The inclusion of these expenses is plainly warranted by the language of 8 619 (a). Pre-shipment charges relative to coverings, containers, and placing an article in condition for shipment are specifically included in the determination of the selling price. But a subsequent "transportation, delivery, insurance, installation, or other charge" is to be excluded if properly established. In the setting of this case, no rule of reason or grammar justifies placing advertising and selling expenses within the meaning of this exclusionary sentence.

To begin with, advertising and selling expenses are obviously not comparable to the specified charges for transportation, delivery, insurance or installation-all of which are incurred subsequent to the preparation of an article for shipment and are not included in the manufacturer's f. o. b. selling price. Hence advertising and selling expenses cannot be encompassed by the term "other charge" unless that term be taken to include charges entirely dissimilar to those specified. This term, however, was understood by its framers to mean "like charges" or "similar charges" to those specifically enumerated in the same sentence. H. Rep. No. 708 (72d Cong., 1st Sess.) p. 37; S. Rep. No. 665, Part 3 (72d Cong., 1st Sess.) p. 3; H. Conf. Rep. No. 1492 (72d Cong., 1st Sess.) p. 22. When this fact is added to the general intent of Congress to include all costs or charges incurred prior to shipment, the applicability of the ejusdem generis rule to the term "other charge" becomes clear. This rule, which appropriately [586] may be invoked here since it does not conflict with the general purpose of the statute, compare Securities & Exchange Commission v. Joiner Corp., 320 U. S. 344, 350, 351, with Smith v. Davis, 323 U. S. 111, limits the "other charge" to expenses similar in character to those incurred for transportation, delivery, insurance and installation. Since advertising and selling expenses arise prior to shipment and are necessarily components of the f. o. b. selling price, the term "other charge" cannot cover them. They must be included in the tax base. Such has been the consistent administrative construction of the statute, G. C. M. 21114, 1939-1 Cum. Bull. 351, 353. And such is the result made necessary by the accepted rules of statutory construction.2

1

It is argued that this conclusion results in a discrimination against a manufacturer who indulges in his own advertising and selling campaigns in favor of one whose products are advertised by his customers and that Congress could not have intended such a discrimination. But this discrimination, to the extent that it may exist, is an unavoidable consequence of an excise tax based on the [587] wholesale selling price. Such cost factors as labor, materials and advertising naturally vary among competing manufacturers; different costs and different methods of doing business in turn may cause the wholesale selling prices to lack uniformity. And if these prices are taxed without ad

1 The parenthetical matter following the term "other charge" in the last sentence of $ 619 (a)(not required by the foregoing sentence to be included)" is not significant in this case. It serves simply to provide that, to the extent that the provisions for inclusion and exclusion may overlap, the former shall control.

2 Section 3 (a) of the Revenue Act of 1939, 53 Stat. 862. ger § 3401, excluded from the sale price "a transportation, deliver and the wholesaler's salesmen's commissions and costs and selling." (Italics added.) Section 3 (b) made this amendm 8 3 (a) cannot be taken as a Congressional declarati selling expenses were intended to be excluded from the selli of 1932. On the contrary, the very fact that Congress exclude such expenses specifically is persuasive evidence tha selling expenses were not meant to be excluded.

al Revenue Code other charge, rtising and

and hence ising and

enue Act 1939 to sing and

justment for differing cost factors, tax inequalities and discriminations inevitably result. But where, as here, a flat tax is placed on the wholesale selling prices and no statutory provisions are made for relief from the resulting natural tax inequalities, courts are powerless to supply it themselves by imputing to Congress an unexpressed intent to achieve tax uniformity among manufacturers selling at wholesales.3

Finally, petitioner urges that § 619 (b) must also be considered in order to ascertain the true Congressional intent and in order to give § 619 (a) its proper construction. But § 619 (b) merely provides that where the manufacturer sells at retail, on consignment or otherwise than through an arm's length tranaction, the tax shall be based upon a figure determined by the Commissioner with reference to the prices at which similar articles are sold in the ordinary course of trade. Inasmuch as petitioner's sales were made at wholesale, § 619 (b) has no direct application to this case. But it does serve to emphasize the failure of Congress to make similar provisions for tax equalization under § 619 (a) where the manufacturer's sales are at wholesale. It cannot, however, vary the plain intent and language of § 619 (a) and Congressional [588] statements relating to the desirability of eliminating discriminations against manufacturers making retail sales cannot be taken as evidence of a desire to prevent the natural inequalities that result when a tax is placed on the wholesale selling price.

