Taxation — Municipalities — Philadelphia Mercantile License Tax — Corporations — Corporations with identical shareholders — Lease of apartment building for expenses of operation.
In this case, in which it appeared that corporation A, organized with broad powers to transact business, including the right to buy and lease real estate, took title to an apartment house, which was its only holding; that immediately thereafter A leased the property to corporation B, which entered into separate leases with the individual tenants; that the rental paid by B to A varied each year but was a sum equal to the amount paid by A for taxes, insurance premiums, water and sewer charges, and mortgage interest; and that both corporations had identical shareholders; it was Held that A was subject to the Philadelphia Mercantile License Tax upon the total sum received by it from B.
OPINION PER CURIAM, June 24, 1966:
This appeal arises out of an assessment of appellee, Kungsgaten, Inc., a Pennsylvania corporation, by the City of Philadelphia for amounts alleged to have been due under the Philadelphia Mercantile License Tax. Philadelphia Code 19-1003. The assessment was sustained by the Philadelphia Tax Review Board and Kungsgaten appealed to the Court of Common Pleas of Philadelphia County which reversed the board and set aside the assessment. On appeal, the Superior Court affirmed. Kungsgaten, Inc. v. Philadelphia, 206 Pa. Super. 343, 213 A.2d 90 (1965). We allowed the petition of the City of Philadelphia for allocatur.
The essential facts are not in dispute and are set forth in the opinion of the Superior Court. We are of the view that the disposition of this appeal is controlled by our decisions in Shelburne Sportswear, Inc. v. Philadelphia, 422 Pa. 199, 220 A.2d 798 (1966), decided today, and Tax Review Board v. Brine, 414 Pa. 488, 200 A.2d 883 (1964). Under those decisions, the tax was properly imposed and the court of common pleas erred in setting aside the assessment. Accordingly, its decision may not be permitted to stand.
The order of the Superior Court is reversed.