This is an action to recover war and excess profits taxes claimed to have been erroneously collected for the years 1918-1919. The Commissioner of Internal Revenue computed the taxes to be paid by the appellant under the provisions of section 301 of the Revenue Act of 1918 (40 Stat. 1057, 1088). The appellant claims that it is entitled to the benefit of an assessment under the provisions of section 327, subd. (d) and section 328 of the Revenue Act of 1918 (40 Stat. 1057, 1093), on the theory that it comes within the proviso of section 327, subd. (d), calling for such an assessment where “owing to abnormal conditions affecting the capital or income of the corporation” the ordinary rules of assessment would “work upon the corporation an exceptional hardship evidenced by gross disproportion between the tax computed without benefit of this section and the tax computed by reference to the representative corporations specified in section 328.” Section 327, subd. (d), also provides that “this subdivision shall not apply to any case (1) in which the tax (computed without benefit of this section) is high merely because the corporation earned within the taxable year a high rate of profit upon a normal invested capital. * * * ” Section 327, subd. (d), Revenue Apt of 1918.
The appellant avers in his complaint that it is engaged in the banking, business, and that the proportion of its deposits to its invested capital is so very large and unusual that, as compared with other banks conducting a similar business, it has been subjected
The appellant applied to the Commissioner for a determination of its tax for the year 1918 and 1919 in accordance with the rules provided in sections 327-328 of the Revenue Act of 1918, but the Commissioner denied the application. The first question presented for our consideration is whether or not the determination of the Commissioner denying appellant’s application for an assessment of its tax under section 328(a) is final and conclusive as to the right of the appellant under sections 327-328, supra, to have the tax so computed. This question has recently been before the Supreme Court in Williamsport Wire Rope Co. v. United States, 277 U. S. 551, 48 S. Ct. 587, 590, 72 L. Ed. 985, and determined adversely to the appellant’s contention. It is there held that the question of whether or not there were such abnormal conditions and exceptional hardships as would call for an assessment under section 327, supra, was one of administrative discretion and not for the courts to determine. Justice Brandéis, speaking for the court, announces the conclusion as follows:
“We conclude that the determination whether the taxpáyer is entitled to the special assessment was confided by Congress to the Commissioner, and could not, under the Revenue Act of 1918, be challenged in the courts — at least in the absence of fraud or other irregularities.”
In order to invoke the jurisdiction of the District Court to overturn the judgment of the Commissioner, and to meet the decision of the Supreme Court, appellant has made allegations by which it attempts to bring itself within the exception stated in the final phrase of the above quotation from Williams-port, etc., v. U. S., supra, by alleging that the act of the Commissioner in denying its-petition was fraudulent.
The sum and substance of these allegations is that the Commissioner erroneously determined that deposits in banks were not to be considered borrowed capital within the meaning of that term as used in the administration of the tax laws. The appellant thus states his position in his brief:
“As alleged in the amended complaint, he has arbitrarily excepted and excluded banks from the benefits accorded to all other corporations where abnormality due to excessive borrowed capital exists, although the act itself makes no exception of banks but applies equally to all corporations called upon to pay excess-profits tax. * * *
“The plaintiff has alleged, and is prepared to prove, that the Commissioner, in passing upon its application for special assessment, refused to consider deposits as a part of its borrowed capital, thereby depriving the plaintiff of any real hearing on the merits, and failing to exercise his discretion in any real sense of the word.”
The question as to whether such conduct is fraudulent has been recently considered by the Circuit Court of Appeals of the Eighth Circuit in Live Stock National Bank, Sioux City, Iowa, v. U. S., 36 F.(2d) 334.. The exact question presented by appellant in this ease was there considered, and, following the decision of the Supreme Court in Williamsport Wire Rope Co. v. U. S., supra, it is held in an opinion delivered by Judge Gardner that the District Court had no authority to review the action of the Commissioner of the Internal Revenue, and that the general allegations of fraud such as those-
Judgment affirmed.