4. Same

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Subcontractor Manufacture of Shells or any part thereof. A steel company which, proceeding under a subcontract, selected the material required in shells, made the steel which constituted the shells, and by work upon said steel segregated it from the general field of commercial use and limited it to shell making, the six several steps performed constituting about 40 per cent of the cost of the shells, was a "person manufacturing shells * * * or any part of the articles named," within the meaning of section 301 of the act of September 8, 1916, though 29 further steps remained to be taken by the contractor and though some of the material, when imperfect, was scrapped and used for other mechanical purposes. 5. Same Subcontractor Manufacture of shells or any part thereof. A company which, under a subcontract, agreed to manufacture and furnish to a contractor for shells, rough steel shell forgings of the character provided in the contract as to chemical constituents, tensile strength, size, shape, etc., and which to fulfill its contract either made, had made, or bought in the market the grade of steel required, of the common commercial type known as rounds, which rounds it nicked and broke into 18-inch lengths, which it then put through two forging processes, piercing a hole and lengthening the rounds, the output being a hollow steel body or shell form weighing about 170 pounds, is a "person manufacturing *** shells * * * or any part of" a shell, within the meaning of section 301 of the act of September 8, 1916, though the contractor, to make the shell form suitable for use as a shell, was required to dress, bore, and machine it down to 77 pounds by means of some 27 distinct and separate processes.

6. Same "Any part"-Control of customs law decisions.

The words "any part," as used in section 301 of the act of September 8, 1916, do not mean "any completed part." Decisions involving customs laws exempting "manufactured" articles are not controlling, as the objects of the customs laws and said section 301 are not the same.

7. Judgments of lower courts.

Judgments of the District Court of the United States for the Western District of Pennsylvania in the case of Carbon Steel Co. v. Lewellyn, collector (255 Fed. 364), affirmed; judgment of the District Court of the United States for the Eastern District of Pennsylvania in the case of Worth Bros. Co. v. Lederer, collector (256 Fed. 116), affirmed; judgment of the District Court of the United States for the Western District of Pennsylvania in the case of Lewellyn, collector, v. Forged Steel Wheel Co. reversed. (258 Fed. 533.) These cases now pending in United States Supreme Court.

Supplies for manufacture furnished by the United States.

A company manufacturing munitions for the United States out of supplies furnished by the United States, which were shipped in interstate commerce, etc., is acting under the authority of the laws of the United States to as full an extent as though it had been incorporated under and in pursuance of national laws * *. (Wagner Elec. Mfg. Co. v. District Lodge No. 9, Int'l Ass'n of Mach., 252 Fed. 597.)

TITLE IV-CAPITAL STOCK TAX.

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SEC. 407. That on and after January first, nineteen hundred and seventeen, special taxes shall be, and hereby are, imposed annually, as follows, that is to say: * Every corporation, joint-stock company or association, now or hereafter organized in the United States for profit and having a capital stock represented by shares, and every insurance company, now or hereafter organized under the laws of the United States, or any State or Territory of the United States, shall pay annually a special excise tax with respect to the carrying on or doing business by such corporation, joint-stock company or association, or insurance company, (See cases under act of Aug. 5, 1909, on "Doing business," made applicable to this section by T. D. 2418.)

ACT OF MARCH 3, 1917.

[No court decisions.]

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Title I, Special preparedness fund. (Repealed by act Oct. 3, 1917, sec. 1301.)

Title II, Excess-profits tax. (Repealed by act Oct. 3, 1917, sec. 214.)

Title III, Estate tax. (Repealed by act Feb. 24, 1919, sec. 1400.) Title IV, Miscellaneous. (Sec. 402, returns of dividends, amended by act Oct. 3, 1917; sec. 1210, repealed by act Feb. 24, 1919, sec. 1400.)

REVENUE ACT OF 1917.

STAMP TAXES ACT OF OCTOBER 3, 1917.

[Repealed by Act of Feb. 24, 1919.]

Titles I, II, III, IV, V, VI, VII, VIII, IX, X, XII repealed by act of February 24, 1919.

TITLE I-WAR INCOME TAX.

SECTION 1. That in addition to the normal tax imposed by subdivision (a) of section one of the Act entitled "An Act to increase the revenue, and for other purposes,' approved September eighth, nineteen hundred and sixteen, there shall be levied, assessed, collected, and paid a like normal tax of two per centum upon the income of every individual, a citizen or resident of the United States, received in the calendar year nineteen hundred and seventeen and every calendar year thereafter.

Income.

Where defendant embezzled moneys which were delivered to him to be paid as insurance premiums, he committed a larceny, and the money so received was not subject to taxation under the income tax act. (Rau v. United States, 260 F. 131.)

TITLE VIII-STAMP TAXES SCHEDULE A.

3. Capital stock, issue: On each original issue, whether on organization or reorganization, of certificates of stock by any association, company, or corporation, on each $100 of face value or fraction thereof, 5 cents: Provided, That where capital stock is issued without face value, the tax shall be 5 cents per share, unless the actual value is in excess of $100 per share, in which case the tax shall be 5 cents on each $100 of actual value or fraction thereof.

