The opinion
Raum, J., dissenting: This is depletion run riot. I cannot believe that Congress ever intended to confer these extraordinary tax benefits at the 2744-percent rate, wholly unrelated to taxpayer’s investment in the property in circumstances such as are present here, whatever may have been its alleged intention to further a national policy of encouraging the extraction of petroleum or other like natural resources. Regardless of whether steam may technically be regarded as “gas,” it is at best doubtful that it is so generally considered in common usage. Accordingly, I would not reach this rather eccentric result, cf. Nix v. Hedden, 149 U.S. 304 , particularly since petitioner is seeking to obtain a highly artificial tax benefit and it has long been established that deductions and exemptions from taxation are to be narrowly construed. Cf. Bingler v. Johnson, 394 U.S. 741, 752 ; Commissioner v. Jacobson, 336 U.S. 28, 49 ; United States v. Stewart, 311 U.S. 60, 71 ; Helvering v. Northwest Steel Mills, 311 U.S. 46, 49 ; New Colonial Co. v. Helvering, 292 U.S. 435, 440 . Indeed, it has been said that “a well founded doubt is fatal to the claim [of tax exemption].” Bank of Commerce v. Tennessee, 161 U.S. 134, 146 . When one considers that Congress has provided for percentage depletion measured by less than 27½ percent in respect of natural resources other than from “oil and gas wells” and that it has specifically indicated that there is to be no percentage depletion whatever in respect of “water” (sec. 613(b)), it seems almost beyond belief that it intended to grant a 27]4-percent bonanza for water vapor.
Nor is the contrary conclusion required by reason of the Commissioner’s so-called concession as to the meaning of the term “gas” as used in the statute, for that is a question of law and it has been firmly established that concessions or stipulations of law are not binding upon the courts. Swift & Co. v. Hocking Valley Ry. Co., 243 U.S. 281, 289 ; Estate of Sanford v. Commissioner, 808 U.S. 39 , 51; Nelson v. Montgomery Ward, 312 U.S. 373, 376 ; First-Mechanics Nat. Bank v. Commissioner, 117 F. 2d 127, 131 (C.A. 3); London-Butte Gold M. Co. v. Commissioner, 116 F. 2d 478, 480 (C.A. 10); Commissioner v. Ehrhart, 82 F. 2d 338, 339 (C.A. 5); John A. Nelson Co. v. Commissioner, 75 F. 2d 696, 697 (C.A. 7), reversed on other grounds 296 U.S. 374 ; Smith v. Commissioner, 59 F. 2d 553 , 538 (C.A. 7); Ernst Kerry Co., 1 T.C. 249, 265 ; Volunteer State Life Insurance Co., 35 B.T.A. 491, 496 , reversed on other grounds 110 F. 2d 879 (C.A. 6); Ohio Clover Leaf Dairy Co., 8 B.T.A. 1249 , 1256, affirmed per curiam 34 F. 2d 1022 (C.A. 6), certiorari denied 280 U.S. 588 . I know of no exception to this rule that would justify an erroneous interpretation of the statute merely “for purposes of this case.”
TtetjeNS and Tannenwald, JJ., agree with this dissent.