The opinion
DAVIS, Judge
(dissenting):
The solution to this case lies in one’s evaluation of the scope and purpose of Section 1481 of the 1954 Code. The court applies subsection (a), but then, taking subsection (b) strictly and literally, finds that Congress has made no provision for a case like this in which the renegotiation affects loss-years or years in which there can be no tax “credit” (in the strict use of that term). Therefore, the court holds, the ordinary rules as to interest must apply (after subsection (a) has had its effect). My difference with the court is that I think that Congress intended Section 1481, as a whole, to govern the tax adjustments due to the repayment of excessive profits, and that we should seek to reach that goal by reading subsection (b) to include the present situation. I agree with the court in applying subsection (a), 1 but I do not believe that, in the circumstances here, Congress intended subsection (a) to be used without subsection (b), which takes into account the diminished interest which taxpayer had to pay on its renegotiation repayments.
In adopting Section 1481 (and its predecessor in the 1939 Code) Congress deliberately set out to harmonize the interest to be paid by the Government on tax adjustments (favorable to the contractor) resulting from renegotiation repayments with the interest paid by the contractor to the Government on those repayments. This was done in subsection (b) (3) (formerly Section 3806(b) (4)). However, since the subsection is unfortunately phrased in terms of a “credit” — and there was none here, because of the loss carryover — the court considers it wholly inapplicable to this case. I know of no reason why Congress would wish to give a preference, in recovery of interest, to a taxpayer with such a carryover loss in the renegotiated year, and neither the taxpayer nor the court suggests one. On the other hand, the principles of equality of justice would make one think that Congress intended no such arbitrary exception but desired, rather, that all renegotiated taxpayers should be treated on the same plane with regard to the relationship between the tax interest *511 they would receive and the renegotiation interest they had to pay. 2
To my mind, the language of Section 1481(b), referring to a “credit”, does not preclude carrying out this Congressional purpose. The “credit” under that provision is generally considered the equivalent of a tax refund (see Universal Oil Products Co. v. Campbell, 181 F.2d 451, 478 (C.A. 7), cert. denied, 340 U.S. 850 , 71 S.Ct. 78 , 95 L.Ed. 623 (1950); United States v. Failla, 219 F.2d 212, 215 (C.A. 3, 1955); Miller v. Commissioner of Internal Revenue, 231 F.2d 8 (C.A. 5, 1956), aff’g 23 T.C. 565 (1954); Baltimore Foundry'& Machine Corp. v. Commissioner, 7 T.C. 998, 1001-1002 (1946); Kurtzon v. Commissioner, 17 T.C. 1542, 1548-1549 (1952)) and is merely an administrative substitute for a refund (Stow Mfg. Co. v. Commissioner, 190 F.2d 723, 724-725 (C.A. 2, 1951), cert. denied, 342 U.S. 904 , 72 S.Ct. 295 , 96 L.Ed. 677 (1952); Midvale Co. v. United States, 124 F.Supp. 678, 682 , 129 Ct.Cl. 483, 490 (1954); Holmes Projector Co. v. United States, 105 F. Supp. 690 , 123 Ct.Cl. 278 (1952), cert. denied, 344 U.S. 912 , 73 S.Ct. 334 , 97 L.Ed. 703 (1953); Miller v. Commissioner, 20 T.C. 280, 284 (1953)). “Credit” was the expression used for those tax readjustments, in favor of the taxpayer, which ensued upon the repayment of excessive profits. With respect to this statute, therefore, the word “credited” can be read as if Congress had said “readjusted”, a term which would cover both a technical credit (i. e. an offset) and a refund (i. e. where there could be no offset because no tax was owing, due to the operation of the carryover provisions). If the “credit” here is the substitute for, and has the same function as, a refund, then it makes sense to treat refunds such as those involved in this case as the equivalent of a “credit” under subsection (b), for the purpose of applying the special interest provision in subsection (b) (3). There is no distortion of the idea underlying the word “credit” as it is used in this instance. The strain on the language is less of an obstacle, it seems to me, than the non-fulfillment of the Congressional purpose, and the unequal treatment of taxpayers basically in the same position, which are the price of the more literal reading.
I would hold, therefore, that taxpayer is entitled to recover restricted interest under the terms of Section 1481(b) (3), but not the full amount which the court allows.
. Subsection (a) is broad and unqualified in its terms, and says flatly that “the part of the contract or subcontract price which was received or was accrued for the prior taxable years shall be reduced by the amount of excessive profits eliminated.” Nothing indicates that Congress did not mean what it said. In this very case, the Internal Revenue Service applied subsection (a).
. Since plaintiff’s situation is an unusual one, it seems probable that the draftsmen of section 1481 simply failed to realize that, in choosing the word “credit”, they were picking a term which was not apt to this particular set of circumstances.