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BGG(ÈhH  Z 6Times New Roman RegularX($¡¡c:\office\wpwin\template\opinion.wpt ÅDÆÇUÈUÉUÊÓËÔÕÓ€ßÖ…#%((*2ên$¤¤Ý ƒ!ÝÝ  ÝÓ  Óà  àòòÚ  Ú0Ú  Úóó€€3|xß((3Q$««Ý ƒ!ÝÝ  ÝÔ d ÔTABLE A(ÖÃ9 Z ‹6Times New Roman Regular ˜Ý ƒ Q+ÝÔ d ÔÝ  Ýßq€6;+'h 0  ` Á{ â gæ€E°°x@8[ x‰°°x@8qß 3Ý ƒ Q+ÝÔ d ÔÝ  ÝÔ  ÔC:\OFFICE\WPWIN\GRAPHICS\DRAFT.WPGÿWPC°°—D%&1—D%&1'Ø'3XXXX,,51ÿÿÿ.+3ÿ– `! ¦Ù'¦Ù'þi(²­(S)õc)°«)"G*"G*Óñ)Óñ)|œ)|œ)|œ)-). )–¨(k(×<(yÚ'›ô&[ú%Þ{%U %<I%&|”&¶'½‹'Üj'æ\'3'3'T‰'T‰'¦Ù'1ÿÿÿ3ÿÿÿN `"0(0(¡ª''r&è%äÌ%‚+&\O&=“&9Ê&6'b{'¶Ò'<](Ìx(0(0(13ÿê `#T#+T#+T#+'H+'H+'H+t+t+ÜO+ÜO+ÜO+»-++†×*\*U`*\ *\ *B$*B$**<*I*n*n*¸*¸*eÊ)eÊ)eÊ)±)œ™)¹„)öQ)5)4)gæ( ¨(:(:(R‘(R‘(R‘(§ã(§ã(ê)ê)ê)­¼)™á)•*“=*º“*èÃ*û×*ó*I+I+ÿ `$ñ c,ñ c,â h,Ý i,Ð u,Á ^,± H,¥ ;, $,s ,^ ,I ,0 , D, D,ƒ Ç,ƒ Ç,H -H -H -1 -û$-Ç-…û,-¹,ÐY,lñ+6 +ò++þ*5ò*5ò*?ý*?ý*Te+€¶+Ð ,/k,•,Åa,áF,Ñ,…¸+5O++ãÛ*[*|ú)±Ç)÷ƒ)„¸) J*p ¬*§ +Ç x+ k+; ~+ˆ Î+¯ ÷+Ç ,ñ c,ñ c,1ÿÿÿ3ÿÿÿN `%e É+e É+ˆ ¨+‘ ˆ+„ \+t #+M â* ²*Ê[*r?*Cl*œ*)í*œ†+××+àæ+ &, &,13ÿJ `&Û 50Û 50º 0ž ð/ Þ/U •// F/! ü. ˜. G.\ .\ .v õ-v õ-B Â-1 °-ôw-ôw- e- e- e- N- N- N-k ¢-k ¢-k ¢-š Ò-š Ò- k- k- k-\ -Ž â, [, [,R µ,R µ,¨ -¨ -¨ - -â ¯-} .} .( e.( e.( e.v ¸.v ¸.v ¸.ã $/ã $/ã $/Ë 5/Ë 5/¹ L/¹ L/¹ L/h ó.P ×. ˆ.É ’.± ž.“ ».` í.k 8/± €/Ì œ/è ­/ Ã/ Ã/( Ù/( Ù/ ç/ ç/ ç/ý 0ó 0Û 50Û 50ÿ `'·/·/»/û »/è Ã/Æ ‡/² k/’ J/t +/O /1 / õ.õ ù.Ñ /¹ ,/‹ U/j u/j u/Ê 0Ê 0 a0> †0« î0« î0 1 1z 1z 1z 1 ®0ð …0£ 50q h0` }0, À0 c0ò F0¶ ë/æ Ë/ö ¿/ ¡/ç s/Ô c/™ +/™ +/± /± /Ç /Ç /Ç /þ ;/ O/< |/< |/Ý à.Ý à.P m.P m.P m.Ž ..õ W.{ â.» #/á U/·/·/ Ý ƒên$ÝÓ  Óà  àòòÚ  Ú1Ú  Úóó€€Ý  ÝThese€items€appear€in€Exhibit€8€to€the€Record€on€Appeal€and€represent€only€a€portion€ofÐ ° Ð"The€Sherwin„Williams€Company€Business€Receipts€Generated€By€Investment€TransactionsÏ12/31/90." BÝ ƒên$ÝÓ  Óà  àòòÚ  Ú1Ú  Úóó€€Ý  Ýà ` àThese€items€appear€in€Exhibit€8€to€the€Record€on€Appeal€and€represent€only€a€portion€Ð ° Ðà  àof€"The€Sherwin„Williams€Company€Business€Receipts€Generated€By€Investment€¼à  àTransactions€12/31/90."!"$&Cþÿ<< Cÿÿ BÝ ƒên$ÝÓ  Óà  àòòÚ  Ú1Ú  Úóó€€Ý  Ýà ` àThese€items€appear€in€Exhibit€8€to€the€Record€on€Appeal€and€represent€only€a€portion€Ð ° Ðà  àof€"The€Sherwin„Williams€Company€Business€Receipts€Generated€By€Investment€¼à  àTransactions€12/31/90."(#Ã$òòÚ  Ú0Ú  Úóó(3¯$¢¢Ý ƒ!ÝÝ  Ý ùÝ ƒ¯"ÝÝ  ÝÔ€XNnXXXÔÔ€ÑI XXNnÔÓ  Óò òÔ Ad ÔFILEDÔ€XNnX ÑIÔÐ  ÐÌOctober€21,€1998ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔdAhÔó ó,c½¬AZ‹"Arial Regular         ð? ð? Âõ ðcAR¥€ ÐcAR¥€ Ãõ(\ ¢@R¥€  ð? ð? ®GáSüTAR¥€ ûTAR¥€ Ház®±“@R¥€  ð? ð? €'cAR¥€ ÐcAR¥€ €Àä@R¥€ÐTABLE A  dƒLevel 1Level 2Level 3Level 4Level 5(3¯$££Ý ƒ!ÝÝ  Ý($$””ò òÚ  Ú1Ú  Úó ó(('÷ÿ dxdüÿP Pd 'ÿÿdxd"^yúÿ  <<= 8ÀÿÿÿÿÿÿÿÿÿÿCÿÿ____3 TripledxdCTriple 1+| d d dÝ ƒ!ÝÝ  Ýñßñ›ñßñÒ€°ÒÒ„°ÒÑTR[¤ AØ'ÿ Legal3Ø' AØ'ÿ Legalÿ3Ø'TÑÑ7€ÙXXdðXXdð7ÑÑ  ÑÔ€¼7ؼXXÔÓ*°ØX‡X®È‘X°œX*ÓñÊñÖ€ ÿÿÖñÊññßññßññßññÕñœñÕñßr€)<,(j 8` `€€@Eô±` 8ttxP,°ð  rßñßññÕññÕññßñßt€)>.*jxLe` `€€@E@` 8ttxPx°4 e tß›ñßñTHE€SHERWIN„WILLIAMS€COMPANY,à ~ à)Ð ° Ðà Ø àà 0 àà ˆ àà à àà 8 àà  àà ~ à)Ìà Ø àPlaintiff/Appellant,à 8 àà  àà ~ à)Ð Ü, Ðà Ø àà 0 àà ˆ àà à àà 8 àà  àà ~ à)ÌÓ9€¨(‡X~ôðX°ØX‡X®È‘X9Óv.à Ø àà 0 àà ˆ àà à àà 8 àà  àà ~ à)€à ô àAppeal€No.Ð  X Ðà Ø àà 0 àà ˆ àà à àà 8 àà  àà ~ à)à ô à01„A„01„9711„CH„Ð  n Ð00651ÌœRUTH€E.€JOHNSON,›€Commissioner€ofà ~ à)€à ô àÐ J š ÐRevenue,€State€of€Tennessee,à 8 àà  àà ~ à)à ô àDavidson€ChanceryÐ ` ° Ðà Ø àà 0 àà ˆ àà à àà 8 àà  àà ~ à)à ô àNo.€93„2721„IÐ vÆ  Ðà Ø àDefendant/Appellee.€à 8 àà  àà ~ à)Ð ŒÜ  ÐÌÌÓ  ÓCOURT€OF€APPEALS€OF€TENNESSEEÌÌÌAPPEAL€FROM€THE€DAVIDSON€COUNTY€CHANCERY€COURTÌÌAT€NASHVILLE,€TENNESSEEÌÌÌTHE€HONORABLE€IRVIN€H.€KILCREASE,€JR.,€CHANCELLORÌÌÓ  ÓÌMICHAEL€D.€SONTAGÌBRYAN€W.€METCALFÌBass,€Berry€&€SimsÌ2700€First€American€CenterÌNashville,€Tennessee€€37238„2700ÌÌMICHAEL€T.€CUMMINSÌJOSEPH€F.€TIMMONSÌThe€Sherwin€Williams€Co.Ì101€Prospect€Avenue,€N.W.