Urie,
J.
(Heald,
J.
concurring):
—
This
is
an
appeal
from
a
judgment
of
Mr.
Justice
Collier
in
the
Trial
Division,
in
which
he
allowed
the
respond
ent's
appeal
from
an
assessment
issued
by
the
Minister
of
National
Revenue
(“the
Minister")
with
respect
to
its
1977
taxation
year
and
referred
the
assessment
back
to
the
Minister
for
reassessment
on
the
basis
that
the
value
of
a
logging
contract
was
at
least
$830,000
and
that
that
sum
in
the
hands
of
the
respondent
constituted
a
payment
on
account
of
capital
but
did
not
constitute
an
“eligible
capital
amount"
within
the
meaning
of
subsection
14(1)
of
the
Income
Tax
Act
as
it
read
in
the
1977
taxation
year.
The
relevant
facts,
which
are
not
in
dispute,
are
these.
The
respondent,
a
company
incorporated
under
the
laws
of
the
province
of
British
Columbia,
was
engaged
in
the
logging
business.
From
1967
to
1977,
its
primary
business
was
the
management
and
operation
of
Timber
Sale
License
X-86695
at
Naden
Harbour,
Queen
Charlotte
Islands,
British
Columbia.
On
March
6,
1970,
it
entered
into
an
agreement
with
Kanematsu-Gosho
(U.S.A.)
Inc.
("Kanematsu")
and
Naden
Harbour
Timber
Limited
("Naden")
to
record
their
respective
obligations
"for
the
orderly
development,
exploitation
and
operation"
of
the
Timber
Sale
Contract
("T.S.C.")
as
defined
in
the
agreement.
That
contract,
which
had
been
awarded
in
1962
to
Prince
Rupert
Sawmills
Ltd.,
had
been
assigned
to
the
respondent
with
the
consent
of
the
British
Columbia
Forest
Service
for
the
beneficial
ownership
of
Kanematsu.
Naden,
a
wholly-owned
subsidiary
of
Kanematsu,
was
granted
the
exclusive
authority
to
develop,
exploit
and
conduct
logging
operations
on
the
area
covered
by
the
T.S.C.
Naden,
in
turn,
appointed
the
respondent
as
manager
of
Naden
at
the
operational
level
"to
administer,
manage
and
operate
the
business
of
Naden
as
the
same
relates
to
the
T.S.C."
Kanematsu
was
to
provide
for
the
financial
requirements
for
the
operation.
Without
recording
here
the
full
details
of
the
compensation
to
be
paid
to
the
respondent
for
its
efforts,
suffice
it
to
say
that
it
covered
pre-agreement
activities
in
the
sum
of
$300,000,
post-agreement
payments
based
on
footage
of
timber
cut
from
the
T.S.C.,
a
payment
of
$260,000
in
the
event
of
termination
for
any
reason
of
the
agreement
and
a
non-interest
bearing
loan
of
$260,000
repayable
in
10
equal
annual
instalments.
An
annual
management
fee
of
either
one-half
of
the
net
profits
of
Naden
before
the
payment
of
the
management
fees
and
taxes,
or
$75,000,
whichever
was
the
greater,
was
also
specified
in
the
agreement.
There
was
also
provision
for
payments
in
the
event
the
annual
cuts
of
timber
permissible
under
the
T.S.C.
were
increased.
Lastly,
paragraph
11
of
the
agreement
provided
for
the
termination
of
the
agreement
in
the
following
terms:
Either
party
in
its
sole
and
absolute
discretion
may
by
six
(6)
months
notice
terminate
this
agreement
effective
not
earlier
than
the
31st
day
of
May,
1972
subject
to
the
rights
of
the
respective
parties
hereto
which
shall
have
arisen
prior
to
the
effective
date
of
such
termination.
While,
apparently,
the
operations
proceeded
reasonably
well
until
the
end
of
1971,
particularly
to
the
satisfaction
of
the
Forestry
Service
and
its
Minister,
difficulties
arose
between
the
respondent
and
Kanematsu
in
respect
of
financing
and
construction
of
a
mill.
An
action
was
instituted
in
the
Supreme
Court
of
British
Columbia
by
Naden
against
the
respondent
in
December
1974,
arising
as
a
result
of
the
refusal
of
the
respondent
to
deliver
the
T.S.C.
to
Naden
and
to
take
any
steps
to
effect
the
assignment
thereof.
