J. H. Robinson Truck Lines, Inc. v. Commissioner of Internal Revenue , 183 F.2d 739 ( 1950 )

HUTCHESON, Chief Judge.

Petitioner is a large Texas trucking corporation, operating 140 trucks covering over 2000 miles in South Texas, with terminals at Houston, San Antonio, Corpus Christi, Laredo, and numerous other towns. Its president, J. H. Robinson, owns all but three of its shares of stock.

The Commissioner disallowed, and the Tax Court approved the disallowance of, deductions petitioner made for salaries and rents paid to its president in the years 1941, 1942, and 1943, and its income and declared value excess-profits taxes were determined accordingly.

Here, pointing to the fact that it offered evidence fully and completely supporting the reasonableness of the deductions claimed and the Commissioner offered no evidence whatever, petitioner insists that the finding and judgment of the Tax Court is not only clearly erroneous but is without any support in the evidence and may not stand. We agree.

To support its claim that the salary it paid Robinson, as president, and the rents it paid him as landlord were reasonable, petitioner introduced the testimony of Robinson and of two other witnesses. Robinson testified positively, and without contradiction or impeachment, that the salaries paid him were in line with, that is were comparable to, salaries paid presidents of other similar lines.

As to the rents paid him, he testified that they were reasonable, indeed were less than rents the corporation paid others.

The other two witnesses testified positively and without equivocation, contradiction, or impeachment, that the salaries paid Robinson were in line with, that is the same as, salaries paid to presidents of similar companies, and that the rents paid to Robinson were reasonable and compared favorably with rents charged by others, indeed were considerably less than were paid by and to others in similar circumstances.

The Commissioner offered no evidence.

The Tax Court rejected all of the evidence of all of the witnesses, and upon a record containing no evidence whatever supporting them, sustained the Commissioner’s determinations that the rents and salaries were- excessive.

Upon settled principles, it. cannot do this, and in doing so, it erred. Crude Oil Corp. of America v. Com., 10 Cir., 161 F.2d 809, and the many cases it cites; Foran v. Com., 5 Cir., 165 F.2d 705; Grace Bros., Inc., v. Com., 9 Cir., 173 F.2d 170 at page 174; Howell Turpentine Co. v. Com., 5 Cir., 162 F.2d 319; Mayson Mfg. Co. v. Com., 6 Cir., 178 F.2d 115.

The judgment of the Tax Court is reversed and the cause is remanded with directions to allow the deductions claimed and redetermine the deficiencies accordingly.