ÌCleveland,€Ohio€€44115à à àÐ œ)ì$" Ðà Ø àATTORNEYS€FOR€PLAINTIFF/APPELLANTÌÌÌÌJOHN€KNOX€WALKUPÌAttorney€General€and€ReporterÌÌJOE€C.€PEELÌCordell€Hull€Building,€Second€FloorÌ425€Fifth€Avenue€NorthÌNashville,€Tennessee€€37243„0489Ìà Ø àATTORNEYS€FOR€DEFENDANT/APPELLEEÌÌÌÓ  ÓAFFIRMED€AND€REMANDEDÌÐ ü:L62w ÐÓ  ÓÌWILLIAM€B.€CAIN,€JUDGEÌÌÖ€ÿÿÖÓ  Óò òÔ‡„¼‰„¼¼7ØÔòòO€P€I€N€I€O€NóóÔ#†¼7ؼ„„¼‰ #Ôó óÐ òB ÐÓ  Ӝ̛à Ø àÌÓ€ÓÓ  Óà Ø àÔ‡ ¼â}¼¼¼7ØÔPlaintiff€Sherwin„Williams€Company€filed€suit€pursuant€to€Tennessee€CodeÐ † Ö ÐAnnotated€section€67„1„1802€seeking€a€refund€of€corporate€excise€taxes€withÏrespect€to€tax€years€1987,€1988,€1989€and€1990.€€The€appeal€presents€threeÏquestions,€to„wit:Ìà Ø à1.à 0 àIs€return€of€capital€from€cash€investments€includable€in€theÐ æ6  Ðdenominator€under€T.C.A.€67„4„811(g)(1)?Ìà Ø à2.à 0 àIf€the€answer€to€question€1€is€affirmative,€did€the€commissionerÐ f Ðproperly€exercise€his€discretion€under€T.C.A.€67„4„812(a)€in€varying€the€statutoryÏformula?Ìà Ø à3.à 0 àIs€Sherwin„Williams'€refund€claim€for€the€year€1987€barred€by€theÐ Þ. Ðstatute€of€limitations?ÌÌà Ø àTennessee€adopted€the€Uniform€Division€of€Income€for€Tax€Purposes€ActÏ(UDITPA)€in€1976€and€it€is€codified€in€Tennessee€Code€Annotated€section€67„4„¼801€et€seq.ÌÌà Ø àThere€is€little€factual€dispute€between€the€parties€and€the€problem€inÏquestion€number€one€is€best€stated€in€the€brief€of€the€appellee.ÌÓ€Óà8 Ø àà 0 àÔ€ XÈcX¼ ¼â}ÔThe€central€issue€in€this€case€involves€the€determination€of€the€properÐ 6(†#* Ðcalculation€of€the€denominator€of€the€sales€factor€in€the€statutory€apportionmentÏformula.€€The€Tennessee€Excise€Tax€law€in€effect€in€1987€through€1990Ïrequired€the€Plaintiff€to€pay€an€excise€tax€equal€to€six€percent€(6%)€of€its€"netÏearnings"€as€defined€in€T.C.A.€ðð€67„4„805.€€Corporations€doing€business€bothÏwithin€and€without€Tennessee€are€permitted€to€allocate€and€apportion€theirÏtaxable€income€under€the€provisions€found€in€T.C.A.€ðððð€67„4„809€through€67„4„¼816.€€These€apportionment€provisions€were€adopted€by€the€Tennessee€GeneralÏAssembly€in€1976€in€Chapter€537,€Public€Acts€of€1976€which€was€based€uponÏthe€Uniform€Division€of€Income€for€Tax€Purposes€Act€(UDITPA).€€SinceÏSherwin€Williams€was€engaged€in€business€both€within€and€without€the€StateÏof€Tennessee€during€the€years€in€question,€it€was€required€by€T.C.A.€ðð€67„4„809Ïto€apportion€its€business€earnings€in€accordance€with€the€apportionment€formulaÏfound€in€T.C.A.€ðð€67„4„811.Ð Ø ü!Ø ü! ÐÌà8 Ø àà 0 àT.C.A.€ðð€67„4„811€defines€the€standard€apportionment€formula€as€aÏfraction,€the€numerator€of€which€is€the€sum€of€the€property,€payroll€and€salesÏfactors€of€each€taxpayer€as€defined€in€the€statute€and€the€denominator€is€threeÏ(3).€€The€statute€defines€each€factor€as€a€fraction€in€which€the€numerator€is€theÏtaxpayer's€respective€property,€payroll€or€sales€values€in€Tennessee€and€theÐ º9 5= Ðdenominator€is€the€taxpayer's€respective€property,€payroll€or€sales€values€in€allÏjurisdictions.Ð Ø ü!Ø ü! ÐÌÐ :d5> МÓE"€ ¨(‚X" ˆƒX~ôðX€¨(‡X~ôðXEÓà8 Ø àà " àThe›€provisions€of€T.C.A.€ðð€67„4„811€read€in€pertinent€part€are€as€œfollows:Ð Ø ü!Ø ü! Л̜ÓH€¨(€" 0 [à–X€ ¨(‚X" ˆƒX~ôðXHÓà8 " àà80 " ² " ² à(a)›à [ àAll€business€earnings€shall€be€apportioned€to€this€state€byÐ ˆØ Ðmultiplying€the€earnings€by€a€fraction,€the€numerator€of€whichÏis€the€property€factor€plus€the€payroll€factor€plus€the€sales€factor,Ïand€the€denominator€of€which€is€three€(3);€.€.€.Ð 0 ¤0 ¤ ÐÌà8 " àœà80 " ² " ² à(b)(1)à [ àThe›€property€factor€is€a€fraction,€the€numerator€of€whichÐ $ t Ðis€the€average€value€of€the€taxpayer's€real€and€tangible€andÏpersonal€property€owned€or€rented€and€used€in€this€state€duringÏthe€tax€period€and€the€denominator€of€which€is€the€average€valueÏof€all€the€taxpayer's€real€and€tangible€property.