Hawkins, Delafield & Wood v. Michael

OPINION OF THE COURT Memorandum. The judgment of the Appellate Division should be affirmed, with costs. [875] A determination of the Commissioner of Finance should be upheld unless shown to be erroneous, arbitrary or capricious (see, Matter of Holy Spirit Assn. v Tax Commn., 55 NY2d 512, 518; Matter of Koner v Procaccino, 39 NY2d 258, 264-265). Here, the Commissioner denied the deductions claimed by petitioners on the ground that section S46-6.0 (3) of the New York City unincorporated business tax (Administrative Code of City of New York § S46-6.0 [3]) disallows deductions for "amounts paid or incurred to a proprietor or partner for services or for use of capital”. In view of the finding that the retirement payments in question constituted deferred compensation for services performed by the payees or for use of their capital while they were actively engaged in the conduct of the partnership business, and inasmuch as section S46-6.0 (3) contains no language limiting its scope to payments actually made while the payees were still active partners, the Commissioner’s determination was the correct interpretation and application of the statutory provision and, therefore, properly confirmed (see, Matter of Grace v New York State Tax Commn., 37 NY2d 193, 195-197). Chief Judge Wachtler and Judges Meyer, Simons, Alexander, Titone and Hancock, Jr., concur; Judge Kaye taking no part. Judgment affirmed, with costs, in a memorandum.