, there were three daily newspapers published in Atlanta-the Atlanta Constitution, published by petitioner; the Atlanta Journal, published by other Atlanta interests; and the Atlanta Georgian, published by a department of Hearst Consolidated Publications, Inc. These papers will be referred to hereinafter as the Constitution, the Journal, and the Georgian. The Constitution was a morning paper while the Journal and the Georgian were both afternoon papers. All three published Sunday editions with special features. In December 1939 both the Journal and the Georgian were purchased by James M. Cox of Dayton, Ohio, and publication of the Georgian was discontinued. The principal assets of the Georgian, consisting of a building and furnishings, circulation lists, and various equipment were transferred over to the Journal. The date of purchase of the Georgian by Cox was December 6, 1939, and of the Journal, December 16, 1939. At all times since the Georgian started publication, and particularly at all times since 1926, there was intense competition among the three Atlanta newspapers for circulation and advertising. This competition tended to lessen the individual earnings of each of the newspapers and especially their advertising income. Large losses were sustained in all of the base period years from the publication of both the Journal and the Georgian. The following table shows the income (or loss) from the publication of each of the papers for the years 1926 to 1939, inclusive. 1 The Journal figures are for fiscal years ending April 30. The Georgian figures for 1939 are to December 17. The average annual advertising linage for the Constitution in the years 1933 through 1935 was 8,267,570 lines, from which it derived an average annual net revenue of $967,330, or an average annual revenue per line of $0.11700. The newspaper's average annual advertising linage in the base period, 1936 through 1939, was 8,597,141 lines, from which it derived an annual net revenue of $1,013,735, or an average annual yield per line of $0.11792. The average annual circulation of the Constitution during the years 1933 through 1935 was 95,774, from which it derived an average annual net circulation revenue of $583,290, or an average annual yield of $6.090 per unit of circulation. In the base period, 1936 through 1939, its average annual circulation was 101,971, from which it derived an average annual net revenue of $742,770, or an average annual yield per unit of circulation of $7.284. Petitioner's net income (and loss) to the nearest dollar, from its different divisions for the years 1922 through 1939, as shown by its audit reports and as determined by the Bureau of Internal Revenue, were as follows: Petitioner's computed average net income from publication of the Constitution for the years shown above, as determined from its audit reports, was as follows: 1922-1939___. 1936-1939_. $34, 054 29, 081 51, 460 Petitioner's net advertising revenue, circulation revenue, miscellaneous revenue, total operating expenses, and net operating profits from the publication of the Constitution for the years 1936 to 1942, inclusive, were as follows: The Constitution Publishing Company-Atlanta, Georgia COMPARATIVE STATEMENT OF REVENUE AND EXPENSE The losses sustained by Hearst Consolidated Publications, Inc., during the years 1936 to 1939, inclusive, from the publication of the Georgian, were offset against its net income from the publication of its other widely distributed newspapers and periodicals, while the losses of the Atlanta Journal Company from the publication of the Journal were largely, and in some years entirely, offset by the income which it received from the operation of a radio station, WSB, in Atlanta, Georgia. The radio profits amounted to: Most of the cities in the United States of comparable size to Atlanta had, during the base period, only two major daily newspapers. Usually there was one morning and one afternoon paper, published by |