Ð 0 ¤0 ¤ ÐÌÓ  Óœ*›€*€*ÌÌÓ  Óœà8 " à›à80 " ² " ² à(e)(1)à [ àThe€payroll€factor€is€a€fraction,€the€numerator€of€whichÐ „Ô  Ðis€the€total€amount€paid€in€this€state€during€the€tax€period€by€theÏtaxpayer€for€compensation,€and€the€denominator€of€which€is€theÏtotal€compensation€paid€everywhere€during€the€tax€period.Ð 0 ¤0 ¤ ÐÌÓ  Óœ*›€*€*ÌÌÓ  Óà8 " àœà80 " ² " ² à(g)(1)›à [ àThe€sales€factor€is€a€fraction,€the€numerator€of€which€isÐ øH Ðthe€total€sales€of€the€taxpayer€in€this€state€during€the€tax€period,Ïand€the€denominator€of€which€is€the€total€sales€of€the€taxpayerÏeverywhere€during€the€tax€period.Ð 0 ¤0 ¤ ÐÌÌœÓ?€¨(‚X" à–X€¨(€" 0 [à–X?Óà8 Ø àà " àT.ñÊñ›ñÊñC.ñÊñ›ñÊñA.›€œð𛀜67„4„80[4](a)(12)›€defines€"sales"€as€œfollows:Ð Ø ü!Ø ü! Л̜Ó?€¨(‚X" N à–X€¨(‚X" à–X?Óà8 Ø àà8" Ø ü!Ø ü!àà8N " ² " ² àà  à"Sales"›€means€all€gross€receipts€of€the€taxpayer€notÏallocated€under€this€chapter.Ð N †N † ÐÌœà8 Ø àà " àIn›€the€present€case,€the€Plaintiff€derived€income€from€the€short„termÏinvestment€of€its€excess€working€capital.€€These€transactions€were€handled€inÏthe€Plaintiff's€Cleveland€office€by€its€treasury€department€personnel.€€On€a€dailyÏbasis,€the€treasury€personnel€consolidated€the€bank€accounts€of€the€Plaintiff'sÏvarious€locations€in€the€states€where€Sherwin„Williams€conducts€its€businessÏoperations.€€The€treasury€personnel€determined€the€cash€position€of€the€PlaintiffÏand€its€future€funding€needs.€€Any€excess€cash€was€invested€in€short„termÏinterest€bearing€securities€with€various€maturities.€€...€€For€example,€Sherwin„¼Williams€wire€transferred€$11,000,000€for€a€one€day€deposit€to€the€Signet€BankÏon€January€3,€1990.€€...€€The€next€day,€January€4,€1990,€Signet€Bank€wireÏtransferred€the€principal€amount€of€$11,000,000€back€to€Sherwin„Williams€plusÏinterest€in€the€amount€of€$2,539.93.€€Generally,€all€working€capital€transactionsÏinvolve€investments€in€which€Sherwin„Williams€makes€an€investment€of€fundsÏin€short„term€interest€bearing€securities.€€Sherwin„Williams€will€usually€holdÏthe€securities€to€maturity€but€if€necessary€to€meet€cash€requirement,€Sherwin„¼Williams€may€sell€such€securities.€€Ð Ø ü!Ø ü! ÐÌœà8 Ø àà " àIn›€this€case,€the€parties€are€agreed€that€the€interest€income€and€anyÏgains(losses)€should€be€included€in€the€denominator€of€the€sales€factor.€ÏSherwin„Williams€contends,€however,€that€the€principal€amounts€of€the€workingÏcapital€invested€which€are€returned€to€Sherwin„Williams€when€the€securitiesÏmature€and€are€redeemed€or€sold€are€also€required€to€be€included€in€theÏdenominator€of€the€sales€factor.€€The€Plaintiff€contends€that€the€term€"totalÏsales"€in€the€denominator€of€the€sales€factor€of€the€statutory€apportionmentÏformula€requires€the€inclusion€of€not€only€the€interest€income€and€any€gainsÏfrom€the€working€capital€transactions€but€also€the€amounts€of€the€returnedÐ (:x5: Ðprincipal€from€the€working€capital€investment€operations.€€The€CommissionerÏdetermined€that€only€the€total€income€[interest€income€and€any€gains(losses)]Ïfrom€the€working€capital€investments€should€be€included€in€the€computation€ofÏthe€denominator€of€the€sales€factor€and€not€the€returned€amounts€of€principalÏinvested€in€the€working€capital€investments.€€Thus,€the€key€question€is€whetherÏthe€returned€principal€amounts€are€properly€included€in€"total€sales€everywhere"Ïunder€the€proper€application€of€the€above€referenced€statutes.Ð Ø ü!Ø ü! ÐÌÓ€ÓÌÔ€ ¼Þ¼X X4:Ôà Ø àThe€position€of€Sherwin„Williams€is€that€Tennessee€Code€AnnotatedÐ r   Ðsection€œ67„4„804(a)(12)›€means€literally€what€it€says€œwhen›€calculating€"€.€.€.€totalÏsales€of€the€taxpayer€everywhere€.€.€.€"€œper€Tennessee€Code€Annotated€section€67„¼4„811(g)(1).›€€The€former€section€reads:€€"Sales€„€All€gross€receipts€of€the€taxpayerÏnot€allocated€under€this€œchapter."€€Tenn.€Code€Ann.€ðð€67„4„804(a)(12)(1997).€Ï(This€subsection€has€been€recodified€as€Tenn.€Code€Ann.€ððÔ#†¼Þ¼¼ ¼ÞN #ÔÔ‡ ¼Þ¼¼¼ÞÔ€67„4„804(a)(15)Ð jº Ð(1998)).