It
sought
specific
performance
of
the
assignment
provisions
of
the
March
6,
1970,
agreement,
an
injunction
or,
alternatively,
rescission
of
the
contract
and
a
declaration,
or
damages.
The
respondent
filed
its
defence
and
counterclaimed
for
damages
for
breach
of
contract
and
breach
of
fiduciary
duty
as
well
as
other
remedies.
On
July
15,
1976,
the
respondent,
Naden,
Kanematsu
and
Goodwin
Johnson
and
his
wife
Edna
personally,
entered
into
minutes
of
settlement
of
that
action.
The
sum
of
$830,000
was
paid
by
Naden
to
the
respondent
pursuant
to
paragraph
9
of
those
minutes:
.
.
.
Without
admission
of
liability
and
accepted
in
full
and
final
settlement
of
the
claim
of
GJ
[the
Respondent]
for
compensation
for
the
loss
of
the
business
related
to
the
Agreement,
that
is
to
say,
as
damages
for
termination
or
cancellation
of
the
Agreement.
.
.
.
It
is
the
sum
of
$830,000
received
by
the
respondent
pursuant
to
the
minutes
of
settlement
which
the
Minister
assessed
in
1980
on
the
basis
that
the
fair
market
value
of
the
management
agreement
on
Valuation
Day
was
only
$280,425,
the
difference
between
the
two
sums
being
a
capital
gain.
The
respondent
in
reporting
its
income
for
the
1977
taxation
year
had
included
the
$830,000
as
the
proceeds
of
a
disposition.
It
deducted
therefrom
the
adjusted
cost
base
of
the
agreement
which
it
said
was
$830,000,
together
with
outlays
and
expenses
in
respect
of
the
disposition
of
$71,268
and,
thus,
claimed
an
allowable
capital
loss
of
$345,634
on
the
disposition.
The
Minister
confirmed
the
assessment
after
receiving
the
respondent's
notice
of
objection.
Thereupon,
the
respondent
appealed
the
assessment
to
the
Trial
Division,
which
appeal
resulted
in
Collier,
J.’s
judgment.
He
referred
the
matter
back
to
the
Minister
for
reassessment
“on
the
basis
that
the
adjusted
cost
base
(V-day
value)
of
'proceeds
of
disposition
—
contract
settlement'
is
$830,000
rather
than
$280,425."
It
is
that
judgment
which
is
the
subject
matter
of
the
appeal
to
this
Court.
The
appellant
does
not
contest
the
value
of
the
disposition.
Rather,
relying
on
the
alternative
plea
contained
in
paragraph
12
of
her
amended
statement
of
defence,
her
counsel
said
that
the
$830,000
received
by
the
respondent
was
compensation
for
the
destruction
or
loss
of
the
whole
profit-making
structure
of
the
respondent's
business.
It
was,
thus,
an
eligible
capital
amount
which
should
have
been
included
in
its
income
as
required
by
subsection
14(1)
of
the
Income
Tax
Act,
c.
63,
S.C.
1970-71-72,
as
amended
(“the
Act").
In
order
to
understand
the
issue
raised
by
the
appeal,
the
relevant
subsections
of
section
14
should
be
set
out:
14(1)
Where,
as
a
result
of
a
transaction
occurring
after
1971,
an
amount
has
become
payable
to
a
taxpayer
in
a
taxation
year
in
respect
of
a
business
carried
on
or
formerly
carried
on
by
him
and
the
consideration
given
by
the
taxpayer
therefor
was
such
that,
if
any
payment
had
been
made
by
the
taxpayer
after
1971
for
that
consideration,
the
payment
would
have
been
an
eligible
capital
expenditure
of
the
taxpayer
in
respect
of
the
business,
there
shall
be
included
in
computing
the
taxpayer's
income
for
the
year
from
the
business
the
amount,
if
any,
by
which
Subsection
14(1)
was
described
by
counsel
for
the
respondent
as
“the
mirror
image
rule”
because,
as
can
be
seen,
the
test
as
to
whether
an
amount
received
is
an
eligible
capital
amount
is
determined
by
the
recipient
being
considered
a
notional
payor
of
the
amount
which
he,
in
fact,
received,
i.e.,
the
inquiry
necessarily
is
to
ascertain
whether
or
not
the
amount,
if
paid
rather
than
received,
would
have
been
an
eligible
capital
expenditure.
