Fritz, Ard and Pressler. The opinion of the court was delivered by Pressler, J.A.D.
Plaintiff Equitable Life Mortgage and Realty Investors (Equitable), a Massachusetts investment trust, appeals from an order of the Superior Court, Chancery Division, dismissing its declaratory action complaint by which it sought to enjoin the New Jersey Division of Taxation (Division) from enforcing a tax assessment made against it pursuant to the Corporation Income Tax Act (1972), N.J.S.A. 54:10E-1 et seq. (Tax Act). The gravamen of the complaint was the claim that the manner in which the assessment was made violated the rule-making requirements of the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. The basis for the dismissal was plaintiff's failure to have exhausted its administrative relief.
Neither the legal nor the factual background of this controversy is in dispute. In implementation of the Tax Act, the Legislature in 1973 adopted the Corporation Business Activities Reporting Act, N.J.S.A. 14A:13-14 et seq. (Reporting Act). The Reporting Act requires foreign corporations engaging in this State in any of the activities enumerated by N.J.S.A. 14A:13-15 to file an annual business activities report, the evident purpose of which is to enable the Division to make a preliminary determination as to whether a foreign corporation having some degree of contact with this State is in receipt of any income taxable under the Tax Act. Taxable income includes any "income derived from sources within New Jersey." N.J.S.A. 54:10E-2.*fn1 The form
of the report requires the foreign corporation to indicate, by a "yes" or "no" answer, whether it in fact engages in any of eight specified activities which are virtually the same as those enumerated by N.J.S.A. 14A:13-15. Here relevant are Questions 11 and 12 of the reporting form. Paraphrasing subsections (e) and (f), respectively, of N.J.S.A. 14A:13-15, these questions read as follows:
Did the corporation during the period covered by this Report:
11. Receive payments from persons residing in or doing business located in New Jersey? If "Yes", explain.
12. Derive income from any source or sources within New Jersey? If "Yes", explain.
Equitable, which on February 18, 1975 filed its report for the previous calendar year, responded negatively to the first six questioned activities. Its answer to Question 11 was, however, affirmative and accompanied by a statement explaining that it "had four mortgage loans secured by real estate in New Jersey. The Trust earned interest income on these mortgage loans during 1974." Its response to Question 12 was negative but referred to the same statement accompanying the answer to Question 11.
Upon receipt of the reporting form the Director of the Division advised Equitable by letter that it was subject to the Tax Act. In pertinent part that letter stated that
Based on information reported on the Notice of Business Activities Report filed, the above named entity does receive interest income in excess of $25,000 from mortgages secured from [sic] New Jersey real property. Since such income is properly includable for New Jersey Corporation Income Tax purposes, it is requested that an amended return together with all applicable schedules be completed reporting all income from New Jersey sources.
Several weeks later, on March 11, 1975, the Division denied Equitable's request for an extension of time to file its 1974 tax return because of its failure to have sent a remittance with the request. The letter of ...