›ÌÌà Ø àSherwin„Williams€articulates€its€position€on€this€issue€in€œits€reply›€brief€withÏclarity:ÌÓ€Óà8 Ø àà " àÔ€ X4:X¼ ¼ÞÔThe€statute€clearly€contemplates€the€inclusion€in€the€sales€factor€of€grossÐ b² Ðreceipts€from€the€sale€of€intangible€property€as€well€as€from€the€sale€of€tangibleÏproperty.€€In€fact,€the€statute€details€a€specific€method€of€determining€whetherÏ"sales,€other€than€sales€of€tangible€personal€property"€occur€in€the€State€ofÏTennessee.€œ€òòSeeóó›€Tenn.€Code€Ann.€ðð€67„4„811(I)€(providing,€generally,€that€if€theÐ !b" Ðmajority€of€the€"earnings€producing€activities"€with€respect€to€the€sale€ofÏintangibles€occur€in€Tennessee,€then€the€sale€is€deemed€to€occur€in€Tennessee).Ð Ø ü!Ø ü! ÐÌà8 Ø àà " àRather€than€including€the€gross€receipts€from€the€sale€of€these€investmentsÏin€the€denominator€of€the€sales€factor,€the€Commissioner€included€only€theÏinterest€income€and€net€gain€(loss)€from€the€Ohio€Transactions€investments€inÏthe€denominator€when€she€recomputed€the€amount€of€Sherwin„William'sÏincome€apportioned€to€Tennessee.€€This€interpretation€of€Tenn.€Code€Ann.€ðð€67„¼4„811(g)(1)€(describing€the€sales€factor)€and€67„4„804(a)(12)€(defining€"sales"Ïas€meaning€all€òògrossóó€òòreceiptsóó€of€the€taxpayer€not€allocated€under€the€excise€taxÐ J*š%, Ðlaw)€cannot€be€reconciled€with€the€plain€language€of€those€sections.€€Courts€areÏrequired€to€give€effect€to€the€intention€or€purpose€of€the€legislature€as€expressedÏin€a€statute,€and€the€"legislative€intent€or€purpose€is€to€be€ascertained€primarilyÏfrom€the€natural€and€ordinary€meaning€of€the€language€used,€when€read€inÏcontext€with€the€entire€statute,€without€any€forced€or€subtle€construction€to€limitÏor€extend€the€import€of€the€language."€€òòWorrall€v.€Kroger€Co.óó,€545€S.W.2d€736,Ð Ò/"+2 Ð738€(Tenn.€1977).Ð Ø ü!Ø ü! ÐÌà8 Ø àà " àThe€natural€and€ordinary€meaning€of€Tenn.€Code€Ann.€ðð€67„4„811(g)(1)Ïrequires€that€the€total€sales€of€the€taxpayer€everywhere€during€the€tax€period€beÏincluded€in€the€denominator€of€the€sales€factor.€€Tenn.€Code€Ann.€ðð€67„4„¼804(a)(12)€defines€the€term€"sales"€to€include€all€òògross€receiptsóó€of€the€taxpayerÐ Z5ª08 Ðnot€otherwise€allocated€under€the€Excise€Tax€Law.€€The€natural€and€ordinaryÏmeaning€of€the€term€"gross€receipts"€mandates€that€the€òòtotalóó€or€òògrossóó€proceedsÐ 27‚2: Ðfrom€the€Ohio€Transactions€(that€is;€the€income€òòandóó€the€return€ofÐ 8n3; Ðprincipal/capital)€be€included€in€the€sales€factor.€€Certainly€the€term€"grossÏreceipts"€cannot€be€construed€to€include€only€the€òònetóó€income€and€òònetóó€gainÐ ö9F5= Ðderived€from€the€sale€of€short„term€investments.€€In€fact,€Sherwin„WilliamsÏrespectfully€submits€that€the€terms€"gross"€and€"net"€are€mutually€exclusive:€ÏòòWebster's€Third€New€International€Dictionaryóó€defines€the€term€"gross"€asÐ ˆØ Ð"consisting€of€an€overall€total€exclusive€of€deductions€œ(~earnings)(~pro„¼duction)(~annual›€profit)€„„€òòopposed€to€netóó."€(emphasis€added).€€The€statute€isÐ `° Ðnot€ambiguous€and€leaves€no€basis€for€which€the€Commissioner€may€contendÏthat€the€natural€and€ordinary€meaning€of€"gross€receipts"€as€used€in€the€salesÏfactor€should€somehow€be€ignored.€€€à è à€Ð$ tØ ü!Ø ü! ÐÌÓ€ÓÌà Ø àÔ€ ¼Þ¼X X4:ÔThe€efforts€by€taxpayers€to€include€return€of€working€capital€invested€in€theÐ ^®  Ðdenominator€of€the€sales€factor€is€not€new€to€states€operating€under€the€UniformÏDivision€of€Income€for€Tax€Purposes€Act€or€under€comparable€legislativeÏenactments.€€The€result€in€each€instance€is€a€hyper„inflated€sales€factor.ÌÌà Ø àIn€ò òòòAmerican€Telephone€and€Telegraph€Co.€v.€Director,€Division€ofÐ V¦ ÐTaxationó óóó,€476€œA.2d›€800€œ(N.J.›€1984)€the€taxpayer€included€in€its€1972€corporationÐ ñA Ðbusiness€tax€returns€total€receipts€in€the€denominator€of€eight€billion€sevenÏhundred€ninety„six€million€nine€hundred€sixty„one€thousand€one€hundred€fifty„¼seven€dollars.