Sarchuk,
T.C.J.:—The
appeals
of
Seaway-Levy
Technical
&
Financial
Ltd.
(Seaway)
are
from
reassessments
of
tax
with
respect
to
its
1981,
1982
and
1983
taxation
years.
The
issue
before
me
arises
in
the
following
manner.
The
appellant
asserts
that
in
its
taxation
year
ending
December
31,
1982
it
disposed
of
all
its
Class
12
assets
to
an
arm's-length
purchaser
for
proceeds
equal
to
one
dollar
and
realized
a
terminal
loss
of
$1,230,914
in
respect
of
that
class.
In
computing
its
income
for
its
1982
taxation
year
the
appellant
deducted
the
terminal
loss
and
as
a
result,
inter
alia,
of
deducting
the
said
terminal
loss
realized
a
non-capital
loss
of
$1,083,936
in
that
taxation
year.
In
computing
its
taxable
income
for
the
taxation
years
ending
December
31,
1981
and
December
31,
1983
the
appellant
deducted
non-capital
losses
pursuant
to
paragraph
111(1)(a)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
in
the
amounts
of
$535,260
and
$548,586
respectively,
being
the
respective
portions
of
the
non-capital
loss
realized
by
it
in
its
1982
taxation
year.
By
notices
of
reassessment
dated
September
3,
1985
the
respondent
disallowed
the
deduction
of
the
terminal
loss
in
taxation
year
1982
and
disallowed
the
deduction
of
the
non-capital
losses
claimed
by
the
appellant
in
taxation
years
1981
and
1983.
In
so
doing
the
respondent
proceeded
on
the
basis:
(a)
that
the
appellant
disposed
of
all
its
Class
12
assets
in
its
1973
taxation
year
and
was
consequently
entitled
to
claim
a
terminal
loss
in
respect
thereof
only
in
that
taxation
year
and
not
in
its
1982
taxation
year;
(b)
that
even
if
the
appellant
retained
a
few
Class
12
items
which
were
obsolete
and
of
no
nominal
value,
the
appellant
at
the
end
of
its
1973
taxation
year
no
longer
owned
any
property
in
Class
12;
and
(c)
that
if
the
appellant
retained
any
Class
12
assets
in
1973
such
assets
were
obsolete
and
of
no
more
than
nominal
value
when
the
change
of
use
occurred
in
relation
to
such
assets
in
1973
resulting
in
a
deemed
disposition
pursuant
to
paragraph
13(7)(a)
of
the
Act.
Accordingly
any
terminal
loss
in
relation
to
Class
12
assets
should
have
been
claimed
in
the
appellant's
1973
taxation
year.
The
primary
issue
in
this
case
is
one
of
fact:
did
the
appellant
dispose
of
all
its
Class
12
assets
in
1973
or
were
certain
items
falling
within
that
class
retained
by
it
which
items
were
not
disposed
of
until
1982?
Evidence
was
given
on
behalf
of
the
appellant
by
Norman
Steven
Eckler
(Eckler)
and
Simon
Andrei
Mucalov
(Mucalov).
Eckler
was
an
employee
of
Seaway
Multi-Corp.
(Seaway)
the
appellants
parent
company,
from
1967
to
1977,
first
as
manager
of
taxes,
then
as
corporate
comptroller
and
ultimately
as
vice-president
of
finance.
Mucalov
first
became
associated
with
the
appellant
in
1975
when
he
was
hired
by
Seaway
as
manager
of
its
internal
audit
department.
At
the
present
time
Eckler
has
no
further
connection
to
the
appellant
or
any
related
company.
Mucalov,
on
the
other
hand,
while
no
longer
employed
by
Seaway,
continues
to
have
a
relationship
with
the
Levy
group
of
companies
in
the
provision
of
accounting
and
tax
services
to
them.
The
appellant
was
incorporated
in
1916
and
until
1976
was
known
as
Canadian
Acme
Screw
&
Gear
Ltd.
Up
to
and
including
the
year
1972
it
operated
a
large
manufacturing
concern
producing
screws,
gears,
joints,
shocks,
pumps
and
other
heavy
industrial
machinery
parts.
In
the
course
of
its
manufacturing
business
the
appellant
owned
and
utilized
property
characterized
by
the
Act
as
Class
12
assets.
This
category
included
tools
costing
less
than
$100,
uniforms
and
items
described
by
Eckler
as
“
cutting
or
shaping
parts
of
a
machine".
In
addition
to
the
foregoing
the
appellant
also
owned
substantial
quantities
of
heavy
equipment
which
fell
into
other
classes
of
assets.
