17 T.C. 830">*831 These consolidated proceedings involved income tax deficiencies for the taxable years 1944, 1945, and 1946, as follows:

The sole issue is whether the retirement pay received by petitioner in the taxable years involved is exempt from tax under the provisions of section 22 (b) (5) of the Internal Revenue Code.

FINDINGS 1951 U.S. Tax Ct. LEXIS 32">*33 OF FACT.

Petitioner is an individual residing at Bean Station, Grainger County, Tennessee. His income tax returns for the periods involved were filed with the collector of internal revenue for the district of Tennessee.

Petitioner enlisted in the United States Navy in September 1910 as an apprentice seaman, and was eventually advanced to the rank of chief boatswain's mate. Petitioner served continuously on active duty until May 1931 when he was transferred to the Fleet Reserve of the United States Navy, where he continued as a member until January 1, 1941. From May 1931 until January 1, 1941, he received pay from the Navy which was unchanged in amount during that period.

On January 1, 1941, petitioner was placed on the retired list, having completed 30 years' total service, and began receiving a higher pay allowance than he had received during the period May 1931 to January 1, 1941.

On June 9, 1941, petitioner was recalled to active duty. On August 6, 1941, he appeared before the Board of Medical Survey at the Naval Hospital, Pensacola, Florida. Under the date of August 26, 1941, petitioner received the following order:

17 T.C. 830">*832 U. S. NAVAL HOSPITAL

Pensacola, Florida

August 1951 U.S. Tax Ct. LEXIS 32">*34 26, 1941.

From: The Commanding Officer.

To: SCARCE, Marshall Sherman, 190-66-57, CBM (PA), USN. (Ret.).

Subject: Release from active duty.

Reference: (a) BuNav. Ltr. Nav-66-FLF over MM-190-66-57, dated August 19, 1941.

1. In accordance with authorization contained in reference (a), you are this date released from active duty and ordered home. NOT physically qualified for mobilization ashore.

2. You have stated and your record shows your home address to be Bean Station, Tennessee, and you will inform the Commandant, EIGHTH Naval District immediately upon your arrival.

3. This is a permanent change of station within the meaning of the Act of May 18, 1920, and you are entitled to such transportation for dependents, and household effects as is authorized by law.

4. The Commandant of the EIGHTH District is your Commanding Officer, and all correspondence with the Navy Department should be forwarded via that officer. You are also cautioned to reply immediately to any official correspondence addressed to you by proper authority.

5. Your pay accounts are being transferred to the Retainer Pay Division, Bureau of Supplies and Accounts, Navy Department, Washington, D. C., from which office1951 U.S. Tax Ct. LEXIS 32">*35 your retired pay will be forwarded to you by check. You are cautioned to notify that office via the Commandant of your district immediately of any change of address.

(Sgd.) G. B. McArthur

Acting in Command.

Copy to:

COM8.N.D.

BuS&A. RPD.

After his release from active duty on August 26, 1941, petitioner continued to receive the same amount of pay which he had received while on the inactive list during the period January 1, 1941, to June 9, 1941.

During the calendar years 1944, 1945, and 1946 petitioner received from the United States Navy pay allowances in the respective amounts of $ 1,457.28, $ 1,457.28, and $ 1,599.84. The receipt of such payments was disclosed on petitioner's tax returns for the respective calendar years, but they were omitted from gross income under a claim of exemption.

In determining the deficiencies for the respective taxable years the respondent disallowed the claimed exemption and included such amounts in petitioner's gross income as ordinary retirement pay for having served 30 years in the United States Navy.

17 T.C. 830">*833 OPINION.

The question is whether the respective amounts which petitioner received in the pertinent taxable years as1951 U.S. Tax Ct. LEXIS 32">*36 pay allowances from the Navy are exempt from tax under section 22 (b) (5) of the Internal Revenue Code. ¹ Exemptions from taxation do not rest on implication. United States v. Stewart, 311 U.S. 60">311 U.S. 60, 85 L. Ed. 40">85 L. Ed. 40, 61 S. Ct. 102">61 S. Ct. 102. Hence petitioner must affirmatively establish that the amounts in question were received as compensation for disability resulting from active service in the armed forces.

1951 U.S. Tax Ct. LEXIS 32">*37 The record shows that on January 1, 1941, petitioner, having served for 30 years in the United States Navy, was retired and placed on the inactive list. Thereafter he received the pay allowance to which he was entitled under the applicable statutes. Having been retired to the inactive list, he was subject to recall. On June 9, 1941, he was recalled to active service. On August 6, 1941, he appeared before the Board of Medical Survey. On August 26, 1941, petitioner was ordered released from active duty as "not physically qualified for mobilization ashore." The order of August 26, 1941, states: "Your pay accounts are being transferred to the Retainer Pay Division, Bureau of Supplies and Accounts, Navy Department, Washington, D. C., from which office your retired pay will be forwarded to you by check." Thereafter petitioner received the same pay allowance he had received while on the inactive list prior to his recall on June 9, 1941. We think the order of August 26, 1941, makes it clear that the pay allowances petitioner received in the taxable years involved constitute retirement pay based on petitioner's length of service. The fact that the medical officers reported him not physically1951 U.S. Tax Ct. LEXIS 32">*38 qualified for active duty is not determinative. Elmer D. Pangburn, 13 T.C. 169">13 T.C. 169.

We are unable to find in this record evidence to persuade us that such payments were made on account of personal injuries or sickness resulting from active service in the armed forces, so as to entitle petitioner to exemption from tax under section 22 (b) (5) of the Code. Retirement pay for length of service is not exempt from taxation. 13 T.C. 169">Elmer D. Pangburn, supra;Joseph B. Simms, 17 T.C. 1">17 T.C. 1 (on appeal to C. A. D. C.).

17 T.C. 830">*834 The respondent's action in including in gross income the amounts received by petitioner in the respective taxable years is approved.

Decisions will be entered for the respondent.