€€Of€this€amount,€proceeds€received€from€the€sale€or€redemption€ofÏinvestment€paper€total€six€billion€eight€hundred€fifteen€million€seven€hundredÏninety„two€thousand€three€hundred€three€dollars,€of€which€more€than€five€billion€Ïeight€hundred€million€dollars€represented€money€flowing€back€to€AT&T€fromÏcertificates€of€deposit,€commercial€paper,€and€bankers'€acceptances.€€During€thisÏsame€year,€1972,€the€total€aggregate€receipts€from€AT&T's€business€of€renderingÏtelecommunications€service€nationally€and€internationally€was€approximately€oneÏbillion€nine€hundred€million€dollars.ÌÌà Ø àApplying€the€New€Jersey€statute€the€court€held:ÌÓ€Óà8 Ø àÔ€ X4:X¼ ¼ÞÔà " à[1]€€We€uphold€as€a€general€matter€the€exclusion€of€gross€revenues€receivedÐ ¬,ü'1 Ðby€plaintiff€from€the€sale€or€maturity€of€investment€paper.€€As€Judge€CrabtreeÏobserved,€idle€cash€can€be€turned€over€repeatedly€by€investment€in€short€termÏsecurities.€€It€is€no€true€reflection€of€the€scope€of€AT€&€T's€business€done€withinÏand€without€New€Jersey€to€allocate€to€the€numerator€or€the€denominator€of€theÏreceipts€fraction€the€full€amount€of€money€returned€to€AT€&€T€upon€the€sale€orÏredemption€of€investment€paper.€€To€include€such€receipts€in€the€fraction€wouldÏbe€comparable€to€measuring€business€activity€by€the€amount€of€money€that€aÏtaxpayer€repeatedly€deposited€and€withdrew€from€its€own€bank€account.€€TheÏbulk€of€funds€flowing€back€to€AT€&€T€from€investment€paper€was€simply€itsÏown€money.€€Whatever€other€justification€there€is€for€excluding€such€revenuesÏfrom€the€receipts€fraction,€it€is€sufficient€to€say€that€to€do€otherwise€producesÏan€absurd€interpretation€of€ðð€6(B).€€"It€is€axiomatic€that€a€statute€will€not€beÏconstrued€to€lead€to€absurd€results.€€All€rules€of€construction€are€subordinate€toÏthat€obvious€proposition.€€[Even€the€rule€of€strict€construction]€does€not€meanÐ ”9ä4? Ðthat€a€ridiculous€result€shall€be€reached€because€some€ingenious€path€may€beÏfound€to€that€end."€€State€v.€Provenzano,€œ34€N.J.€318,€322,€169›€œA.2d›€135Ï(1961).Ð Ø ü!Ø ü! ÐÌœò òòò€€€€€€€€ñÂññÁñ€€ñÁññÂñAmerican›€Telephone€and€Telegraph€Co.€v.€Director€Division€of€Taxationó óóó,€476€œA.2d›€800,€œñÃñÐ `° Ѐ€€€€€ñÃñ802€(N.J.€1984).›ÌÌÌÓ€ÓÔ€ ¼Þ¼X X4:Ôà Ø àIn€1996,€the€Indiana€tax€court€dealt€with€a€statute€almost€identical€to€that€ofÐ  ` ÐTennessee€wherein€Sherwin„Williams€sought€to€include€return€of€principal€in€theÏdenominator€of€the€sales€factor€where€"sales"€was€defined€as€"€.€.€.€all€grossÏreceipts€of€the€taxpayer€not€allocated€under€i.c.€6„3„2„2(g)€through€1c6„3„2„2(k)."ÌÌà Ø àThe€court€observed:ÌÓ€Óà8 Ø àà " àÔ€ X4:X¼ ¼ÞÔThe€central€debate€in€this€case€is€how€to€define€"gross€receipts"€for€theÐ  ð Ðpurpose€of€the€denominator€of€the€sales€factor.€€The€Department€considers€onlyÏthe€interest€earned€on€the€investment€securities€to€be€gross€receipts.€€Sherwin„¼Williams,€on€the€other€hand,€argues€that€gross€receipts€equals€the€amountÏreceived€on€the€sale,€which€includes€both€the€interest€earned€and€the€principal.€ÏThe€Department€responds€that€inclusion€of€principal€in€the€denominator€distortsÏthe€apportionment€formula€by€giving€extra€weight€to€out„of„state€sales.€€ThereÏis€a€great€potential€for€abuse,€argues€the€Department,€because€Sherwin„WilliamsÏcould€use€the€same€principal€many€times€as€it€re„invests€in€short„term€securities,Ïrolling€[*7]€over€the€principal€of€the€previously€sold€investment.Ð Ø ü!Ø ü! ÐÌœò òòò€€€€€€€The›€Sherwin„Williams€Co.€v.€Indiana€Dep't€of€State€Revenueó óóó,€673€œN.E.2d›€849,€€œ851€€€€Ð Ä Ѐ€€€€€€(Ind.›€Tax€Ct.€1996).ÌÌÓ€ÓÌà Ø àÔ€ ¼Þ¼X X4:ÔRelying€on€òòò òAT&T€v.€Directoró óóó,€€476€œA.2d›€800€œ(N.J.›€1984),€the€Indiana€courtÐ ê#:$ Ðheld€that€"gross€receipts"€did€not€include€return€of€principal.€ÌÌà Ø àTurning€now€to€the€effect€in€Tennessee€of€including€return€of€principal€inÏthe€"sales€œfactor",€one›€must€remember€that€the€principal€business€of€Sherwin„¼Williams€nationwide€is€the€manufacture€and€sale€of€paint€and€related€products.