Pratte,
J
[TRANSLATION]:—The
only
question
raised
by
this
appeal
is
as
to
whether
the
Trial
Division
properly
held
that
appellant
could
not
deduct,
in
computing
its
income
for
the
taxation
years
1974
and
1975,
certain
legal
fees
which
it
had
incurred
in
those
years.
Appellant
is
the
tenant
of
a
building
in
Beloeil,
in
which
it
operated
a
service
station.
In
1973,
a
neighbour
sued
it
asking
the
Superior
Court
to
issue
an
injunction
prohibiting
operation
of
this
service
station.
The
neighbour
alleged
that
the
property
occupied
by
appellant
was
subject
to
a
servitude
which
prohibited
its
being
used
for
the
business
of
selling
gas.
The
Superior
Court
granted
the
inunction
requested.
Appellant
nonetheless
continued
to
operate
the
service
station.
Because
of
this,
it
had
on
three
occasions
to
defend
itself
against
charges
of
contempt
of
court.
In
May
1974,
after
being
convicted
of
contempt
of
court
twice,
appellant
closed
its
service
station.
It
is
legal
fees
incurred
in
connection
with
these
proceedings,
relating
to
the
injunction
and
contempt
of
court,
which
appellant
claims
to
be
able
to
deduct
in
computing
its
income.
With
regard
to
the
portion
of
the
costs
which
appellant
incurred
in
attempting
to
oppose
the
application
for
injunction,
these
are
obviously
expenses
incurred
for
the
purpose
of
earning
income.
The
only
problem
arising
in
connection
with
them
is
as
to
whether
they
are
amounts
which
were
spent
on
capital
account,
the
deduction
of
which
is
prohibited
by
paragraph
18(1)(b)
of
the
Income
Tax
Act.*
The
trial
judge
answered
this
question
in
the
affirmative,
because
in
his
opinion
these
expenses
were
incurred
in
order
to
protect
the
very
existence
of
the
service
station.
I
concur
in
that
view
and
would
affirm
the
Trial
Division
judgment
on
this
point.
With
regard
to
the
legal
fees
incurred
by
appellant
in
connection
with
the
charges
of
contempt
of
court,
the
trial
judge
held
that
they
should
be
likened
to
the
fees
incurred
in
opposing
the
injunction
proceedings.
The
judge
considered
that
all
such
fees
were
incurred
for
the
purpose
of
keeping
the
service
station
in
operation.
Counsel
for
the
respondent
disputed
this
finding.
He
argued
that
the
fees
incurred
in
order
to
avoid
conviction
for
contempt
of
court
were
not
paid
for
the
purpose
of
keeping
the
service
station
in
operation,
but
solely
in
order
to
avoid
appellant
being
punished
for
contravening
the
injunction.
It
is
not
necessary
to
decide
this
question
here,
for
whatever
the
response
given
to
it,
the
deduction
of
all
such
fees
is
still
prohibited,
if
not
by
paragraph
(b)
then
by
paragraph
(a)
of
subsection
18(1).
For
these
reasons,
I
would
dismiss
the
appeal
with
costs.
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