CARTWRIGHT,
J.
(concurred
in
by
Abbott,
Judson,
Spence,
JJ.)
:—This
is
an
appeal
from
a
judgment
of
Dumoulin,
J.
allowing
an
appeal
from
a
decision
of
the
Tax
Appeal
Board
and
restoring
the
re-assessment
of
tax
in
the
sum
of
$14,758.97
for
the
appellant’s
1957
taxation
year.
The
appellant
carried
on
the
business
of
logging
and
milling
on
Vancouver
Island.
Between
the
years
1949
and
1955
the
appellant
purchased
from
the
Esquimault
and
Nanaimo
Railway
Company
blocks
of
land
on
which
merchantable
timber
was
standing.
In
each
case
the
appellant
acquired
an
estate
in
fee
simple
subject
to
a
reservation
of
mineral
rights
and
other
reservations
not
material
to
the
question
raised
in
this
appeal.
The
purchase
price
of
each
block
was
based
on
cruises
made
by
the
vendor
and
purchaser
assigning
prices
to
the
various
kinds
of
standing
timber
on
the
land
purchased.
No
value
was
assigned
to
the
land
apart
from
the
timber,
it
being
the
custom
and
the
intention
of
the
appellant
to
let
the
land
be
sold
for
taxes
after
all
the
merchantable
timber
had
been
removed.
In
computing
its
income
from
year
to
year
the
appellant
claimed
deductions
in
an
amount
equal
to
the
capital
cost
of
the
timber
cut
during
the
year
from
the
lands
above
referred
to.
In
1957
Alaska
Pine
and
Cellulose
Company
Limited,
hereinafter
referred
to
as
‘‘
Alaska
Pine’’,
offered
to
purchase
these
lands
from
the
appellant,
its
intention
being
to
use
them
as
a
tree
farm.
The
appellant
accepted
the
offer
which
it
regarded
as
a
windfall.
The
appellant
conveyed
the
lands
to
Alaska
Pine
in
fee
simple
but
reserved
to
itself
the
right
to
cut
and
remove
all
the
merchantable
timber
standing,
lying
or
being
upon
the
said
lands.
Prior
to
the
end
of
the
appellant’s
taxation
year
on
September
30,
1957,
it
removed
all
this
timber.
It
is
agreed
that
the
net
proceeds
from
the
sale
of
the
land
to
Alaska
Pine
amounted
to
$22,620.
In
his
notice
of
re-assessment
the.
respondent
added
this
amount
to
the
appellant’s
income
for
1957
by
an
item
worded
as
follows:
‘
‘
Reduction
of
Capital
Cost
Allowance
claimed
in
1957
on
Blocks
871,
891,
1035
and
1069,
and
a
partial
recovery
of
Capital
Cost
Allowance
on:.
blocks
previously
shown
as
depleted.
Sold
March
|
|
4,
1957,
for
|
$22,620.00”
|
The
appellant
served
a
notice
of
objection
to
the
re-assessment.
As
to
this
item
the
objection
was
rejected
by
the
Minister
who
stated
in
his
notification
that
the
re-assessment
in
respect
of
this
item
was
made
in
accordance
with
the
provisions
of
the
Income
Tax
Act
and
in
particula
;
‘
‘
on
the
ground
that
the
proceeds
of
disposition
of
depreciable
property
sold
to
Alaska
Pine
Company
Limited
pursuant
to
an
Agreement
dated
4th
March,
1957
was
$22,620.00
in
accordance
with
the
provisions
of
paragraphs
(a)
and
(c)
of
subsection
(5)
of
section
20
of
the
Act
and
therefore
for
the
purpose
of
paragraph
(a)
of
subsection
(1)
of
section
11
of
the
Act
and
paragraph
(e)
of
subsection
(1)
of
section
1100
of
the
Income
Tax
Regulations
the
undepreciated
capital
cost
of
the
taxpayer’s
timber
limits
and
rights
to
cut
timber
has
been
properly
determined.’’
