Jerome,
A.C.J.:—This
action
by
way
of
appeal
from
a
decision
of
the
Tax
Court
of
Canada
came
on
for
hearing
at
Toronto,
Ontario,
on
January
24
and
25,
1990.
The
disputed
assessments
concern
the
plaintiff's
1981
and
1982
taxation
years
and
arise
from
the
Minister's
rejection
of
the
taxpayer's
allocation
between
land
and
buildings
of
the
proceeds
from
the
sale
of
an
apartment
building
in
North
York.
The
facts
are
not
in
dispute
and
are
as
follows.
In
1973
the
plaintiff
purchased
an
apartment
building
located
at
2850
Jane
Street
in
the
City
of
North
York
for
the
sum
of
$2,806,322
allocated
as
follows:
|
Land
|
$
493,105
|
|
Building
|
2,259,450
|
|
Equipment
|
53,767
|
The
plaintiff
held
the
property
until
December,
1980
when
it
was
sold
to
Kungs
Trading
Co.
Ltd.
for
$3,000,000.
The
agreement
of
purchase
and
sale
for
the
latter
transaction
contained
no
allocation
between
land
and
building,
but
the
parties
signed
a
subsequent
document
entitled
“interim
agreement
amendment"
which
included
the
following
allocation:
|
Land
|
$
460,000
|
|
Building
|
2,530,000
|
|
Equipment
|
10,000
|
The
plaintiff
acknowledges
having
executed
that
document,
but
contends
that
a
more
reasonable
allocation
would
have
been:
|
Land
|
$1,000,000
|
|
Building
|
2,000,000
|
The
plaintiff
retained
a
qualified
appraiser
who
provided
the
taxpayer
with
the
opinion
that
a
reasonable
allocation
would
be:
|
Land
|
$1,246,000
|
|
Building
|
1,754,000
|
Accordingly,
it
is
the
taxpayer's
position
that
the
proper
allocation
of
the
proceeds
of
the
sale
should
be:
|
Land
|
$1,241,847
|
|
Building
|
1,748,153
|
|
Equipment
|
10,000
|
The
Minister
rejected
that
proposal
and
reassessed
with
the
precise
figures
from
the
interim
agreement
amendment
to
which
I
referred
earlier.
The
relevant
provision
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
amended,
is
section
68
which
reads
as
follows:
68.
Amounts
in
part
consideration
for
position
of
property.—Where
an
amount
can
reasonably
be
regarded
as
being
in
part
the
consideration
for
the
disposition
of
any
property
of
a
taxpayer
and
as
being
in
part
consideration
for
something
else,
the
part
of
the
amount
that
can
reasonably
be
regarded
as
being
the
consideration
for
such
disposition
shall
be
deemed
to
be
proceeds
of
disposition
of
that
property
irrespective
of
the
form
or
legal
effect
of
the
contract
or
agreement;
and
the
person
to
whom
the
property
was
disposed
of
shall
be
deemed
to
have
acquired
the
property
at
the
same
part
of
that
amount.
The
onus
rests
upon
the
plaintiff
to
dislodge
the
Minister’s
position
and
I
am
not
satisfied
that
the
plaintiff
has
done
so
here.
There
are
at
least
three
aspects
of
this
case
which
direct
me
to
that
conclusion.
First,
the
allocation
in
issue
was
the
subject
of
an
agreement
between
knowledgeable
parties
to
the
1980
sale.
Mr.
Jack
Friedman
testified
on
behalf
of
the
plaintiff
corporation
and
was
the
directing
officer
throughout
all
of
these
transactions.
He
acknowledged
that
when
the
purchaser
proposed
the
breakdown
contained
in
the
interim
agreement
amendment,
he
gave
extensive
consideration
to
the
effect
of
any
counter-proposal
on
his
part
and
concluded
that
it
might
put
the
transaction
at
risk.
Clearly,
therefore,
the
breakdown
was
a
considered
element
in
the
agreement
between
a
knowledgeable
vendor
and
purchaser
operating
at
arm's
length.
Jurisprudence
makes
it
clearer
that
this
alone
is
not
necessarily
conclusive,
but
it
is
extremely
persuasive.
Secondly,
the
allocation
of
the
Minister
and
that
of
the
taxpayer
contained
in
the
interim
agreement
amendment
bears
a
very
similar
proportion
to
the
allocation
agreed
to
by
this
taxpayer
when
he
acquired
the
property
in
1973.
By
contrast,
the
proposed
allocation
of
the
taxpayer
represents
a
significant
departure
from
the
proportion
accepted
on
two
occasions
by
this
taxpayer.
Thirdly,
the
evidence
of
the
expert
appraiser
offered
in
support
of
the
plaintiff's
position,
while
comprehensively
presented,
simply
falls
short
of
the
necessary
substance
to
overturn
what
appears
to
have
been
a
normal
allocation
in
the
two
transactions
to
which
I
have
already
referred.
Obviously,
a
property
of
this
sort,
an
apartment
building
of
some
age
in
a
fluctuating
and
active
real
estate
market
could
be
the
subject
of
several
theoretical
approaches
to
allocation
of
value
between
land
and
buildings.
The
witness
for
the
appraiser
was
Mr.
Warren
Stewart,
owner
and
president
of
Warren
Stewart
and
Associates
(1986)
Limited,
expert
appraisers.
He
acknowledged
that
he
did
not
conduct
a
personal
examination
of
the
premises
but
had
it
done
by
a
junior,
but
more
importantly,
his
analysis
did
not
include
similar
transactions
in
the
same
area.
His
report
contained
some
reference
to
comparable
sales,
but
only
in
global
amounts.
In
the
absence
of
a
detailed
breakdown
of
other
sales
in
the
area
and
in
particular
a
breakdown
between
land
and
buildings,
the
opinion
evidence
does
not
persuade
me
that
the
Minister
erred
in
accepting
the
allocation
agreed
to
by
the
taxpayer
on
two
separate
occasions.
I
am
therefore
of
the
view
that
the
analysis
of
this
matter
by
the
learned
judge
of
the
Tax
Court
of
Canada
was
entirely
correct
and
there
is
no
justification
in
setting
aside
the
reassessment
of
the
Minister
in
the
plaintiff's
1981
and
1982
taxation
years.
The
appeal
is
therefore
dismissed,
with
costs.
Appeal
dismissed.
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