There is neither law nor jurisprudence that states that the taxpayer’s failure to fill up the entry in the “Creditable Tax Withheld” column in Schedule 1 of the Annual Income Tax Return would be fatal to a claim for refund.

In this claim for refund of unutilized creditable withholding taxes, the BIR questioned, among others, the taxpayer’s compliance of the requirement that he income upon which the taxes were withheld were included in the return of the recipient, on the ground that the creditable tax withheld column in schedule 1 of the annual ITR was not filled-up.

The CTA en banc ruled that there is neither law nor jurisprudence that states that the taxpayer’s failure to fill up the entry in the “Creditable Tax Withheld” column in Schedule 1 of the Annual ITR would be fatal to a claim for refund. What Section 2.58.3 of RR No. 2-98 and the applicable jurisprudence require is that the taxpayer be able to declare as part of its gross income in the Annual Income Tax Return the

income payment from which the withholding was made. Further, failure on the part of a taxpayer to make an entry in the “Creditable Tax Withheld” column found in page 2 of the Annual Income Tax Return, specifically Schedule 1 or the “Schedule of Sales/Revenues/Receipts/Fess” is not a sufficient basis to conclude that the taxpayer failed to comply with the requirement that “income upon which the taxes were withheld were included in the return of the recipient” when the taxpayer has offered other evidence to establish its compliance with this requirement. The claim for refund was granted. (Commissioner of Internal Revenue vs. Sonoma Services Inc., CTA EB No. 931, December 11, 2013)