The
appellant
served
a
notice
of
appeal
to
the
Tax
Appeal
Board.
Paragraph
10
of
the
reply
to
this
notice
reads
as
follows:
/‘The
Respondent.
pleads
and
relies
upon
the
provisions
of
sections
11(1)
(a)
and
20(5)
of
the
Income
Tax
Act
and
sections
1100(1)
(e),
1101(3)
and
1105
and
Schedule
C
of
the
Income
Tax
Regulations.”
There
is
no
dispute
as
to
amounts
I
or
as
to
the
material
facts.
The
question
is
whether
or
not
on
the
true
construction
of
the
applicable
sections
of
the
Income
Tax
Act
and
Regulations.
this
addition
of
$22,600
to,
the
income
of
the
appellant
was
properly
made.
Regulations.”
|
H
|
ou
ge
TOE
|
whatsoever
involved
in
the
sale
by
the
appellant
to
Alaska
.
Pine
Company
Limited.”
Dumoulin,
J.
was
of
opinion
that
the
lands
acquired
by
the
appellant
in
fee
simple
and
disposed
of
by
it
to
Alaska
Pine
were
‘‘timber
limits’’
within
the
meaning
of
Schedule
C
to
the
Income
Tax
Regulations
and
‘‘depreciable
property’’
in
respect
of
which
the
appellant
had
been
allowed
a
deduction
under
regulations
made
under
Section
11(1)
(a)
of
the
Income
Tax
Act.
It
is
common
ground
that
the
blocks
of
land
with
the
merchantable
timber
standing
on
them
were
acquired
by
the
appellant
as
capital
assets.
It
was
pointed
out
by
Locke,
J.
in
Caine
Lumber
Co.
Ltd.
v.
M.N.R.,
[1959]
S.C.R.
556
at
559;
[1959]
C.T.C.
221
at
223
that:
‘“The
provisions
of
Section
11
of
the
Act
and
of
the
Regulations
are
required
in
order
to
afford
a
means
of
properly
ascertaining
the
trading
profit
of
persons
engaged
in
such
businesses
as
mining
and
lumbering,
where
capital
assets
are
depleted
by
the
operations.”
The
sections
of
the
Act
and
Regulations
with
which
we
are
chiefly
concerned
are:
Section
11(1)
(a)
and
(b)
:
“11.
(1)
Notwithstanding
paragraphs
(a),
(b)
and
(h)
of
subsection
(1)
of
section
12,
the
following
amounts
may
be
deducted
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
:
(a)
such
part
of
the
capital
cost
to
the
taxpayer
of
property,
or
such
amount
in
respect
of
the
capital
cost
to
the
taxpayer
of
property,
if
any,
as
is
allowed
by
regulation
;
(b)
such
amount
as
an
allowance
in
respect
of
an
oil
or
gas
well,
mine
or
timber
limit,
if
any,
as
is
allowed
to
the
taxpayer
by
regu
;
Section
12(1)
(b)
:
“12.
(1)
In
computing
income,
no
deduction
shall
be
made
in
respect
of
;
(b)
an
outlay,
loss
or
replacement
of
capital,
a
payment
>
U-
on
account
of
capital
or
an
allowance
in
respect
of
depreciation,
obsolescence
or
depletion
except
as
expressly
permitted
by
this
Part,’’
?
Section
20(1)
:
“20.
(1)
Where
depreciable
property
of
a
taxpayer
of
a
prescribed
class
has,
in
a
taxation
year,
been
disposed
of
and
the
proceeds
of
disposition
exceed
the
undepreciated
capital
cost
to
him
of
depreciable
property
of
that
class
immediately
before
the
disposition,
the
lesser
of
(a)
the
amount
of
the
excess,
or
(b)
the
amount
that
the
excess
would
be
if
the
property
had
been
disposed
of
for
the
capital
cost
thereof
to
the
taxpayer,
shall
be
included
in
computing
his
income
for
the
year.”