MR. JUSTICE ROBERTS concurs in the result.

Affirmed.

IV. JURISDICTION, VENUE AND PROCEDURE

A. FEDERAL TAXES

1. Helvering v. American Dental Co., 318 U. S. 322. See p. 165.

2. Helvering v. Chicago Stock Yards Co., 318 U. S. 693. See p. 309.

3. COMMISSIONER OF INTERNAL REVENUE v. GOOCH MILLING & ELEVATOR CO.

(320 U. S. 418. No. 53-Decided December 6, 1943)

1. Upon a taxpayer's appeal from the Commissioner's determination of a deficiency in tax for 1936, the Board of Tax Appeals was without jurisdiction to determine the amount of a 1935 overpayment (refund of which was barred by limitations) and to credit such overpayment against the deficiency. Internal Revenue Code, § 272 (g). P. 419.

2. The Board of Tax Appeals was without jurisdiction in such case to apply the doctrine of equitable recoupment. P. 420. 133 F. 2d 131, reversed.

3 Congress has subsequently realized that the excise tax on the wholesale selling price created tax inequalities among manufacturers. In § 552 of the Revenue Act of 1941, 55 Stat. 687, 718, Congress substituted a retail excise tax for the manufacturer's excise tax on toilet preparations. The reasons assigned for the change were that under the earlier law "evasion is substantial and inequitable competitive situations are created." H. Rep. No. 1040 (77th Cong.. 1st Sess.), p. 33.

See H. Rep. No. 708 (72d Cong., 1st Sess.), pp. 32-33; 75 Cong. Rec. 5693, 5694.

CERTIORARI, 319 U. S. 737, to review the reversal of a decision of the Board of Tax Appeals redetermining deficiencies in income and excess-profits taxes.

MR. JUSTICE MURPHY delivered the opinion of the Court.

The

The jurisdiction of the Board of Tax Appeals1 to determine and to apply a prior tax overpayment against a tax [419] deficiency for a particular year is the sole question presented by this case. Board held that it did not possess such jurisdiction, but the court below reversed, 133 F. 2d 131. We granted certiorari, 319 U. S. 737, the problem being one of importance in the administration of the revenue laws.

An audit made in 1938 of the books of the respondent corporation disclosed an erroneous valuation of its inventory of June 30, 1935. Because of this error, respondent had been overassessed and had overpaid its income and excess profits taxes for the 1935 fiscal year. This excess payment was not subject to refund because barred by the statute of limitations. On the basis of the adjusted inventory, however, the Commissioner determined that there was a tax deficiency for the 1936 fiscal year. The overpayment of the prior fiscal year exceeded the amount of this deficiency. On appeal to the Board for a redetermination of the deficiency, the respondent sought in its amended petition to have the 1935 overpayment applied as an offset or recoupment against the 1936 deficiency. The Board, consistent with its past decisions, refused to grant this relief "for jurisdictional reasons."

3

We hold that the Board's position was correct and that it had no jurisdiction to determine or to apply any overpayment of the taxes for the 1935 fiscal year against the 1936 deficiency.