By
definition,
to
be
such
an
expenditure
it
is
required
that:
(1)
the
expenditure
has
been
made
in
respect
of
a
business,
(2)
as
a
result
of
a
transaction,
(3)
which
occurred
after
1971,
(4)
was
on
account
of
capital,
(5)
was,
in
turn,
for
the
purpose
of
producing
income,
and
(6)
was
an
outlay
or
expense
not
otherwise
deductible
by
virtue
of
any
provision,
other
than
paragraph
18(1)(b),
in
computing
income
from
the
business.*
It
is
common
ground
that
if
the
respondent
had
been
the
payor,
the
payment
would
have
met
all
the
tests
of
subsection
5
with
the
exception
of
number
4.
The
appellant
says
that,
in
so
far
as
that
test
is
concerned,
the
payment,
not
being
deductible
as
a
business
expense,
would
have
been
a
capital
payment
and,
therefore,
would
have
been
an
eligible
capital
expenditure
since
the
other
tests
were
met.
It
was
the
consideration
paid
to
obtain
the
profit-making
structure
of
the
respondent
which
arose
as
a
result
of
the
operation
of
the
agreement.
Moreover,
in
appellant
counsel's
view,
even
if
it
is
conceded
to
be
a
capital
receipt
that
characterization
cannot
change
its
capital
nature
to
enable
it
to
become
a
revenue
expenditure
in
the
hands
of
the
payor.
Counsel
for
the
respondent,
on
the
other
hand,
says
that
a
payment
in
the
settlement
of
a
damage
action
is
not
a
payment
on
account
of
capital
although
in
the
hands
of
the
recipient
it
is
a
capital
receipt.
That
is
so
because
the
payment
would
not
be
an
outlay
or
expense
made
once
and
for
all
in
order
to
secure
or
acquire
an
asset
of
a
long
term
or
enduring
advantage.
Rather,
it
would
be
an
expense
on
revenue
account
and
would
be
deductible
as
a
business
expense.
It
is,
therefore,
excluded
by
the
definition,
supra,
—
test
number
6.
With
the
respective
positions
of
the
parties
in
mind,
it
would
be
helpful
in
understanding
the
issue
herein
to
adopt
the
terms
used
in
subsection
14(1)
to
the
facts
of
the
case.
An
amount,
$830,000,
became
payable
to
a
taxpayer,
the
respondent
in
1976,
in
respect
of
the
logging
business
formerly
carried
on
by
it.
The
consideration
given
by
the
respondent
for
that
amount
was
agreeing
to
settle
the
action
for
damages
for
breach
of
contract
with
Naden
and,
as
a
result,
foregoing
the
benefits
under
the
contract
had
it
continued
in
existence.
If
the
respondent
had
been
the
payor
of
that
amount
(a
notional
payor)
in
consideration
of
the
contract
cancellation,
it
would
have
been
an
eligible
capital
expenditure
if
it
met
the
tests
imposed
by
subsection
14(5)
to
be
such
an
expenditure.
The
issue
raised
by
this
appeal,
therefore,
is
a
very
narrow
one.
The
facts,
the
principles
of
law
and
the
tests
applicable,
with
the
exception
of
one,
have,
as
I
have
said,
all
been
agreed
upon.
That
issue
is:
Was
the
payment
of
$830,000
given
by
the
Respondent
as
a
notional
payor,
in
return
for
the
agreeing
to
the
cancellation
of
the
contract
and
the
benefits
flowing
therefrom,
an
eligible
capital
expenditure
or
did
it
fail
to
be
entitled
to
be
so
characterized
because
the
consideration
(the
sum
of
$830,000)
could
not
satisfy
all
of
the
tests
of
an
eligible
capital
expenditure
imposed
by
subparagraph
14(5)(b)(i)
of
the
Act?
The
payment
deemed
to
have
been
made
by
the
respondent
as
a
notional
payor
was
not,
in
my
opinion,
given
for
the
transfer
of
the
business
or
profit-making
structure
represented
by
the
operations
agreement
as
alleged
by
the
appellant.
I
have
this
opinion
for
the
following
reasons:
(1)
the
action
in
the
Supreme
Court
of
British
Columbia
by
Naden
against
the
respondent
was,
as
earlier
observed,
for
specific
performance
and
an
injunction
to
restrain
the
respondent
from
disposing
of
the
T.S.C.
or,
alternatively,
rescission
of
the
contract.