Section
20(5),
so
far
as
relevant,
reads:
‘
‘
(5)
In
this
section
and
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11,
(a)
‘depreciable
property
of
a
taxpayer’
as
of
any
time
in
a
taxation
year
means
property
in
respect
of
which
the
taxpayer
has
been
allowed,
or
is
entitled
to,
a
deduction
under
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11
in
computing
income
for
that
or
a
previous
taxation
year;
(b)
‘disposition
of
property’
includes
any
transaction
or
event
entitling
a
taxpayer
to
proceeds
of
disposition
of
property
;
(c)
‘proceeds
of
disposition’
of
property
include
(i)
the
sale
price
of
property
that
has
been
sold,
..
.
.
(clauses
(11),
(iii)
and
(iv)
are
not
applicable.)
(d)
‘total
depreciation
allowed
to
a
taxpayer’
before
any
time
for
property
of
a
prescribed
class
means
the
aggregate
of
all
amounts
allowed
to
the
taxpayer
in
respect
of
property
of
that
class
under
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11
in
computing
income
for
taxation
years
before
that
time;
and
(e)
‘undepreciated
capital
cost
to
a
taxpayer
of
depreciable
property’
of
a
prescribed
class
as
of
any
time
means
the
capital
cost
to
the
taxpayer
of
depreciable
property
of
that
class
acquired
before
that
time
minus
the
aggregate
of
(i)
the
total
depreciation
allowed
to
the
taxpayer
for
property
of
that
class
before
that
time,
(ii)
for
each
disposition
before
that
time
of
property
of
the
taxpayer
of
that
class,
the
least
of
(A)
the
proceeds
of
disposition
thereof,
(B)
the
capital
cost
to
him
thereof,
or
(C)
the
undepreciated
capital
cost
to
him
of
property
of
that
class
immediately
before
the
disposition,
and
(iii)
each
amount
by
which
the
undepreciated
capital
cost
to
the
taxpayer
of
depreciable
property
of
that
class
as
of
the
end
of
a
previous
year
was
reduced
by
virtue
of
subsection
(2).”
Regulations,
Section
1100(1)
(e)
:
“1100.
(1)
Under
paragraph
(a)
of
subsection
(1)
of
section
11
of
the
Act,
there
is
hereby
allowed
to
a
taxpayer,
in
computing
his
income
from
a
business
or
property,
as
the
ease
may
be,
deductions
for
each
taxation
year
equal
to
(e)
such
amount
as
he
may
claim
not
exceeding
the
amount
calculated
in
accordance
with
Schedule
C
in
respect
of
the
capital
cost
to
him
of
a
timber
limit
or
a
right
to
cut
timber
from
a
limit;”
Regulations,
Section
1100(2)
:
“(2)
Where
a
taxpayer
has,
in
a
taxation
year,
otherwise
than
on
death,
disposed
of
all
property
of
a
prescribed
class
that
he
had
not
previously
disposed
of
and
has
no
property
of
that
class
at
the
end
of
the
taxation
year,
he
is
hereby
allowed
a
deduction
for
the
year
equal
to
the
amount
that
would
otherwise
be
the
undepreciated
capital
cost
to
the
taxpayer
of
property
of
that
class
at
the
expiration
of
the
taxation
year.’’
Regulations,
Section
1101(3)(a)
and
(b)
:
“(3)
For
the
purpose
of
this
Part
and
for
the
purpose
of
Schedules
C
and
D,
(a)
a
timber
limit
or
a
right
to
cut
timber
from
a
limit
shall
be
deemed
to
be
a
separate
class
of
property,
and
and
(b)
where
a
taxpayer
has
more
than
one
timber
limit
or
rights
to
cut
timber
from
more
than
one
limit,
each
limit
or
right
shall
be
deemed
to
be
a
separate
class
of
property.”’
Schedule
C
reads
as
follows:
“Schedule
C
1.
