3 T.C. 917">*917 OPINION.

The parties have raised and argued a jurisdictional question on the petitioner's motion for leave to file an amended petition. The question which they have argued is, Has this Court jurisdiction to consider and rule upon an application by the petitioner for relief under section 722 of the Internal Revenue Code in this proceeding, which is based entirely upon a notice of deficiency in excess profits taxes for 1940?

The petitioner, a corporation, filed two returns for the calendar year 1940 with the collector for the second district of New York. One return was for income, declared value excess1944 U.S. Tax Ct. LEXIS 114">*115 profits, and defense taxes. The other was for excess profits tax. The petitioner represented on its income tax return that it was a personal service corporation and signified its desire not to be subject to excess profits tax. Accordingly, it reported no tax due on the excess profits tax return. The Commissioner mailed the petitioner a notice of deficiencies in income tax, declared value excess profits tax, and excess profits tax for 1940. He also advised the petitioner in that notice of his holding that the petitioner was not entitled to classification as a personal service corporation under section 725 (a) of the Internal Revenue Code.

The petitioner filed a petition with this Court on April 29, 1943, based upon the above deficiency notice, contesting only the excess profits tax deficiency. The single error assigned was the failure of the Commissioner to recognize that the petitioner was a personal service corporation. Issue was joined and the proceeding came on for hearing on April 5, 1944, at which time counsel for the petitioner stated that the claim for personal service classification was abandoned. 3 T.C. 917">*918 He asked leave at that time to amend the petition in order1944 U.S. Tax Ct. LEXIS 114">*116 to attack the deficiency in excess profits tax on the ground that the Commissioner had erroneously failed to grant relief under section 722 of the Internal Revenue Code. About six months previously, on September 15, 1943, the petitioner had filed with the Commissioner an application for relief under section 722, in which it claimed a refund or credit of $ 83,669.16, the same amount as the deficiency in excess profits tax determined by the Commissioner. The petitioner has not paid any excess profits tax for 1940. The Commissioner has not acted upon the application for relief under section 722.

Congress has provided that the excess profits tax imposed by section 710 of subchapter E of chapter 2 shall first be computed, returned, and paid without regard to any possible relief under section 722, except in a case not here material. Sec. 722 (d). A complete system of assessing and collecting this excess profits tax, including any deficiency therein determined by the Commissioner, without regard to possible relief under 722, has been provided. Section 729 (a), relating to excess profits tax, states that all provisions of law applicable in respect of income taxes "shall insofar as not1944 U.S. Tax Ct. LEXIS 114">*117 inconsistent with this subchapter, be applicable in respect of the tax imposed by this subchapter." Thus, the receipt of the notice of deficiency in excess profits tax and the filing of the original petition in this case gave this Court jurisdiction to make "a redetermination of the deficiency." The petitioner has now withdrawn its only assignment of error as to the deficiency and a decision for the respondent is in order.

Congress separately provided a procedure for the consideration of relief under 722, for the determination by the Commissioner of the extent to which relief should be granted, and for review of that determination by this Court under certain circumstances. Section 732, entitled "Review of Abnormalities," provides that the Commissioner, if he disallows a claim under section 722, shall send a notice of his disallowance to the taxpayer by registered mail and the taxpayer may file a petition with this Court within 90 days for a redetermination of the excess profits tax. ¹ It further provides that "such notice of disallowance shall be deemed to be a notice of deficiency for all purposes 3 T.C. 917">*919 relating to the assessment and collection of taxes or the refund or credit1944 U.S. Tax Ct. LEXIS 114">*118 of overpayments."

Thus, proceedings may come to this Court in two different ways -- one, following the receipt of a notice of a deficiency in excess profits taxes, and the other, following a notice of the disallowance of a claim under 722. The present proceeding is one which has arisen1944 U.S. Tax Ct. LEXIS 114">*119 under the first method, not the second. Jurisdiction in this case depends entirely upon the provisions of section 729 (a).

Congress obviously intended and provided that the application for relief under section 722 should first be considered by the Commissioner before the matter should be "reviewed" by this Court. ² The regulations are consistent with this interpretation of the law. Section 732, the only section which specifically confers jurisdiction on this Court to consider questions arising under section 722, confers jurisdiction to make a redetermination after the Commissioner has acted by denying in whole or in part a claim for refund. There is now no provision authorizing this Court to consider or decide the question of relief under 722 in the absence of prior action by the Commissioner.