In
1972
as
a
result
of
a
labour
dispute,
the
appellant
terminated
its
manufacturing
operations
and
instructed
an
auctioneer
to
dispose
of
its
assets.
All
of
the
major
pieces
of
equipment
including
presses,
lathes
and
other
mill
working
machinery
were
catalogued
and
advertised
for
sale.
In
1973
a
general
auction
was
held.
It
was
Eckler's
recollection
that
the
bulk
of
the
machinery
was
sold
and
that
any
pieces
which
were
not
sold
or
which
were
held
back
were
transferred
to
"some
of
our
other
manufacturing
companies"'.
The
testimony
regarding
the
disposition
of
the
Class
12
assets
in
1972
and
1973
is
somewhat
ambiguous,
vide
Eckler's
testimony
in
chief:
Q.
When
these
items
were
given
to
the
auctioneer
for
sale,
did
you
include
in
the
items
that
were
offered
for
sale
by
auction
the
Class
12
assets?
A.
For
the
most
part,
the
Class
12
assets
wouldn't
be
saleable
because
they
were
small
tools
or
they
were
special
moulds
or
jigs
for
particular
pieces
of
product
that
were
being
manufactured
at
the
time
by
Acme
or
may
have
been
manufactured
years
before,
but
they
wouldn't
be
of
any
use
to
any
other
buyer,
and
the
small
tools
were
really
not
anything
that
would
really
fetch
much
in
the
way
of
an
auction.
Q.
Were
some
small
tools
offered—were
some
assets
in
the
Class
12
category
offered
for
sale
at
the
auction?
A.
I
can't
really
recall
but
I
wouldn't
think
there
would
be
anything
material.
On
the
other
hand
the
appellant's
income
tax
return
as
originally
filed
for
taxation
year
1971,
discloses
that
approximately
$200,500
worth
of
Class
12
assets
consisting
of
items
such
as
previously
described
formed
part
of
the
proceeds
of
disposition
in
the
capital
cost
allowance
schedule
attached
to
that
return.
Furthermore,
with
respect
to
the
1973
taxation
year,
the
appellant
filed
an
amended
income
tax
return
in
which
the
capital
cost
allowance
schedule
was
amended.
From
this
it
appears
that
certain
Class
12
assets
were
disposed
of
in
that
year
at
least
to
the
amount
of
$620,068.
The
appellant
had
carried
on
its
manufacturing
operations
at
premises
located
at
207
Weston
Road
in
Toronto.
Although
Eckler's
testimony
implied
that
the
appellant
maintained
ownership
of
that
plant
I
am
satisfied
that
the
property
was
sold
in
1973,
apparently
to
a
related
company.
In
this
regard
I
accept
the
evidence
of
Mucalov
who
specifically
referred
to
the
appellant's
income
tax
returns
in
which
the
sale
of
the
plant
was
reported.
After.
the
disposition
of
its
building
and
assets
in
1973
for
all
practical
purposes
the
appellant
was
inactive.
Mucalov
described
it
as
more
or
less
a
shelf
company
in
1975.
It
had
ceased
its
manufacturing
activities,
it
had
no
remises,
it
did
not
have
a
building
and
it
did
not
have
any
facility
in
which
to
keep
equipment.
It
did,
however,
utilize
the
services
of
several
employees,
whether
its
own
or
those
of
its
parent
is
uncertain,
for
the
purpose
or
collecting
accounts
receivable
that
were
still
outstanding
and
for
the
preparation
of
its
tax
returns.
It
was
not
until
1975
that
the
appellant
commenced
a
new
business
and
became
a
service
corporation
rendering
administrative,
management
and
financial
services
to
a
number
of
related
companies.
When
Mucalov
began
to
work
for
Seaway
in
1975
he
became
responsible
for
the
tax
returns
and
tax
reporting
of
the
appellant.
In
that
year
he
was
instructed
by
Eckler
to
prepare
and
file
amended
tax
returns
for
the
appellant
for
the
years
1971,
1972
and
1973.
Essentially
the
amendments
consisted
of
changes
to
the
schedule
of
fixed
assets.
In
the
original
returns
Eckler
had
determined
that
for
tax
purposes
the
appellants
Class
12
assets
were
to
be
written
off
as
current
expenses
as
perishable
tooling,
and
indeed
that
had
been
the
practice
for
many
years.