For
the
purpose
of
paragraph
(e)
of
subsection
(1)
of
section
1100,
the
amount
that
may
be
deducted
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
in
respect
of
a
timber
limit
or
a
right
to
cut
timber
from
a
limit
is
the
.
lesser
of
(a)
an
amount
computed
on
the
basis
of
a
rate
(computed
under
section
2
of
this
Schedule):
per
cord
or
board
foot
cut
in
the
year,
or
(b)
the
undepreciated
capital
cost
to
the
taxpayer
as
of
the
end,
of
the
year
(before
making
any
deduction
under
section
1100
for
the
year)
of
the
timber
or
right.
2.
The
rate
for
a
taxation
year
is
(a)
if
the
taxpayer
has
not
been.
granted
an
allowance
in
respect
of
the
limit
or
right
for
a
previous
year,
an
amount
determined
by
dividing
the
capital
cost
of
the
limit
or
right
to
the
taxpayer
minus
the
residual
value
by
the
quantity
of
timber
in
the
limit
or
the
quantity
of
timber
the
taxpayer
has
obtained
a
right
to
cut,
as
the
case
may
be
(expressed
in
cords
or
board
feet)
as
shown
by
a
bona
fide
cruise,
and
(b)
if
the
taxpayer
has
been
granted
an
allowance
in
respect
of
the
limit
or
right
in
a
previous
year,
(i)
if
no
rate
has
been
determined
under’
subparagraph
(ii),
the
rate
employed
to
determine
the
allowance
for
the
most
recent
year
for
which
an
allowance
was
granted,
and
(ii)
where
it
has
been
established
that
the
quantity
of
timber
that
was
in
the
limit
or
that
the
taxpayer
had
a
right
to
cut
was
in
fact
substantially
different
from
the
quantity
that
was
employed
in
determining
the
rate
for
the
previous
year,
or
where
it
has
been
established
that.
the
capital
cost
of
the
limit
or
right
was
substantially
different
from
the
amount
that
was
employed
in
determining-.
the
rate
for
the
previous
year,
a
rate
determined
by
dividing
the
undepreciated
capital
cost
to
the
taxpayer
of
the
limit
or
right
as
of
the
commencement
of
the
year
minus
the
residual
value
thereof
by
the
estimated
remaining
quantity
of
timber
that
is
in
the
limit
or
that
the
taxpayer
has
a
right
to
cut,
as
the
case
may
be
(expressed
in
cords
or
board
feet)
at
the
commencement
of
the
year.
3.
In
heu
of
the
deduction
otherwise
determined
under.
this
Schedule,
a
taxpayer
may
elect
that
the
deduction
for
a
taxation
year
be
the
lesser
of
(a)
$100,
or
(b)
the
amount
received
by
him
in
the
taxation
year
from
the
sale
of
timber.
4.
In
this
Schedule,
‘residual
value’
means
the
estimated
‘value
of
the
property
if
the
merchantable
timber
were
removed.”
While
in
view
of
these
somewhat
complex
statutory
provisions
it
may
seem
an
over-simplification,
it
appears
to
me
that
the
result
of
this
appeal
depends
upon
whether
the
sum
of
$22,620
received
by
the
appellant
in
its
1957
taxation
year.
for
the
lands
from
which
the
merchantable
timber
had
been
removed
was
the
proceeds
of
disposition
of
depreciable
property
of
the
appellant
within
the
meaning
of
the
provisions
quoted
above.
In
order
to
be
brought
within
the
terms
of
Section
1100(1)
(e)
of
and
Schedule
C
to
the
Regulations
the
lands
with,
which
we
are
concerned
must
answer
one
or
other
of
the
descriptions
‘‘a
timber:
limit’’
or
‘‘a
right
to
cut
timber
from
a
limit’’.
I
think
it
plain
that
when
those
lands
were
acquired
by
the
appellant
they.
were
properly
described
as
‘‘timber
limits’’
both
in
ordinary
popular
language
and
in
the
sense
in
which
those
words
are
used
in
the
statutory
provisions.
