Pratte, J:—This is an appeal from a judgment of the Trial Division dismissing an appeal from a decision of the Tax Review Board relating to the appellant’s income tax for the 1965 and 1966 taxation years.
In 1965 and 1966 the appellant realized a total profit of $105,608.75 on the sale of his interest in certain lands situated on Bourret Street, in Montreal. His income tax for those years was first assessed on the basis that the profit of $105,608.75 was a non-taxable capital gain. However, on July 2, 1970, the Minister of National Revenue reassessed the tax payable by the appellant for 1965 and 1966 on the basis that that profit was income from a business within the meaning of the Income Tax Act. The sole question for determination on this appeal is whether the Trial Division correctly held that those reassessments had been legally made.
It was first argued on behalf of the appellant that the judge below had erred in deciding that the profit realized on the sale of the Bourret Street property was not a capital gain. There is, in my view, no substance in that argument. A mere reading of the record shows that there is ample evidence Supporting the finding of the Trial Division on this point.
The appellant’s second argument was that the Minister could not legally reassess the appellant on the basis that the profit in question was income because he had previously agreed to treat that profit as a capital gain. Counsel submitted that this agreement had been made during the course of negotiations between representatives of the appellant and officers of the Department of National Revenue concerning the appellant’s assessments for the years 1961 to 1964. The appellant had agreed, said counsel, not to appeal his assessments for the 1961 to 1964 taxation years on the understanding that his income tax for 1965 would be computed on the basis that the profit here in question was a capital gain. Counsel argued that the Minister could not repudiate that understanding, particularly after the expiry of the time within which the appellant might have appealed the 1961 to 1964 assessments.
In my view, the trial judge correctly dismissed that argument. .. the Minister has a statutory duty to assess the amount of tax payable on the facts as he finds them in accordance with the law as he understands it. It follows that he cannot assess for some amount designed to implement a compromise settlement ...”.* The agreement whereby the Minister would agree to assess income tax otherwise in accordance with the law would, in my view, be an illegal agreement. Therefore, even if the record supported the appellant’s contention that the Minister agreed to treat the profit here in question as a capital gain, that agreement would not bind the Minister and would not prevent him from assessing the tax payable by the appellant in accordance with the requirements of the statute.
For these reasons, I would dismiss the appeal with costs.
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