The
respondent's
counterclaim
was
for
damages
for
breach
of
contract
and
breach
of
fiduciary
duties,
as
well
as
other
remedies,
based
on
the
existence
of
the
contract.
Neither
did
Naden
seek,
in
this
action,
in
any
way
to
acquire
the
underlying
business
structure
of
the
respondent,
as
alleged
by
the
appellant,
nor
did
the
respondent
seek
to
sell
that
structure,
i.e.,
termination
of
the
contract
for
the
purpose
of
acquiring
a
capital
asset
was
not
sought.
Those
facts
are
crucial
in
the
characterization
of
“the
consideration
given
by
the
taxpayer.
.
.
.
”
(2)
While
reference
was
made
in
paragraph
9
of
the
minutes
of
settlement,
supra,
to
the
“claim
.
.
.
for
the
loss
of
the
business
related
to
the
Agreement,"
that
was
amplified
by
the
further
words
“that
is
to
say,
as
damages
for
the
termination
.
.
.
of
the
Agreement."
When
that
phrase
is
read
in
conjunction
with
the
claims
in
both
the
statement
of
claim
and
counterclaim,
as
well
as
in
conjunction
with
the
overall
terms
of
the
settlement,
there
can
be
no
question,
in
my
view,
that
the
$830,000
was
paid
as
damages
for
breach
of
contract
only.
(3)
Cogent
support
for
this
view
is
derived
from
the
termination
provision
of
the
contract,
paragraph
11,
supra.
The
underlying
business
structure
could
have
been
acquired
by
Naden
having
simply
terminated
the
contract
in
accordance
with
the
requirements
of
paragraph
11.
It
did
not
do
so.
For
whatever
reason,
it
elected
not
to
terminate
it
but
rather
to
seek
its
specific
performance.
The
only
reasonable
inference
to
be
drawn
from
these
facts
is
that,
when
it
could
not
obtain
the
remedies
it
sought,
it
agreed
to
pay
to
the
respondent
damages
for
breach
of
contract.
It
acquired
nothing
but
peace
in
the
litigation
and
rid
itself
of
a
bothersome
partner.
That
was
the
purpose
of
the
settlement.
That
the
payment
was
not
made
for
the
transfer
of
the
business
or
profitmaking
structure
does
not
end
the
inquiry.
The
next
question
to
be
answered,
ignoring
for
the
moment
the
effect
of
the
mirror
image
provision
of
subsection
14(1),
is,
was
the
compensation
received
by
the
respondent
pursuant
to
the
minutes
of
settlement
nevertheless
a
capital
receipt
or
was
it
received
in
lieu
of
profits
from
a
business
or
property?
It
is
clear
that
the
appellant,
by
virtue
of
the
assessment
under
appeal,
considered
the
amount,
as
the
proceeds
of
a
disposition,
to
be
a
capital
receipt.
But
in
determining
how
that
concession
is
affected
by
subsection
14(1),
it
is
useful,
I
think,
to
examine
the
law
as
to
how
a
payment
of
the
kind
in
issue
comes
to
be
characterized
as
a
capital
payment.
The
jurisprudence
on
the
characterization
of
payments
received
for
breach
or
cancellation
of
contracts
as
capital
or
income
receipts
is
volumi-
nous.
The
authorities
going
each
way
have
been
reviewed
in
many
cases
and
need
not
be
again
in
this
case.t
Suffice
it
to
say,
the
characterization
of
the
payment
depends
upon
the
facts
of
the
particular
case
and
the
inferences
to
be
drawn
therefrom.
Fauteux,
J.
(as
he
then
was)
in
M.N.R.
v.
Algoma
Central
Railway,
[1968]
S.C.R.
447;
[1968]
C.T.C.
161
viewed
the
problem
in
this
way:
Parliament
did
not
define
the
expressions
“outlay
.
.
.
of
capital”
or
“payment
on
account
of
capital”.
There
being
no
statutory
criterion,
the
application
or
nonapplication
of
these
expressions
to
any
particular
expenditures
must
depend
upon
the
facts
of
the
particular
case.
We
do
not
think
that
any
single
test
applies
in
making
that
determination
and
agree
with
the
view
expressed,
in
a
recent
decision
of
the
Privy
Council,
B.P.
Australia
Ltd.
v.
Commissioner
of
Taxation
of
the
Commonwealth
of
Australia
(2),
by
Lord
Pearce.
In
referring
to
the
matter
of
determining
whether
an
expenditure
was
of
a
capital
or
an
income
nature,
he
said,
at
p.