In
my
opinion,
the
phrase
‘‘timber
limits’’
describes
a
parcel
of
land
with
merchantable
timber
standing
upon
it.
It
refers,
that
is
to
say,
to
a
corporeal
hereditament.
The
phrase
‘‘a
timber
limit’’
is
used
in
Section
1100(1)(e),
Section
1101(3)
(a)
and
(b),
and
Schedule
C
in
contradistinction
to
the
phrase
“a
right
to
cut
timber
from
a
limit’’,
which
is
one
apt
to
describe
a
profit
à
prendre.
A
timber
limit
under
the
scheme
of
the
relevant
sections
of
the
Aet
and
Regulations
is
treated
as
a
class
of
depreciable
property
;
it
is
an
asset
the
total
capital
cost
of
which
the
owner
is
entitled
to
deduct
in
calculating
his
taxable
income..
Without
these
statutory
provisions
the
owner
would
have
no
right
to
make
such
deductions
from
income.
The
right
to
make
the
deductions
is
subject
to
the
obligation,
if
he
disposes
of
the
asset,
to
add
to
his
income
the
proceeds
of
that
disposition
to
the
extent
that
such
proceeds
do
not
exceed
the
capital
cost
to
him.
I
am
unable
to
accept
the
view
that
when
all
the
merchantable
timber
had
been
removed
the
land
which
remained
ceased
to
be
a
timber
limit,
and,
in
my
opinion,
the
proceeds
of
the
disposition
of
that
land
fall
within
the
terms
of
Section
20(
1)
of
the
Income
Tax
Act
and
of
Section
1100(2).
The
answer
to
the
question
what
tax
is
payable
in
any
given
circumstances
depends,
of
course,
upon
the
words
of
the
legislation
imposing
it.
Where
the
meaning
of
those
words
is
difficult
to
ascertain
it
may
be
of
assistance
to
consider
which
of
two
constructions
contended
for
brings
about
a
result
which
conforms
to
the
apparent
scheme
of
the
legislation.
In
the
present
case
the
appellant
purchased
the
land
in
question
as
a
capital
asset
to
secure
a
supply
of.
timber
to
be
used
in
earning
its
income.
The
scheme
of
the
legislation
is
to
allow
the
taxpayer
to
deduct
the
whole
of
the
net
cost
of
such
capital
asset
in
arriving
at
its
trading
profit.
The
judgment
of
the
Exchequer
Court
in
this
case
brings
about
this
result.
If,
on
the
other
hand,
the
contention
of
the
appellant
was
upheld
the
result
would
be
that
it
would
have
been
permitted
to
deduct
the
total
original
cost
of
the
capital
asset
although
it
had
already
recovered
$22,620
of
that
cost.
For
the
reasons
stated
above
and
for
those
given
by
Dumoulin,
J.,
with
which
I
am
in
substantial
agreement,
I
would
dismiss
the
appeal
with
costs.
RITOHIE,
J.:—I
have
had
the
advantage
of
reading
the
reasons
for
judgment
of
my
brother
Cartwright
which
are
concurred
in
by
the
other
members
of
the
Court
and
in
which
he
has
outlined
the
circumstances
giving
rise
to
this
appeal
and
has
reproduced
the
relevant
provisions
of
the
Income
Tax
Act
and
Regulations.
The
following
facts
appear
to
me
to
be
undisputed:
1.
The
capital
cost
to
the
appellant
of
the
timber
limits
in
question
was
determined
exclusively
by
reference
to
the
extent
and
quality
of
the
standing
timber
and
no
value
whatever
was
assigned
to
the
land.
2.
‘The
undepreciated
capital
cost’’
of
the
property
so
acquired
immediately
before
March
4,
1957
was
$49,379.90.
3.
On
March
4,
1957
the
land
excluding
timber
was
sold
by
the
appellant
to
Alaska
Pine
and
Cellulose
Company
Limited
for
a
net
return
of
$22,620.