[420] The Board is but "an independent agency in the Executive Branch of the Government," and the legislative pattern of its jurisdiction is clear and unambiguous. The Board is confined to a determination of the amount of deficiency or overpayment for the particular tax year as to which the Commissioner determines a deficiency and as to which the taxpayer seeks a review of the deficiency assessment. Internal Revenue Code, §§ 272, 322 (d). It has no power to order a refund or credit should it find that there has been an overpayment in the year in question. United States ex rel. Girard Trust Co. v. Helvering, 301 U. S. 540, 542. Section 272 (g) of the Internal Revenue Code specifically provides that "the Board in redetermining a deficiency in respect of any taxable year shall consider such facts with relation to the taxes for other taxable years as may be necessary correctly to rede

1 Section 504 (a) of the Revenue Act of 1942, c. 619, 56 Stat. 798, 957, changed the name of the Board of Tax Appeals to The Tax Court of the United States. Section 504 (b) provided that this change in name was to have no effect on the jurisdiction, powers and duties of the agency. See also H. Rep. No. 2333, 77th Cong., 2d Sess., pp. 172-173. 2 The respondent filed its tax returns on the basis of a fiscal year ending on June 30. The inventory of June 30, 1935, was common to successive years, being the closing inventory for the 1935 fiscal year and the opening inventory for the 1936 fiscal year.

3 See, for example, Appeal of R. P. Hazzard Co., 4 B. T. A. 150: Appeal of Cornelius Cotton Mills, 4 B. T. A. 255; Appeal of Dickerman & Englis, Inc., 5 B. T. A. 633; B. T. Couch Glue Co. v. Commissioner, 12 B. T. A. 1321; Gould-Mersereau Co. v. Commissioner, 21 B. T. A. 1316; Heyl v. Commissioner, 34 B. T. A. 223; Red Wing Potteries v. Commissioner, 43 B. T. A. 841: Elbert v. Commissioner, 2 T. C., No. 113.

452 Stat. 158, 26 U. S. C. § 1100.

termine the amount of such deficiency, but in so doing shall have no jurisdiction to determine whether or not the tax for any other taxable year has been overpaid or underpaid."

5

The Board's want of jurisdiction to apply the doctrine of equitable recoupment in this case is manifest from these statutory provisions. The Commissioner assessed a deficiency only for the 1936 fiscal year and it was this assessment of which the respondent sought a review. The Board thus had jurisdiction to do no more than redetermine the 1936 deficiency distinct from any overpayment or underpayment in any prior or subsequent year. There was no occasion here for the Board to exercise its power under § 272 (g) to consider any facts relating to the taxes for the 1935 fiscal year. The redetermination of the tax liability for the 1936 fiscal year was in no way dependent [421] on any prior tax assessment or overpayment. Likewise, neither the fact that the prior overpayment could no longer be refunded nor the fact that the overpayment exceeded the amount of the deficiency had any relevance whatever to the redetermination of the correct tax for the 1936 fiscal year. The respondent, in other words, was seeking to have the 1935 overpayment used, not as an aid in redetermining the 1936 deficiency, but as an affirmative defense or offset to that deficiency. This necessarily involved a determination of whether there was an overpayment during the 1935 fiscal year. The absolute and unequivocal language of the proviso of § 272 (g), however, placed such a determination outside the jurisdiction of the Board. Thus to allow the Board to give effect to an equitable defense which of necessity is based upon a determination foreign to the Board's jurisdiction would be contrary to the expressed will of Congress."

We are not called upon to determine the scope of equitable recoupment when it is asserted in a suit for refund of taxes in tribunals possessing general equity jurisdiction. Cf. Bull v. United States, 295 U. S. 247; Stone v. White, [422] 301 U. S. 532. But its use in proceedings before the Board is governed by the circumscribed jurisdiction of that agency. The Internal Revenue Code, not general equitable principles, is the mainspring of the Board's jurisdiction. Until Congress deems it advisable to allow the Board to determine the overpayment or underpayment in any taxable year other than the one for which a deficiency has been assessed, the Board must remain impotent when the plea of equitable recoupment is based upon an overpayment or underpayment in such other year. The judgment of the court below is therefore reversed and that of the Board of Tax Appeals is affirmed. Reversed.