264:
The
solution
to
the
problem
is
not
to
be
found
by
any
rigid
test
or
description.
It
has
to
be
derived
from
many
aspects
of
the
whole
set
of
circumstances
some
of
which
may
point
in
one
direction,
some
in
the
other.
One
consideration
may
point
so
clearly
that
it
dominates
other
and
vaguer
indications
in
the
contrary
direction.
It
is
a
commonsense
appreciation
of
all
the
guiding
features
which
must
provide
the
ultimate
answer.
[1966]
A.C.
24;
[1965]
3
All
E.R.
209.
To
summarize,
from
a
review
of
the
authorities
I
think
that
it
can
be
safely
said
that
it
is
the
purpose
for
which
the
payment
is
made
that
determines
whether
it
is
to
be
characterized
as
being
on
capital
account
or
on
revenue
account.
As
I
have
earlier
said,
it
is
my
opinion
that
the
purpose
of
the
respondent
in
settling
the
damage
action
here
was
not
to
sell
a
capital
asset
nor
was
it
Naden's
purpose
to
acquire
one,
although
that
was
a
result
which
followed
incidentally
from
the
acceptance
of
the
settlement
offer.
Rather,
its
purpose
truly
was
to
settle
a
breach
of
contract
action.
Should
the
payment
arising
from
the
settlement,
aside
from
the
effect
of
subsection
14(1)
on
that
determination,
be
considered
in
the
hands
of
the
respondent
to
be
a
receipt
on
account
of
capital
or
one
on
account
of
revenue?
In
all
of
the
circumstances
of
this
case
its
receipt
should
be
considered,
in
my
opinion,
to
have
been
on
capital
account.
I
say
so
because
of,
inter
alia,
the
importance
of
the
contract
in
relation
to
the
whole
of
the
respondent's
business,
the
length
of
time
the
relationship
between
the
parties
had
subsisted
and,
perhaps,
most
importantly,
because
of
the
evidence
adduced
at
trial
as
to
its
value
to
the
respondent
as
a
capital
asset.
That
value
was,
according
to
that
evidence,
at
least
as
much
as
the
settlement
amount.
The
value,
being
the
sum
of
$830,000,
was
the
price
paid
for
sterilizing
the
asset
from
which
otherwise
benefits
would
have
been
obtained.
For
settlement
purposes,
the
measure
of
damages,
while
related
to
the
value
of
the
contract
to
the
respondent
at
the
time
of
settlement,
was
the
loss
of
contractual
benefits
to
the
respondent
arising
from
the
breach,
just
as
the
loss
of
earnings
for
a
period
related
to
an
employee's
length
of
service
often
provides
a
measure
of
damages
in
an
award
or
a
settlement
of
a
wrongful
dismissal
action.
In
either
case,
in
such
circumstances,
whether
paid
and
received
pursuant
to
a
court
judgment
or
pursuant
to
a
settlement,
for
tax
purposes,
the
damages
paid
are
capital
in
the
hands
of
the
recipient.
As
Lord
Buckmaster
said
in
the
report
of
The
Glenboig
Union
Fireclay
Co.,
Ltd.
v.
C.I.R.:
.
..
But
there
is
no
relation
between
the
measure
that
is
used
for
the
purpose
of
calculating
a
particular
result
and
the
quality
of
the
figure
that
is
arrived
at
by
means
of
the
application
of
that
test.
I
turn
now
to
the
effect,
if
any,
of
subsection
14(1)
on
the
finding
that,
in
the
hands
of
the
respondent,
the
payment
of
$830,000
was
capital.
As
earlier
noted,
that
subsection
employs
the
curious
technique
of
determining
whether
or
not
a
payment
is
an
eligible
capital
expenditure
by
notionally
considering
the
recipient
of
the
payment
as
the
payor
for
the
consideration
which
was
given
in
return
for
the
payment.
In
my
opinion
that
notional
change
of
roles
cannot
be
effected
in
a
vacuum.
By
that
I
mean,
the
circumstances
in
which
the
actual
payment
was
made,
for
the
actual
consideration
given,
do
not
change
and
cannot
be
ignored.
They
are
vital
in
making
the
determination
required
to
ascertain
whether
or
not
the
payment
is
an
eligible
capital
expenditure.