€ÏNationwide€gross€receipts€from€these€operations€for€each€of€the€years€in€issue€areÏas€follows:Ìà Ø à1987à N à$1,751,029,652Ð ­0ý+4 Ðà Ø à1988à N à$1,908,933,782Ð E2•-6 Ðà Ø à1989à N à$2,016,485,025Ð Ý3-/8 Ðà Ø à1990à N à$2,190,709,853Ð u5Å0: ÐÌœà Ø àÐ ¥8õ3> Ðà Ø àDuring›€those€same€years,€return€of€principal€was:Ìà Ø à1987à N à$2,008,053,464Ð H˜ Ðà Ø à1988à N à$1,595,783,455Ð à0 Ðà Ø à1989à N à$3,320,585,868Ð x È Ðà Ø à1990à N à$3,098,033,766Ð  ` ÐÌà Ø àIf€the€gross€receipts€from€manufacturing€and€sale€of€paint€and€relatedÏproducts€are€then€combined€with€return€of€principal€amounts€in€determining€theÏdenominator€in€the€"sales€factor",€an€average€of€55.169%€of€the€combined€total€forÏeach€year€would€be€return€of€principal.ÌÌà Ø àThus,€the€same€absurdity€existing€in€New€Jersey€and€Indiana€would€existÏin€Tennessee.ÌÌà Ø àFollowing€the€lead€of€New€Jersey€and€Indiana,€the€chancellor€held:€€ÌÓ€Óà8 Ø àÔ€ X4:X¼ ¼ÞÔThis€court€finds€that€to€include€return€of€principal€in€the€sales€factorÐ ˜è Ðdenominator€would€distort€the€extent€of€Sherwin„Williams'€business€activitiesÏin€Tennessee€and€other€states€in€which€it€does€business€and€defeat€the€intent€andÏpurpose€of€the€statute€(T.C.A.€67„4„811).€€Accordingly,€the€court€finds€that€theÏamount€of€return€of€principal€to€Sherwin„Williams€on€the€sale€or€redemption€ofÏinterest€bearing€securities€related€to€œits,›€working€capital€investments€should€notÏbe€included€in€the€denominator€of€the€sales€œfactor.€[sic]›€€€Ð Ø ü!Ø ü! ÐÌÌÓ€ÓÔ€ ¼Þ¼X X4:Ôà Ø àThis€holding€by€the€chancellor€is€logical€and€appealing,€particularly€since;Ð ä$4 ' Ð"It€is€presumed€that€the€legislature€enacting€a€statute€did€not€intend€an€absurdity,Ïand€such€a€result€will€be€avoided€by€this€court€if€the€terms€of€the€statute€admit€ofÏit€by€reasonable€construction."€€ò òòòEpstein€v.€Stateó óóó,€œ211€Tenn.€633,€366›€S.W.2d€914Ð ¬)ü$- М(1963);›€ò òòòLoftin€v.€Langsdonó óóó,€813€S.W.2d€475,€480€(Tenn.€App.€1991).Ð G+—&/ ÐÌà Ø àThis€sound€rule,€however,€is€met€by€the€equally€well€settled€rule€that:€€"IfÏthe€words€of€a€statute€plainly€mean€one€thing€they€cannot€be€given€anotherÏmeaning€by€judicial€construction."€€ò òòòHenry€v.€Whiteó óóó,€œ194€Tenn.€192,€198,€250›Ð ª1ú,7 ÐS.W.2d€70,€72€œ(1952).›ÌÌà Ø àIn€construing€the€term€"gross€receipts"€under€Tennessee€Code€AnnotatedÏsection€67„4„301,€the€Supreme€Court€of€Tennessee€observed:€€"We€do€not€believeÏthat€the€definition€of€'gross€receipts'€under€T.C.A.€67„4„301€is€ambiguous€so€as€toÐ ¥9õ4A Ðrequire€resort€to€rules€dealing€with€the€construction€of€unclear€statutes."€€ò òòòSouthÐ ° ÐCentral€Bell€Tele.€Co.€v.€Olsonó óóó,€669€S.W.2d€650,€652€(Tenn.€1984).Ð K› ÐÌà Ø àœWith€deference€to€sister€jurisdictions,€this€court€is€reluctant€to€apply€theÏsame€ð ðabsurd›€result€œstandardðð.›€€œAn€absurd€result€is€not€necessary€for,€in›€spite€ofÏthe€plain€language€of€Tennessee€Code€Annotated€section€67„4„811(g)(1),€€theÏcommissioner€may€opt€for€a€different€scheme€of€assessment€œwhenever›€theÏresulting€apportionment€does€not€fairly€represent€the€taxpayerððs€business€in€thisÏstate.€€The€very€absurdity€of€the€result€sought€by€Sherwin„Williams,€lays€a€soundÏbasis€for€the€implementation€of€Tennessee€Code€Annotated€section€œ67„4„812(a).Ô#†¼Þ¼¼ ¼ÞÞ)#ԀР^ ÐThe€trial€court€found€that€applying€the€statutory€scheme€would€"distort€the€extentÏof€Sherwin„Williams'€business€in€Tennessee€.€.€.€,"€and€applied€the€alternativeÏmethod.›ÌœÌ›à Ø àœThe›€alternative€statute€is€clear€upon€its€face:ÌÓ€Óà8 Ø àà8" Ø ü!Ø ü!àœÔ€X4:X¼¼ÞÔ(a)€If›€the€allocation€and€apportionment€provisions€of€this€part€do€notÐ žî Ðfairly€represent€the€extent€of€the€taxpayerððs€business€activity€in€thisÏstate,€the€taxpayer€may€petition€for€òòor€the€commissioner€may€requireóó,Ð vÆ  Ðin€respect€to€all€or€any€part€of€the€taxpayerððs€business€activity,€ifÏreasonable:Ð " ² " ²  ÐÓ  Ó.