The stamps representing the tax imposed by this subdivision shall be attached to the stock books and not to the certificates issued.

Section 807 Schedule A (3)-Capital stock, issue.

Issue of certificates of stock of one class in conversion and exchange for stock of another class held not required to be stamped as an "original issue," for the reason that Congress intended to tax transactions by which substantial consideration passed, and also for the reason that Congress in reenacting a similar provision of the revenue acts of 1898 and of 1914, which had been construed by the Treasury Department as not requiring stamps upon certificates issued for conversion purposes, had approved and made part of the present act such former practical construction. In his opinion Judge Hand said:

I can not regard an issue of stock based upon a conversion privilege which does not increase the total stock liability of a corporation as coming within the purview of the statute. (Unreported case of Wabash Ry. Co. v. Edwards, Collector, U. S. D. C.; So. Dist. of New York, June, 1919. This case now on appeal, October, 1919.)

ACT OF OCTOBER 3, 1917-TITLE X.

SEC. 1004. That whoever fails to make any return required by this Act or the regulations made under authority thereof within the time prescribed or who makes any false or fraudulent return, and whoever evades or attempts to evade any tax imposed by this Act or fails to collect or truly to account for and pay over any such tax, shall be subject to a penalty of not more than one thousand dollars, or to imprisonment for not more than one year, or both, at the discretion of the court, and in addition thereto a penalty of double the tax evaded, or not collected, or accounted for and paid over, to be assessed and collected in the same manner as taxes are assessed and collected, in any case in which the punishment is not otherwise specifically provided. Prosecution where compromise accepted.

Under Revised Statutes, section 3229 (Comp. St. sec. 5952), empowering Commissioner of Internal Revenue, with advice of Secretary of the Treasury, to compromise any criminal case arising under the internal revenue laws, one who failed to file an income tax return as required by the act October 3, 1917 (sec. 1004) can not be successfully prosecuted for this failure, where the collector of internal revenue offered to compromise on payment of the tax and penalty, and such offer was accepted. (Rau v. United States, 260 Fed. 131.)

Where internal-revenue officers, after defendant admitted he had not filed an income tax return as required by Act October 3, 1917 (sec. 1004), accepted not only the tax, but the penalty, informing defendant that such payment would end the matter and there would be no indictment, such acceptance and statement was a "compromise," within Revised Statutes (sec. 3229), and was a bar to prosecution.

(Id.)

In a prosecution for failure to file an income tax return as required by act October 3, 1917 (sec. 1004), that sum paid by defendant to internal-revenue officer after he had admitted he did not file the return was retained by the Treasury is evidence that the money was received in compromise of the case, which compromise was authorized by Revised Statutes section 3229. (Id.)

In a prosecution for failure to file an income tax return as required by act October 3, 1917 (sec. 1004), the question whether the internalrevenue officers compromised the case, as authorized by Revised Statutes section 3229, held for the jury. (Id.)

INCOME TAX.

ACT OF FEBRUARY 24, 1919-TITLE II-INCOME TAX.

INDIVIDUAL RETURNS.

SEC. 223. That every individual having a net income for the taxable year of $1,000 or over if single or if married and not living with husband or wife, or of $2,000 or over if married and living with husband or wife, shall make under oath a return stating specifically the items of his gross income and the deductions and credits allowed by this title. If a husband and wife living together have an aggregate net income of $2,000 or over, each shall make such a return unless the income of each is included in a single joint return.

If the taxpayer is unable to make his own return, the return shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of such taxpayer.

Returns under oath.

Indictment, charging that perjury had been committed by falsely swearing to an income tax return before a commissioner of deeds of New York City, had been demurred to, raising point that as such an officer was not authorized to take an oath by any law of the United States no crime had been committed. Judge Hand overruling this demurrer held that article 406 of Regulations 45 which was promulgated, under concededly legal powers, by the Commissioner of Internal Revenue, includes all such persons as were authorized by local law to take oaths in their several districts and allows a commissioner of deeds among other officials to take such an oath. (Op. Judge Hand, Oct. 20, 1919, U. S. D. C., So. Dist. of New York, case of United States of America v. Benowitz, T. D. 2952.)

RECEIPTS FOR TAXES.

SEC. 251. That every collector to whom any payment of any tax is made under the provisions of this title shall upon request give to the person making such payment a full written or printed receipt, stating the amount paid and the particular account for which such payment was made; and whenever any debtor pays taxes on account of payments made or to be made by him to separate creditors the collector shall, if requested by such debtor, give a separate receipt for the tax paid on account of each creditor in such form that the debtor can conveniently produce such receipts separately to his several creditors in satisfaction of their respective demands up to the amounts stated in the receipts; and such receipt shall be sufficient evidence in favor of such debtor to justify him in withholding from his next payment to his creditor the amount therein stated; but the creditor may, upon giving to his debtor a full written receipt acknowledging the payment to him of any sum actually paid and accepting the amount of tax paid as aforesaid (specifying the same) as a further satisfaction of the debt to that amount, require the surrender to him of such collector's receipt.