As
I
have
concluded
that
the
payment
by
Naden
of
$830,000
as
the
actual
payor,
was
in
settlement
of
an
action
for
damages
for
breach
of
contract
so
too
then
is
the
payment
of
that
sum
by
the
notional
payor,
the
respondent.
The
sole
question
then
is,
does
that
payment
fall
within
the
terms
of
subparagraph
14(5)(b)(i)
or
not?
In
general
terms
that
question
leads
to
another
—
is
the
payment
an
expense
deductible
as
being
one
for
the
purpose
of
gaining
or
producing
income
and
not
within
the
exceptions
described
in
paragraphs
(i)
to
(vi)
inclusive
of
subsection
14(1),
more
particularly,
in
this
case,
paragraph
(i)?
If
it
is
not
within
these
exceptions
and
is
properly
a
deductible
expense,
it
is
a
revenue
expenditure.
Since
it
is
not
within
the
ambit
of
subsection
14(1),
it
will
not
be
an
eligible
Capital
expenditure.
I
had
occasion
in
the
case
of
The
Queen
v.
Royal
Trust
Corporation
of
Canada,
supra,
at
165
(D.T.C.
5176)
of
the
report
to
discuss
briefly
the
interrelationship
of
section
14
with
sections
18
and
20
of
the
Act.
For
convenience
sake
I
set
out
that
passage
since
it
appears
to
be
apposite
at
this
stage
of
my
consideration
in
this
case.
Section
20
spells
out
specific
deductions
permitted
in
computing
income
from
a
business
or
property.
It
sets
in
motion
the
capital
cost
system
of
deductions
including
some
that,
prior
to
the
enactment
of
the
section,
had
not
been
eligible
for
such
treatment.
Paragraph
18(1)(b)
of
the
Act
prohibits
deduction
of
payments
on
account
of
capital
or
allowances
in
respect
of
depreciation,
inter
alia,
except
as
otherwise
permitted
by
the
Part.
Section
20
comes
into
play
to
alleviate
some
of
the
outright
prohibitions
prescribed
by
section
18.
Among
them
is
the
change
in
treatment
of
such
things
as
goodwill
and
similar
assets
previously
known
as
“nothings”
due
to
the
fact
that
they
were
not
deductible
either
because
of
their
capital
nature
or
because
they
were
not
depreciable
since
no
asset
existed
the
cost
of
which
could
be
amortized
over
a
given
period.
It
is
to
these
kinds
of
assets
that
paragraphs
14(5)(a)
and
(b)
are
directed
by
employing
the
concepts
of
“eligible
capital
property”
and
“eligible
capital
expenditures”.
Paragraph
20(1)(b)
permits
the
one-half
of
a
company’s
eligible
capital
property
as
defined
in
paragraph
14(5)(a)
to
be
amortized
at
the
rate
of
10%
per
annum
on
a
declining
balance
basis.
Subsection
18(1
)(a),
of
course,
reading
as
follows,
provides
the
exception
to
the
general
prohibition
against
the
deduction
of
“an
outlay
or
expense",
applicable
to
the
facts
of
this
case:
1.
In
computing
the
income
of
a
taxpayer
from
a
business
or
property
no
deduction
shall
be
made
in
respect
of
(a)
an
outlay
or
expense
except
to
the
extent
that
it
was
made
or
incurred
by
the
taxpayer
for
the
purpose
of
gaining
or
producing
income
from
the
business
or
property;
[Emphasis
added.]
What,
then,
on
the
facts
of
this
case
was
the
purpose
of
the
payment?
In
my
opinion,
it
is
clear
that
the
expenditure
was
made
“for
the
purpose
of
gaining
or
producing
income”
by
getting
rid
of
an
operational
contractual
expense
by
paying
damages
for
breach
of
that
contract.
The
purpose
could
not
remotely
be
described
as
being
for
the
acquisition
of
a
capital
asset.
That
being
so,
subsection
14(1)
does
not
come
into
play
because
if
the
respondent
had
been
the
payor,
the
payment
made
by
it
would
not
have
been
an
eligible
capital
expenditure
since
it
failed
to
meet
one
of
the
tests
imposed
by
subparagraph
14(5)(b)(i)
of
the
Act,
viz.,
that
the
payment
not
be
what,
in
general
terms
is
described
as,
a
deductible
business
expense.
The
trial
judge,
therefore,
correctly
found
the
$830,000
payment
to
have
been
received
on
capital
account.
Accordingly,
I
would
dismiss
the
appeal
with
costs.
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