€€€€.€€€€.€ÌÓ  Óà8 Ø àà8" Ø ü!Ø ü!à(4)€The€employment€of€any€other€method€to€effectuate€an€equitableÏallocation€and€apportionment€of€the€taxpayerððs€earnings.€Tenn.€CodeÏAnn.ò ò€ó óðð€67„4„812(a)(4)€(1994).òòemphasis€œaddedóóÐþ#N&" ² " ²  ЛÌÌÓ€Óà Ø àœÔ€¼Þ¼XX4:ÔThe›€real€question€to€be€answered€is€whether,€as€a€matter€of€law,€theÐ Æ&") Ðvariation€in€this€case€amounts€to€an€abuse€of€discretion.€€Using€the€terminology€ofÏthe€statute,€the€commissioner€has€abused€his€discretion€where€the€alternativeÏcomputation€reaches€an€inequitable€result€as€to€the€apportionment.€ÌÌà Ø àIn€utilizing€the€variation,€the€œCommissioner›€found,€as€did€the€œChancellor,›Ïthat€by€including€the€gross€receipts€from€the€sales€of€short€term€securities,ÏSherwin„Williams€did€not€fairly€and€accurately€represent€the€total€amount€ofÏproperty,€payroll€and€sales€subject€to€state€taxation€(the€denominator),€andÏtherefore€did€not€fairly€represent€the€amount€of€property€subject€to€taxation€in€thisÏstate,€(the€ratio€constructed€using€the€above€denominator).€€Ì̜Рæ965A Лà Ø àSherwin„Williams€argues€that€absent€a€ð ðgrossly€disproportionateðð€ratio€asÏdescribed€by€this€court€in€ò òòòAT&T€v.€Huddlestonóóó ó,€880€S.W.2d€682€at€692€(Tenn.Ct.Ð H˜ ÐApp.€1994),€the€alternative€œstatute,›€œTennessee€Code€Anotated€section›€œ67„4„812Ï(a)(4),›€cannot€be€used.€€Both€parties€as€well€as€the€trial€court€have€acknowledgedÏthat€the€situation€at€bar€represents€a€case€of€first€impression€insofar€as€it€concernsÏa€Commissioner€who€seeks€a€variance€rather€than€a€taxpayer.€€The€two€TennesseeÏcases€that€come€closest€to€addressing€this€situation,€ò òòòAT&T€v.€Huddlestonóó,€ó óòò€óó880Ð C“  ÐS.W.2d€682€(Tenn.€Ct.€App.€1994)€and€ò òòòPeterson€Mfg.€œCo.›€v.€Stateóóó ó,€779€S.W.2dÐ á1  Ð784€(Tenn.€1989),€concern€taxpayers€seeking€a€variance.ÌÌà Ø àThere€is,€however,€much€guidance€to€be€drawn€from€these€authoritativeÏsources.€€Contrary€to€Sherwin„Williams€assertion€in€its€brief,€this€court€in€ò òòòAT&Tó óóóÐ D” Ðfound€that:€ÌÓ€Óà8 Ø àÔ€X4:X¼¼ÞÔà8" Ø ü!Ø ü!àStates€are€given€wide€latitude€under€the€Federal€Constitution€to€adoptÐ wÇ Ðvarious€methods€for€attributing€earnings€to€a€taxing€state.€€òòSeeÐ c³ ÐMoorman€Mfg.€Co.€v.€Bair,€óó437€U.S.€267,€279,€98€S.Ct.€2340,€2347„48,Ð OŸ Ð57€L.Ed.2d€197,€208€(1978).€€ð ð[T]he€Constitution€imposes€no€singleÏformula€on€the€œStates...ðð€Container›€Corp.,€463€U.S.€at€164,€103€S.Ct.Ïat€2939,€77€L.Ed.2d€at€552.Ð " ² " ²  ÐÌœò òòò€€€€€€€€€€AT&T›€v.€Huddlestonóóó ó,€880€S.W.2d€682,€689€œ(Tenn.Ct.App.›€1994).Ð ë;! ÐÌœÌ̛ӀÓà Ø àÔ€¼Þ¼XX4:ÔIndeed€the€court€in€ò òòòAT&Tó óóó€cited€ò òòòPetersonóóó ó€for€the€proposition€that€the€burdenÐ ›#ë% Ðis€on€a€taxpayer€to€establish€that€ð ðits€own€unique€facts€and€circumstances€justifyÏa€departure€from€the€standard€apportionment€formula.ððò ò€€òòAT&T€v.€Huddlestonóóó ó,€880Ð Î&") ÐS.W.2d€682€at€691.€€It€can€well€be€said€that€under€the€above€authorities€theÏstatutory€apportionment€scheme€is€presumptively€correct.€€However€what€can€aÏstate€do€when€faced€with€a€statutory€scheme€which€does€not€fairly€represent€theÏtaxpayerððs€income€attributable€to€that€state?€€€The€three€factor€apportionmentÏformula€applied€is€clearly€set€out€in€Tennesseeððs€version€of€the€UniformÏDistribution€of€Income€for€Tax€Purposes€Act€(UDITPA).€€The€goal€of€theÏUDITPA€is€not€pinpoint€mathematical€accuracy€but€fair€apportionment.€€ò òòòSeeóó€ó óTenn.Ð ü1L-7 ÐCode€Ann.ò ò€ó óðð€67„4„804(b)€œ(1998).›€œñÄñ€ñÄñThe›€discretion€accorded€the€Commissioner€asÐ š3ê.9 Ðwell€as€the€bilateral€ability€to€request€a€variance€evidence€this€goal.€€ò òòòSeeóó€ó óTenn.Ð 85ˆ0; ÐCode€Ann.€ðð€œ67„4„812›€œ(1998).›€€It€is€clear€from€the€record€before€this€court€that€theÏCommissioner€acted€well€within€his€discretion.€€At€œñÅñ€ñÅñthis›€point,€this€court€mustÏexamine€the€nature€of€the€transactions€which€the€taxpayer€claimed€were€ð ðsalesððÐ :V5A Ðbelow.