4.
In
computing
its
income
for
the
1957
taxation
year,
the
appellant
deducted
$45,411.42
as
a
capital
cost
allowance
in
respect
of
the
timber
cut
from
the
limits
during
that
year,
5.
By
notice
of
re-assessment
dated
January
3,
1960,
the
Minister
of
National
Revenue
re-assessed
the
capital
cost
allowance
so
claimed
by
subtracting
therefrom
the
proceeds
of
the
disposition
of
the
land
(i.e.,
$22,620)
thus
leaving
the
maximum
amount
deductible
by
way
of
capital
cost
allowance
at
a
figure
of
$26,759.30
instead
of
$49,379.90.
6.
The
timber
limits
in
question
were
acquired
by
the
appellant
for
the
purpose
of
removing
merchantable
timber
therefrom
and
were
no
further
use
to
it
after
the
timber
had
been
removed.
The
question
to
be
determined
on
this
appeal
is
whether,
in
computing
his
taxable
income
for
a
taxation
year,
a
taxpayer
who
owns
a
timber
limit
is
required
to
deduct
the
sale
price
of
land
exclusive
of
timber
from
the
‘undepreciated
capital
cost’’
of
the
limit
at
the
date
of
sale
and
this
in
turn
depends,
as
Cartwright,
J.
has
pointed
out,
upon
whether
such
a
sale
constitutes
“a
disposition
of
depreciable
property’’
within
the
meaning
of
these
words
as
they
are
used
in
the
Income
Tax
Act.
For
greater
clarity,
and
notwithstanding
the
fact
that
the
subsections
have
been
reproduced
by
my
brother
Cartwright,
I
think
it
desirable
to
set
out
the
portions
of
the
Income
Tax
Act
which
define
‘‘depreciable
property
of
a
taxpayer’’
and
“undepreciated
capital
cost
to
a
taxpayer
of
depreciable
property’’.
“20.
(5)
In
this
section
and
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11,
(a)
‘depreciable
property
of
a
taxpayer’
as
of
any
time
in
a
taxation
year
means
property
in
respect
of
which
the
taxpayer
has
been
allowed
or
is
entitled
to,
a
deduction
under
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11
in
computing
income
for
that
or
a
previous
taxation
year;
.
..
(e)
‘undepreciated
capital
cost
to
a
taxpayer
of
depreciable
property’
of
a
prescribed
class
of
any
time
means
the
capital
cost
to
the
taxpayer
of
depreciable
property
of
that
class
acquired.
before
that
time
minus
the
aggregate
of
(i)
the
total
depreciation
allowed
to
the
taxpayer
for
property
of
that
class
before
that
time,
(ii)
for
each
disposition
before
that
time
of
property
of
the
taxpayer
of
that
class,
the
least
of
(A)
the
proceeds
of
disposition
thereof,
(B)
the
capital
cost
to
him
thereof,
or
(C)
the
undepreciated
capital
cost
to
him
of
property
of
that
class
immediately
before
the
disposition,
and
(iii)
each
amount
by
which
the
undepreciated
capital
cost
to
the
taxpayer
of
depreciable
property
of
that
class
as
of
the
end
of
a
previous
year
was
reduced
by
virtue
of
subsection
(2).”’
In
determining
the
‘‘undepreciated
capital
cost
to
a
taxpayer
of
depreciable
property’’
the
taxpayer
can
only
be
required
to
subtract
from
the
capital
cost
of
the
property
such
items
as
are
specified
in
Section
20(5)
(e)
and
it
is
clear
from
the
terms
of
his
confirmation
of
the
present
re-assessment
that
the
Minister
has
treated
the
sale
price
of
the
land,
excluding
timber,
sold
by
the:
appellant
on
March
4,
1957
as
being
‘the
proceeds
of
disposition”
of
‘‘depreciable
property
of
a
prescribed
class’’
within
the
meaning
of
Section
20(1)
and
Section
20(5)
(e)
(ii)
(A).
