concurring.
I concur in the result .reached by the majority but for somewhat different reasons. In my opinion, the contacts shown by this taxpayer with other states are minimal and are less substantial than those shown in most eases where apportionment has been allowed. The taxpayer has no employees, officers or property in any other state, except inventory being stored for shipment to plants owned by its parent in Canada. Except in isolated instances, it makes no sales and derives no income from operations in other states. It pays only minimal taxes to any other state. Such operations as it has in other states are conducted through independent agents or public warehouses, and not through its own employees. All operations are centered in and controlled from Memphis.
Unlike the situation in Allenberg Cotton Co., Inc. v. Woods, 640 S.W.2d 543 (Tenn.1982), the taxpayer on its excise and franchise tax returns showed all of its sales being made through the Memphis office. The Commissioner has not questioned the figures used in the apportionment formulae by the taxpayer, as was the situation in Allenberg where some apportionment was permitted. Rather, the Commissioner has questioned the right of the taxpayer to apportion at all.
The Commissioner, however, has not challenged the right of the taxpayer to apportion for purposes of the state franchise tax. At all times pertinent to this case, both before and after 1976, the corporate franchise tax statute has permitted apportionment to corporations “doing business in Tennessee and elsewhere .... ” T.C.A. § 67-4-909. The taxpayer reported its liability for franchise taxes on the same form and at the same time as it reported its liability for excise taxes. During 1975 and 1976, the right to apportion excise taxes was accorded to corporations “doing business in Tennessee and elsewhere” — in identical terms to the franchise tax statute. I am not aware that in previous cases the Court has made any distinction between the two taxes with respect to the criteria for apportionment. If the Commissioner deemed that appellee was entitled to apportion its franchise taxes for 1975 and 1976, then, under the excise tax statute, for those years it seems to me that there is difficulty in denying apportionment for excise tax purposes. The-State seems to be attempting to tax all of the corporation’s net earnings while agreeing that portions of the corporate franchise value are properly allocable elsewhere.
Further, the taxpayer had domesticated its charter in five other states for all or most of the calendar year 1975. Although minimal, it did pay taxes to several of those jurisdictions. Accordingly, for the first portion of the audit period, I do not believe that the Commissioner was justified in denying apportionment, although the issue is quite close under our previous cases.
With respect to the years 1977 through 1979, the question is somewhat different because of a change in the provisions of the excise tax statute. In 1976 the General Assembly adopted the Uniform Division of Income for Tax Purposes Act and expressly stated that some of its basic definitions “shall be interpreted consistently” with the intent of the National Conference of Commissioners on Uniform State Laws. T.C.A. § 67-4-804.
*163Since the 1976 revision, corporations have been entitled to apportion net earnings for excise tax purposes on a somewhat different standard from that contained in the earlier statute, the apportionment provisions being substantially revised and differing from those in the franchise tax law which have remained unchanged. T.C.A. § 67-4-809 controls the audit period from 1977 through 1979. Subsection (a) permits apportionment to taxpayers “having earnings from business activity which are taxable both within and without the state .... ” Taxability of business activity, therefore, is the criterion, rather than “doing business in Tennessee and elsewhere.”
More specifically, under subsection (b), a taxpayer is deemed to be taxable in another state if that state has jurisdiction to levy a net income tax upon it, as discussed in the majority opinion, or, alternatively, if it is subject to certain other taxes. Subsection (b)(1) permits allocation and apportionment of earnings if a corporation is subject in another state to:
1. a net income tax;
2. a franchise tax measured by net income;
3. a franchise tax for the privilege of doing business; or
4. a corporate stock tax.
There is no question in this case but that appellee paid a corporate franchise tax to the State of Arkansas for the years 1977 through 1979, as well as for many years previously. That tax is levied for the privilege of doing business in corporate form in that state. Ark.Stat.Ann. § 84-1801 (1980). Further, appellee had domesticated its charter in that state during each of these three years; it has been continuously so domesticated since 1939.
The Arkansas corporate franchise tax is levied upon corporations which are either organized in Arkansas or have qualified under the laws of that state. Each corporation is required to file a tax return, as appellee did, and to allocate to Arkansas a portion of the par value of its capital stock, computed upon the percentage of its property in the state of Arkansas to the total value of all of its property. Ark.Stat.Ann. § 84-1835(f) (1980).
Appellee, in its returns, showed substantial assets in Arkansas at the end of each taxable year, consisting of inventories stored in warehouses. It allocated the value of its capital stock to Arkansas based upon the proportion of these assets to all of its property.
The Tennessee Commissioner has not questioned the good faith of the taxpayer in paying Arkansas franchise taxes. If it is indeed subject to those taxes, then under T.C.A. § 67-4-809(b)(l) appellee is entitled to apportion its earnings for purposes of the Tennessee excise tax.