€€The€courtððs€attention€is€drawn€specifically€to€the€following€series€ofÏœtransactions:Ì›Ô*wƒ ddd Xdd Xdd X€T$€T$wÔÔ,« dd ÔÔ,edd ÔÔ,£dd ÔÔ,ûdd ÔÔ,ûdd ÔÔ,Ïdd ÔÔ+  ÔÐ  à0 „„ÐÔ‡Â÷š ¼¼ÞÔDESCRIPTIONÐ 'D”" „„'ÐDATEÏACQUIREDÐ 'L œ" „„'ÐDATEÏSOLDÐ 'L œ " „„'ÐGROSS€SALESÏPRICEÐ 'L œ" „„'ÐCOST€ORÏOTHER€BASISÐ 'L œ" „„'ÐGAIN€ORÏLOSSÔ#†¼Þ¼ ÂÂ÷šjo#ÔÔ‡ô ô ô¼¼ÞÔÐ L œ" ÐFNC€ETD€MATURITYÐ   à Ð1/3/90Ð   à Ð1/4/90Ð D:  à Âõ ðcA 10002309.03ˆR¥€ˆ‰Âõ ðcA‰DÐ$10,002,309.03Ð si8 àR¥€ Âõ ðcA 10002309.03 Âõ ðcA ÐcA 10000000.00ˆR¥€ˆ‰ÐcA‰sÐ$10,000,000.00Ð oe8 àR¥€ ÐcA 10000000.00 ÐcA Ãõ(\ ¢@2309.03ˆR¥€ˆ‰Ãõ(\ ¢@‰oÐ$2,309.03Ð @64 àR¥€ Ãõ(\ ¢@2309.03 Ãõ(\ ¢@ @ÐAMERITRUST€ETDÏMATURITYÐ   ^ Ð1/3/90Ð  è 8 Ð1/4/90Ð C9 è 8 ®GáSüTA 5501260.42ˆR¥€ˆ‰®GáSüTA‰CÐ$5,501,260.42Ð qg7è 8 R¥€ ®GáSüTA 5501260.42 ®GáSüTA ûTA 5500000.00ˆR¥€ˆ‰ûTA‰qÐ$5,500,000.00Ð nd7è 8!R¥€ ûTA 5500000.00 ûTA Ház®±“@1260.42ˆR¥€ˆ‰Ház®±“@‰nÐ$1,260.42Ð @64è 8"R¥€ Ház®±“@1260.42 Ház®±“@ @ÐCONTINETNAL€ETDÏMATURITY€Ô#†¼Þ¼ ôô ôÀp#ÔœñËññÔñ׃×ñÔññÔñ׃×ñÔññËññËñ׃×ñËñÝ ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×›Ô‡ô ô ô¼¼ÞÔÐ  ŒÜ % Ð1/4/90Ð  f¶ & Ð1/5/90Ð D: f¶ ' €'cA 10042500.00ˆR¥€ˆ‰€'cA‰DÐ$10,042,500.00Ð si8f¶ (R¥€ €'cA 10042500.00 €'cA ÐcA 10000000.00ˆR¥€ˆ‰ÐcA‰sÐ$10,000,000.00Ð pf8f¶ )R¥€ ÐcA 10000000.00 ÐcA €Àä@42500.00ˆR¥€ˆ‰€Àä@‰pÐ$42,500.00Ô#†¼Þ¼ ôô ô}u#ÔÐE;9f¶ *R¥€ €Àä@42500.00  €Àä@ EÐÓ€Ӝ̛ÌÌÓ€Óà Ø àIn€essence,€the€Commissioner€found,€as€this€court€does,€a€very€highÏprobability€that€the€same€investment€basis€may€be€used€in€these€admittedlyÏefficient€short„term€purchases€and€sales€to€barely€increase€the€companyððs€overallÏnet€worth,€while€profoundly€increasing€the€out„of„state€portion€of€their€ð ðgrossÏreceiptsðð€for€UDITPA€purposes.€€In€such€a€situation,€the€above€transactions€do€notÏfairly€represent€the€taxpayerððs€income€connection€to€Ohio.€€The€resultingÏtransactions€do€not€amount€to€$35,046,069.45€of€taxable€income€in€that€state.ÏConsider€the€logical€result,€if€these€transactions€had€Tennessee€as€their€situs.€€IfÏthe€Commissioner€were€to€apply€œthe›€statutory€scheme,€then€the€taxpayer€would€beÏon€the€steps€of€the€courthouse€claiming€an€abuse€of€discretion.€€Under€theÏauthorities€cited€above€this€court€would€be€bound€to€assess€the€CommissionerððsÏactions€with€regard€to€whether€such€an€arrangement€fairly€represented€theÏcompanyððs€business€in€this€state.€€It€strains€the€bounds€of€good€sense€to€assert€thatÏthe€taxpayer€is€attempting€to€fairly€and€completely€represent€his€businessÏconnection€to€this€state,€when,€as€fortune€would€have€it,€Ohio€statutes€do€notÏrequire€inclusion€of€the€ð ðgross€receiptsðð€in€itððs€receipt€factor.€€The€action€of€theÏchancellor€in€applying€the€alternative€provisions€of€Tennessee€Code€AnnotatedÏsection€67„4„812(a)(4)€is€affirmed.ÌÌà Ø àIn€view€of€this€courtððs€affirmation€of€the€Chancery€Courtððs€ruling€regardingÏthe€Commissionerððs€use€of€an€alternate€scheme,€the€issue€regarding€the€limitationÏof€an€action€for€refund€for€1987€is€moot.€€However,€this€court€agrees€with€theÐ (5x0W Ðchancellor€that€Appellantððs€refund€claim€for€1987€taxes€paid€was€barred€by€theÏRefund€Statute,€Tenn.€Code€œAnn.€ðð›€67„1„1802.€€The€statute€is€clear€upon€its€face.€ÏThe€claim€for€refund€was€filed€well€after€the€statutory€period€had€run.Ìà Ø àÌà Ø àUnder€the€authorities€cited€herein,€and€upon€the€record,€the€judgment€of€theÏChancellor€is€affirmed.€€Costs€on€appeal€are€taxed€against€the€appellant.€€TheÏcause€is€remanded€for€such€further€proceedings€as€are€deemed€necessary.ÌœÌñÇñÌñÇñ̛ӀÓà Ø àà " àà N àà  àà à àà 8 àœÔ€X4:X¼¼ÞÔ_______________________________________ñÆñ______ñÆñ›Ð  ð Ðà Ø àà " àà N àà  àà à àà 8 àWILLIAM€B.€CAIN,€JUDGEÌœÌÌÌCONCUR:›ÌœÌñÊñ›ñÊññÈñÌñÈñ›Ìœ_________________________________________›ÌBEN€H.€CANTRELL,€PRESIDING€JUDGE,€M.S.ÌœÌñÊñ›ñÊññÉñÌñÉñ›Ì_________________________________________ÌWILLIAM€C.€KOCH,€JR.,€JUDGE