The
‘
‘prescribed
lass’’
of
depreciable
property
here
in
question
is
a
‘‘timber
limit”
and
the
property
of
that.
class
‘‘i
respect
of
which
the
taxpayer
.
.
.
is
entitled
to
a
deduction
.
.
.”’
is
prescribed
by
the
provisions
of
Schedule
C,
Section
1,
so
that
it
is
a
matter
of
first
importance
to
determine
the
meaning
to
be
attached
to
the
phrase
‘‘timber
limit”
as
it
occurs
in
that
Schedule.
There
does
not
appear
to
me
to
be
any
difficulty
about
the
meaning
of
the
word
“limit”
and
I
take
it
to
be
plain
that
the
phrase
means
the
‘‘timber
within
defined
limits
or
boundaries”.
The
question
which
remains
to
be
determined,
however,
is
what
meaning
Parliament
intended
to
be
attached
to
the
word
“timber”
in
the
context.
The
provisions
of
Schedule
C,
Section
1
read
as
follows
:
“Section
C'
1.
For
the
purpose
of
paragraph
(e)
of
subsection
(1)
of
section
1100,
the
amount
that
may
be
deducted
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
in
respect
of
a
timber
limit
or
a
right
to
cut
timber
from
a
limit
is
the
lesser
of
‘<1,..;
(a)
an
amount
computed
on
the
basis
of
a
rate
(computed
under
section
2
of
this
Schedule)
per
cord
or
board
foot
cut
in
the
year,
or
(b)
the
undepreciated
capital
cost
to
the
taxpayer
as
of
the
end
of
the
year
(before:
making
any
deduction
under
section
1100
for
the
year)
;
‘of
the
timber
or
right.’
At
common
law
in
the
consideration
of
deeds
and
other
documents
of
title
“timber”
is
generally
treated
as
connoting
growing
trees
which
are
a
part
of
the
realty
and
pass
with
a
conveyance
of
land
unless
expressly
reserved.
In
this
sense
the
word
is
defined
in
The
Shorter
Oxford
English
Dictionary
as
meaning
‘‘trees.
growing
upon
land
and
forming
part
of
the
freehold
inheritance’’.
but
growing
trees
are
potentially
severable
from
the
land
and
when
severed
and
reduced
to
logs
and
lumber
they
become
personal
property
and
have
a
value
as
“merchantable
timber”
altogether
apart
from
the
land
and
The
Oxford
English
Dictionary
also
defines
‘‘timber’’
as
being
“applied
to
the
wood
of
growing
trees
capable
of
being
used
for
structural
purposes
hence
collectively
to
the
trees
themselves”.
It
appears
to
me
that
the
word
‘‘timber’’
as
used
in
the
phrase
“timber
limit’’
in
Schedule
C,
Section
1
is
to
be
taken
as
meaning
the
kind
of
‘‘timber’’
which
is
made
the
subject
of
the
deduction
allowed
by
that
Schedule
and
in
this
regard
it
is
significant
that
the
deduction
is
not
to
be
computed
on
the
basis
of
timber
as
part
of
the
corporeal
hereditament
but
rather
‘‘on
the
basis
of
a
rate
per
cord
or
board
foot
cut
in
the
year’?
in
which
sense
it
seems
to
me
that
it
must
refer
to
the
timber
in
growing
trees
capable
of
being
severed
from
the
land
and
being
reduced
to
‘‘cord
or
board
foot’’
measure
and
not
to
growing
trees
together
with
the
land
on
which
they
grow.
In
this
sense
the
man
who
has
a
‘‘right
to
cut
timber
from
a
limit’’
and
the
man
who
has
acquired
the
land
itself
for
the
purpose
of
removing
timber
from
it
and
has
no
further
use
for
it
have
both
acquired
the
same
class
of
property,
namely,
‘‘the
wood
in
the
growing
trees’’
and
with
the
greatest
respect
for
those
who
hold
a
different
view,
I
read
Section
1101(3)
of
the
Regulations
as
reinforcing
this
view.