Mucalov’s
instructions
were
to
review
the
appellant's
accounts
for
those
three
years
and
to
extract
from
the
company's
income
statements
certain
expenses
identified
as
Class
12
items
which
amounts
were
then
to
be
added
back
to
the
income
of
the
appellant
in
order
to
enable
the
appellant
to
capitalize
those
amounts
on
the
capital
cost
allowance
schedules
as
Class
12
fixed
assets.
Mucalov
described
this
process
as
follows:
A.
Well,
we
had
two
or
three
people
in
the
Internal
Audit
Department
actually
go
back
to
the
old
Canadian
Acme
Screw
&
Gear
files
for
1971,
'71
and
'72,
and
they
went
through
the
expense
accounts
of
the
company
and
identified
certain
items
that
were
expensed
on
the
books
and
were
extracted,
and
lists
were
made
of
all
these
items
and
they
were
added
back
to
income
as
reported
by
the
company
in
order
to
arrive
at
the
taxable
income
and
then
added
to
the
capital
cost
allowance
schedule
as
Class
12
assets.
According
to
Mucalov,
the
reason
for
filing
these
amended
returns
was:
A.
Because
the
company
had
losses
to
carry
forward
and,
by
the
procedure
that
we
employed
to
add
these
expenses
back
as
Class
12
assets,
we
could
reduce
the
losses
to
be
carried
forward
and
have
the
Class
12
assets
on
the
capital
cost
allowance
schedule
so
that
we
could
claim
the
deduction
at
any
time
that
was
suitable
or
required.
Q.
This
new
treatment,
then,
would
give
you
more
flexibility
and
discretion?
A.
Yes,
it
would.
It
was
conceded
by
Eckler
that
the
flexibility
and
discretion
referred
to
was
solely
related
to
the
extended
time
period
within
which
the
terminal
loss
could
be
utilized
for
tax
purposes.
At
the
same
time
that
Mucalov
was
instructed
to
revise
the
1971-1973
schedules
of
fixed
assets
Eckler
asked
"an
accountant
.
.
.
to
set
aside
some
hand
tools
to
keep
on
file
to
ensure
that
there
would
be
no
terminal
loss".
This
was
to
be
done,
as
he
said:
“
Because
those
tools
were
Class
12
tools
and
the
tax
regulations,
as
I
remember
at
that
time,
as
long
as
there
is
one
asset
left,
there
is
no
terminal
loss—you
cannot
claim
a
terminal
loss
if
there
is
one
asset
left."
According
to
Eckler
his
instructions
to
the
accountant
(subsequently
identified
as
Art
Island,
the
appellant's
assistant
treasurer)
were
followed.
What
was
done
and
when
it
was
done
is
unclear.
Island
did
not
testify
and
we
are
forced
to
pick
up
the
thread
of
continuity
in
the
testimony
of
Mucalov.
He
said
that
to
the
best
of
his
knowledge
certain
hand
tools
were
kept
in
the
Seaway
corporate
tax
department
in
a
file
drawer
along
with
the
tax
files
for
the
appellant.
He
believed
they
were
there
when
he
arrived
and
they
remained
there
until
1982
at
which
time
arrangements
were
made
for
their
disposition.
He
had
the
tools
photographed
(Exhibit
A-2)
and
then
directed
someone
in
his
employer's
purchasing
department
to
find
a
buyer.
Ultimately
an
individual
representing
Technical
Source
Services,
a
third
party
with
whom
Seaway
did
business
on
a
regular
basis,
came
to
Mucalov’s
office,
gave
him
a
cheque
for
one
dollar
and
took
the
tools.
As
far
as
Mucalov
was
aware
this
transaction
disposed
of
the
remaining
Class
12
assets.
The
appellant
then,
in
its
income
tax
return
for
that
year,
deducted
the
terminal
loss
in
issue
in
this
appeal.
It
is
the
appellant's
position
that
it
was
entitled
to
deduct
a
terminal
loss
in
computing
its
income
for
the
1982
taxation
year.
The
terminal
loss
provision
that
counsel
relies
upon
is
subsection
20(16)
of
the
Act,
which
reads:
20.