The Board has not hesitated to exercise its jurisdiction under § 272 (g) to consider the taxes for other taxable years insofar as relevant to the correct redetermination of the deficiency in question. See Evens & Howard Fire Brick Co. v. Commissioner, 8 B. T. A. 867 Commercial Trust Co. v. Commissioner, 8 B. T. A. 1138; D. N. & E. Walter & Co. v. Commissioner, 10 B. T. A. 620; J. C. Blair Co. v. Commissioner, 11 B. T. A. 673: Greenleaf Textile Corp. v. Commissioner, 26 B. T. A. 737, affirmed 65 F. 2d 1017; W. M. Ritter Lumber Co. v. Commissioner, 30 B. T. A. 231, 277.

As we said in Bull v. United States. 295 U. S. 247, 262. "recoupment is in the nature of a defense arising out of some feature of the transaction upon which the plaintiff's action is grounded."

Before 272 (g) of the Internal Revenue Code was enacted, the Board held that it had jurisdiction to determine an overpayment for a year as to which no deficiency had been found by the Commissioner and to apply that overpayment against the liability for the year as to which he had found a deficiency, thus giving effect to the doctrine of equitable recoupment. Appeal of E. J. Barry, 1 B. T. A. 156. Soon thereafter, however, Congress passed § 274 (g) of the Revenue Act of 1926 (now § 272 (g) of the Internal Revenue Code) taking such jurisdiction away from the Board.

4. Commissioner v. Heininger, 320 U. S. 467. See p. 216.

5. Dobson v. Commissioner of Internal Revenue, 320 U. S. 489. See p. 195.

6. R. SIMPSON & CO., INC. v. COMMISSIONER OF INTERNAL REVENUE

(321 U. S. 225. No. 1-Decided February 14, 1944)

Of a case to which § 1140 (b) (2) of the Internal Revenue Code is applicable, this Court is without jurisdiction after a petition for a writ of certiorari has been denied and the period of 25 days allowed by Rule 33 for filing a petition for rehearing has expired. P. 229.

128 F. 2d 742, writ dismissed.

CERTIORARI, 319 U. S. 778, to review the affirmance of a decision of the Board of Tax Appeals, 44 B. T. A. 498. This Court had previously denied certiorari, 317 U. S. 677.

[226] MR. JUSTICE JACKSON delivered the opinion of the Court.

For the years 1934, 1935, and 1936 the taxpayer, a corporation, filed complete income and excess-profits tax returns on Form 1120 of the Treasury Department. Each of these included a question whether the corporation was a personal holding company within the meaning of § 351 of the applicable revenue act and stated that if it was, an additional return on Form 1120H was required. The taxpayer answered the question in the negative and did not in any year file personal holding company returns on Form 1120H.

The Commissioner imposed personal holding company surtaxes for each year and under the authority of § 406 of the Revenue Act of 1935 and § 291 of the Revenue Acts of 1934 and 1936 imposed a 25 per cent penalty for failure to file the personal holding company return.

The president, who executed the income tax returns, did not file personal holding company returns because he thought the taxpayer was not a personal holding company within the meaning of the Act. It was actively engaged in the pawnshop business. However, more than 50 per cent of its capital stock was owned by less than five stockholders, and more than 80 per cent of its gross income was derived from interest. The taxpayer filed information returns showing dividends of over $300 paid to each stockholder during those years and its books and records made available to the Commissioner during audit disclosed the facts. No fraud or bad faith is suggested.

The Board of Tax Appeals affirmed the penalties,1 and its decision was affirmed by the Circuit Court of Appeals.2 [227] There appearing to be no conflict of decision between circuits, we on November 9, 1942, denied certiorari.3 The 25-day period allowed by our rule in which to file petition for rehearing expired. In February 1943 a conflict developed through decision of Lane-Wells Co. v. Commissioner by the Court of Appeals for the Ninth Circuit. Petitioner asked leave to

144 B. T. A. 498.

2 128 F. 2d 742. 3 317 U. S. 677. 4134 F. 2d 977.