The
section
reads:
“1101.
(3)
For
the
purpose
of
this
Part
and
for
the
purpose
of
Schedules
C
and
D,
(a)
a
timber
limit
or
a
right
to
cut
timber
from
a
limit
shall
be
deemed
to
be
a
separate
class
of
property,
and
.
.
.”
Unlike
the
other
members
of
the
Court,
I
take
this
to
mean
that
for
the
purpose
of
Schedule
C
‘‘a
timber
limit’’
or
‘‘a
right
to
cut
timber
from
a
limit”
are
to
be
deemed
to
belong
to
the
same
separate
class
of
property
and
that
they
belong
to
a
class
in
which
capital
cost
allowance
is
limited
to
the
value
of
the
timber
which
is
cut
during
a
taxation
year
and
in
which
the
land
on
which
the
timber
stands
is
not
included.
For
these
reasons
I
have
concluded
that
the
phrase
‘‘timber
limit”
as
used
in
Schedule
C,
Section
1
to
connote
the
property
in
respect
of
which
the
taxpayer
is
entitled
to
a
deduction
means
“merchantable
timber
within
defined
limits”,
and
I
am
accordingly
of
opinion
that
land
stripped
of
timber
is
not
‘‘
property
in
respect
of
which
a
taxpayer
has
been
allowed
or
is
entitled
to
a
deduction
under
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11
.
.
.’’
and
is
therefore
not
‘‘depreciable
property
of
a
taxpayer’’
within
the
meaning
of
Section
20(5)
(a).
It
follows
in
my
view
that
the
proceeds
of
disposition
of
the
land
here
in
question
were
not
proceeds
of
disposition
of
depreciable
property
within
the
meaning
of
Section
20(5)
(e)
or
20(1)
and
that
the
land
was
not
property
‘‘of
a
prescribed
class”
within
the
meaning
of
Section
1100(2).
Having
reached
this
conclusion,
I
am
unable
to
find
any
authority
in
the
Income
Tax
Act
to
justify
the
Minister
in
taking
the
proceeds
of
the
sale
of
this
land
into
consideration
in
determining
the
undepreciated
capital
cost
of
the
timber
limit
in
question
for
the
purpose
of
computing
the
taxpayer’s
taxable
income
for
the
year
1957.
For
these
reasons
I
would
allow
this
appeal
and
restore
the
judgment
of
the
Tax
Appeal
Board.
I
appreciate
that,
as
pointed
out
by
my
brother
Cartwright,
the
result
of
this
decision
is
that
the
taxpayer
would
be
allowed
to
deduct
the
total
original
cost
of
the
timber
limit
notwithstanding
the
fact
that
it
had
sold
the
land
on
which
the
timber
stood
for
$22,620.
Unlike
the
other
members
of
the
Court,
I
do
not
regard
this
as
a
result
which
runs
contrary
to
the
expressed
intention
of
Parliament
but
I
am,
on
the
other
hand,
of
opinion
that
it
would
require
an
amendment
to
the
statute
in
order
to
include
land
stripped
of
timber
in
the
prescribed
class
of
depreciable
property
for
which
provision
is
made
in
Schedule
C,
Section
1.
The
fact
that
the
appellant
had
made
an
unexpected
sale
of
eut-over
barren
lands
which
it
was
prepared
to
abandon
is,
in
my
opinion,
a
circumstance
of
a
kind
sometimes
referred
to
in
this
context
as
a
‘‘windfall’’
and,
with
great
respect
for
those
who
hold
a
different
view,
it
appears
to
me
to
fall
clear
of
what
Dumoulin,
J.
has
referred
to
as
the
‘‘rather
intricate
statutory
skein’’
presently
supplied
by
those
provisions
of
the
Income
Tax
Act
which
are
fully
set
out
in
the
reasons
for
judgment
of
my
brother
Cartwright.