(16)
Notwithstanding
paragraphs
18(1)(a),
(b)
and
(h),
where
at
the
end
of
a
taxation
year,
(a)
the
aggregate
of
all
amounts
determined
under
subparagraphs
13(21)(f)(i)
to
(ii.1)
in
respect
of
depreciable
property
of
a
particular
prescribed
class
of
a
taxpayer
exceeds
the
aggregate
of
all
amounts
determined
under
subparagraphs
13(21)(f)(iii)
to
(viii)
in
respect
of
depreciable
property
of
that
class
of
the
taxpayer,
and
(b)
the
taxpayer
no
longer
owns
any
property
of
that
class,
in
computing
the
taxpayer's
income
for
the
year
(c)
there
shall
be
deducted
the
amount
of
the
excess
determined
under
paragraph
(a),
and
(d)
no
amount
shall
be
deducted
for
the
year
under
paragraph
(1)(a)
in
respect
of
property
of
that
class,
and
the
amount
of
the
excess
determined
under
paragraph
(a)
shall
be
deemed
to
have
been
deducted
under
paragraph
(1)(a)
in
computing
the
taxpayer's
income
for
the
year
from
a
business
or
property.
Counsel
said,
and
I
quote:
Paragraph
(a),
I
submit,
simply
indicates,
if
I
can
put
it
in
general
terms,
that
you
take
the
amounts
determined
under
13(21)
(f)(i)
to
(ii.1)—in
most
cases,
Your
Honour,
that
is
essentially
the
cost
of
the
property—and
you
deduct
from
that
cost
amounts
that
you
have
previously
deducted
either
as
capital
cost
allowances
or
amounts
that
have
been
deducted
from
the
class
because
of
dispositions
that
you've
made
and
if
you
have
a
balance
left
in
your
class
and
if
you
no
longer
own
any
property
of
that
class
at
the
end
of
the
year-^and,
of
course,
the
important
words
in
the
Appellant's
submission
is
"no
longer
owns
any
property
of
that
class
at
the
end
of
the
year"—then,
in
computing
your
income,
you
can
deduct
essentially
what
is
the
unclaimed
balance
in
the
class.
[Emphasis
added.]
Accordingly,
counsel
submitted
that
the
appellant
need
only
show,
in
terms
of
ownership
of
property,
that
the
taxpayer
"
no
longer
owns
any
property
of
that
class"
as
of
taxation
year
1982.
As
to
the
disposition
of
all
its
Class
12
assets
in
1982
counsel
relies
on
the
evidence
of
Mr.
Eckler,
and
for
simplicity’s]
sake
I
will
quote
his
words:
Mr.
Eckler
testified
that,
after
the
auction
occurred
in
1973,
he
had
gone
down
to
207
Weston
Road,
which
were
the
premises
of
Canadian
Acme
Screw
&
Gear,
and
from
time
to
time
had
seen
small
tools
and
other
items
in
Class
12
on
the
premises.
That
was
at
some
time
after
the
auction
had
occurred.
In
addition,
he
testified
to
the
effect
that
in
1975,
he
decided
to
take
specific
steps
to
ensure
that
a
disposition
of
all
the
Class
12
assets
would
not
occur.
He
asked
specifically
that
some
of
the
hand
tools
that
were
included
in
the
Appellant's
Class
12
assets
be
set
aside
and
he
testified
that
this
was
done
and,
although
the
appellant
had
sold
its
premises,
there
was
an
area
set
aside
in
the
parent
company’s
premises
where
the
Class
12
assets
were
held.
When
he
ordered
the
segregation
of
those
specific
Class
12
assets
in
1975,
he
didn't
personally
carry
out
the
segregation—he
didn't
do
it
by
hand;
he
ordered
someone
else
to
do
it
and
he
assumed
that
his
instructions
were
followed.
I
submit
to
the
Court
that
there
is
no
reason
why
they
wouldn't
be
followed
nor
is
there
any
evidence
whatsoever
to
suggest
that
the
assets
weren't
segregated
or
that
Canadian
Acme
Screw
&
Gear
did
not
have
Class
12
assets
at
that
time.
Quite
the
contrary.
The
only
evidence
that
is
before
the
Court
on
this
point
is
Mr.
Eckler's
evidence
to
the
effect
that
he
knew
there
were
Class
12
assets
still
on
hand,
he
asked
that
they
be
segregated
and
set
aside
and,
although
he
didn't
do
the
physical
act
of
segregation—not
something
that
one
would
expect
him
to
do
in
a
company
of
that
size—he
assumed
that
it
was
done
and
there
is
no
evidence
to
contradict
that
assumption.
[Emphasis
added.]
The
respondent's
position
is
that
the
appellant
had
disposed
of
all
its
Class
12
assets
in
its
1973
taxation
year
and
incurred
a
terminal
loss
in
that
year.
Consequently
its
right
to
carry
forward
the
non-capital
loss
for
its
1973
taxation
year
would
have
expired
after
1978.