1944 U.S. Tax Ct. LEXIS 114">*120 The relief provided by section 722 is in the form of a refund or credit of excess profits tax paid. Until some tax is paid, there is no basis for that relief. The relief is not effected through reduction of a deficiency in the excess profits tax. The petitioner in this case has paid no excess profits tax for 1940 and, consequently, is not in position to ask for any relief. It can not be entitled to a refund or credit of excess profits tax until it pays the deficiency which the Commissioner has determined. ³ It will have two years after payment within which to make a claim to the Commissioner for relief under section 722. See section 322(b) in the light of section 722(d). ⁴ Here 3 T.C. 917">*920 there has been neither payment of the tax nor action by the Commissioner. The petitioner's request that we take jurisdiction in this proceeding over the question of relief under 722 is premature.

1944 U.S. Tax Ct. LEXIS 114">*121 It is apparent from the provisions of the statute that Congress intended to limit the jurisdiction of this Court, based upon a notice of deficiency in excess profits taxes, to a redetermination of that deficiency without regard to any possible relief under 722, and that our jurisdiction to consider the question of possible relief under 722 can be invoked only after the Commissioner has mailed a notice of the disallowance of a claim for that relief as provided in section 732. ⁵ The present petitioner in a deficiency proceeding under section 729(a) is seeking to invoke the jurisdiction to consider its right to relief as if the proceeding had originated under section 732. Congress did not intend that this should be done and to allow it would defeat the purposes which Congress had in mind.

1944 U.S. Tax Ct. LEXIS 114">*122 Furthermore, no good purpose could be served by retaining jurisdiction in this proceeding pending the action of the Commissioner on the claim for relief under 722. ⁶ The entry of an order finding a deficiency in the amount determined by the Commissioner will in no way prejudice the petitioner in its efforts to have its claim for relief under 722 adequately considered in accordance with the provisions of the statute. It says that its application under 722 may be ineffectual unless jurisdiction is retained in this proceeding. Reference has been made above to the right of the petitioner to file an application for relief within two years after the tax has been paid. 3 T.C. 917">*921 But it says it will not be able to bring suit for any overpayment which is determined and this is so even if the Commissioner acts favorably upon its application. The thought is that its excess profits tax liability will become final once this present proceeding is terminated and then section 322 will prevent any suit for recovery of an overpayment later determined. It is also suggested that the Commissioner may not send a notice of disallowance of the claim under section 722, since that is the equivalent 1944 U.S. Tax Ct. LEXIS 114">*123 of a notice of deficiency, one notice of deficiency in excess profits tax has already been mailed, and section 272(f) prohibits the determination of an additional deficiency where a petition based upon an existing notice has been filed with this Court.

1944 U.S. Tax Ct. LEXIS 114">*124 The flaw in this reasoning is that the provisions of the income tax law, including sections 322 and 272, are made applicable to the excess profits tax only to the extent that they are not inconsistent with the provisions of the excess profits tax subchapter. Sec. 729 (a). If the Commissioner disallows a claim for refund, the sending of a notice under section 732 (a) is mandatory. The same section also expressly provides that the petitioner, upon receipt of such a notice, may invoke the jurisdiction of this Court. These provisions would be of no avail if the excess profits tax liability had already become fixed for all purposes and 272 (f) prohibits a notice under 732 (a), as the taxpayer has suggested. Therefore, the provisions of the income tax law which would nullify the excess profits tax provisions granting relief under 722 must be read with the exceptions necessary to permit the purpose of Congress as expressed in 732 and 722 to be accomplished. ⁷ Consequently, if the Commissioner should act favorably upon this petitioner's claim for refund, the petitioner would be entitled to receive the refund or sue for it. Or, if it were held by this Court in a later proceeding that1944 U.S. Tax Ct. LEXIS 114">*125 the petitioner is entitled to relief under 722, this Court would find an overpayment and the petitioner would be within the first exception to the general rule of section 322 (c). ⁸

A decision is being entered denying the motion1944 U.S. Tax Ct. LEXIS 114">*126 for permission to file the amended petition.