I have difficulty in concluding that appel-lee was subject to a net income tax in Arkansas during any of the years 1975 through 1979. Arkansas has a general income tax law applicable to corporations as well as individuals. Ark.Stat.Ann. §§ 48-2001 to 2094.2 (1980). Appellee filed sworn income tax returns in Arkansas for each of the years in question, and in each year showed the same amount of total gross sales as were shown on the Tennessee franchise and excise tax returns. It "showed none of these allocable to Arkansas, and it reported no taxable income applicable to that state in any tax year involved. Arkansas apportions income among states in accordance with the Uniform Division of Income Act. Ark.Stat.Ann. § 84-2057 (1980).
To me it seems inconsistent for the taxpayer to insist in Tennessee that it is subject to net income taxation in Arkansas and other states while it at the same time filed tax returns in Arkansas denying all income tax liability there. As far as the record shows, it filed no income tax returns in any other state and has made no showing that any other state than Arkansas could subject it to a net income tax. Accordingly, in my opinion, any entitlement of appellee to apportionment under the revised Tennessee excise tax statutes arises solely from its having, apparently properly, paid Arkansas franchise taxes.
*164The Commissioner correctly points out that if a taxpayer voluntarily pays nominal franchise taxes in other states to which it is not actually subject, this circumstance has little weight in establishing a right to apportion. Signal Thread Co. v. King, 222 Tenn. 241, 435 S.W.2d 468 (1968). In this case, however, the taxpayer, a Delaware corporation, has had its charter domesticated in Arkansas since 1939. In good faith it filed returns and paid franchise taxes to Arkansas during each year involved in the audit, long before any question of its right to apportionment was raised.
The most appealing argument of the Commissioner in this case is that the taxpayer, which apparently is doing practically all of its business in Tennessee, is paying income taxes to Tennessee based on only 36% of its net earnings, and is not paying any amount whatever to any other state on the remaining 64%. Nevertheless, contrary to the insistence of the Commissioner, under the provisions of the revised Tennessee excise tax statute, payment of taxes to other states based on net income does not appear to be the sole criterion for apportionment. The taxpayer must have earnings from business activity which are taxable both within and without this state, and T.C.A. § 67-4-809(b)(l) expressly states that a taxpayer is entitled to allocate and apportion its earnings if it pays “a franchise tax for the privilege of doing business” in another state. Obviously, this means something other than “a franchise tax measured by net income” which in the same subsection is separately made a basis for apportionment.
The Commissioner contends that the criteria for apportionment under the revised excise tax statute are essentially the same as those under the previous one allowing apportionment for corporations doing business in Tennessee and elsewhere. Were subsection (a) of T.C.A. § 67-4-809 the only provision regarding apportionment, this argument would be plausible. The specific provisions of subsection (b), however, are different. Further the legislative debates make it clear that the intent of the General Assembly was to adopt a uniform act differing materially from the earlier statutes.
The taxpayer has contended that for Tennessee to deny it the right to apportion its earnings would violate the commerce clause or other constitutional provisions. Upon this record such a contention would be difficult to sustain. If all of the audit years in question were governed by the previous statutes, in my opinion almost all of the taxpayer’s earnings could properly be subjected to the Tennessee excise taxes for 1977 through 1979, and quite possibly for 1976 as well. As previously stated, however, while not necessarily controlling, it is somewhat troubling that the Commissioner has challenged the right of appellee to apportion its earnings for excise tax purposes but has apparently conceded its right to apportionment for franchise tax purposes during each year.
The Commissioner has not undertaken in this case to reallocate income under the relief provisions of the excise tax statute, T.C.A. § 67-4-812, although this might have been possible. In the case of Deseret Pharmaceutical Company, Inc. v. State Tax Commission, 579 P.2d 1322 (Utah 1978), a corporation had its only place of business within the state of Utah. It did solicit business from out-of-state customers, however, through traveling salesmen. Other states were precluded from taxing income resulting from those sales by the federal statute referred to in the majority opinion. ■ Under these circumstances, the Utah Supreme Court affirmed the Commission in using the relief provisions of the Uniform Division of Income for Tax Purposes Act (identical to T.C.A. § 67-4-812(a)) and allocating most of the earnings of the corporation to the state of Utah.
This statute permits departure from the normal apportionment factors in order “to effectuate an equitable allocation and apportionment of the taxpayer’s earnings.” T.C.A. § 67-4-812(a)(4). The Commissioner, however, has not undertaken to challenge the percentages used by the taxpayer or the other details of the statutory appor*165tionment factors, but has cast the present case upon an all-or-nothing basis.
In the Deseret Pharmaceutical case, supra, the taxpayer paid nominal taxes to two other states. One of these was a franchise tax for the privilege of doing business in the state of Washington; the other, a corporate stock tax in the state of Texas. Neither of the taxes was determined by or based upon net income. The Utah commission, however, allowed apportionment of income. It excluded from Utah these earnings specifically shown to be allocable to Washington and Texas. The Supreme Court of Utah affirmed. Under the standard apportionment formulae used by the taxpayer, less than 50% of the corporation’s earnings had been attributable to Utah.
In the present case, neither in the trial nor on appeal, has the Commissioner sought to invoke the relief provisions or to revise the percentages of apportionment claimed by the taxpayer.
Therefore, with reluctance, I concur in affirming the judgment of the Chancellor.
I am authorized to state that Justice COOPER joins in this opinion.