Counsel
urged
the
Court
to
consider
the
following
facts
as
supporting
the
respondent's
conclusion.
The
original
accounting
treatment
in
1973
whereby
Class
12
was
exhausted
was
based
on
the
fact,
known
to
the
appellant
at
that
time,
that
all
property
in
Class
12
had
been
disposed
of.
The
appellant
itself
recognized
that
fact
in
filing
its
original
return
for
that
taxation
year.
Counsel
argued
that
the
subsequent
change
in
accounting
treatment
and
the
filing
of
an
amended
income
tax
return
for
1973
does
not
alter
that
basic
fact.
Counsel
also
referred
to
the
fact
that
the
building
in
which
the
appellant
carried
on
its
manufacturing
business
was
disposed
of
in
1973,
and
directed
the
Court's
attention
to
the
evidence
given
by
Eckler
to
the
effect
that
between
1973
and
1975
another
business
was
being
carried
on
in
the
former
premises
of
the
appellant
by
a
related
company.
Furthermore
it
was
not
clear
where
the
remaining
tools
came
from,
it
is
not
clear
where
these
tools
were
between
1973
and
1975
and
counsel
urged
the
Court
to
find
as
well
that
on
the
evidence
it
is
not
clear
that
the
tools
shown
in
Exhibit
A-2
were
ever
owned
by
the
appellant.
If
the
appellant
is
to
succeed
I
must
be
able
to
reasonably
conclude
on
the
evidence
before
me
that
some
property
in
Class
12
was
still
owned
by
it
in
1982
and
was
disposed
of
that
year.
The
evidence
is
too
vague
and
uncertain
to
enable
me
to
reach
that
conclusion.
It
is
far
more
probable
that
this
appellant
no
longer
had
any
Class
12
property
in
1982
and
had
not
owned
any
property
of
that
class
since
1973.
That
is
the
last
point
in
time
in
respect
of
which
there
is
any
direct
evidence
regarding
unsold
or
retained
property
and
even
that
testimony
is
itself
somewhat
equivocal.
Eckler
stated
that
following
the
auction
which
took
place
in
1973
he
was
satisfied
that
certain
Class
12
assets
had
been
retained.
When
asked
how
he
knew
that
he
responded:
“After
the
auction—my
office
was
at
1400
Weston
Road
and
I
had
gone
down
there
and
I
saw
various
pieces
of
equipment
that
hadn't
been
sold
.
.
.".
Eckler
then
continued:".
.
.
and
in
1975
I
asked
the
accountant
to
put
aside
some
small
hand
tools
when
we
filed
the
amended
returns."
This
testimony
however
fails
to
account
for
the
hiatus
of
some
two
years
during
which
Eckler’s
description
of
the
activities
of
the
appellant
was
that
it
consisted
of
.
.
.
just
wind-up
affairs
and
clean-up
elections
[sic]
and
sale
of
any
remaining
equipment".
It
is
difficult
however
to
ascertain
precisely
where
these
pre-1975
wind-up
operations
took
place.
He
said,
referring
to
the
appellant's
former
plant,
that
between
1973
and
1975:“.
.
.
there
was
still
some
shock
absorber
manufacturing
going
on
down
there
and
we
kept
some
offices
there
and
we
had
some
accountants
stationed
there
.
.
.
and
we
also
had
another
operation
down
there
where
we
rented
space
.
.
.".
From
the
totality
of
his
evidence
it
is
most
probable
that
these
"other
operations"
were
carried
on,
as
Eckler
subsequently
conceded,
by
another
subsidiary
of
Seaway
which
occupied
the
appellant's
former
premises.
Furthermore,
once
the
appellant
disposed
of
its
assets
it
appears
unlikely
that
there
were
any
further
activities
to
be
carried
on
at
the
former
premises,
given
that
its
financial
and
tax
records
appear
to
have
been
maintained
at
a
Seaway
office.
I
turn
next
to
the
tools
shown
in
Exhibit
A-2
which
are
presented
as
the
remaining
Class
12
assets.
They
are
commonly
used
hand
tools,
specifically
several
screwdrivers,
and
a
wrench
or
two
of
a
type
found
in
most
manufacturing
plants.
They
bear
absolutely
no
mark,
label
or
other
feature
or
characteristic
to
distinguish
them
from
any
other
similar
tool
or
to
identify
them
as
property
of
the
appellant.
There
is
no
evidence
before
me
as
to
when
they
were
picked
up
other
than
it
was
in
1975.
There
is
no
evidence
as
to
the
location
from
which
they
were
taken,
whose
possession
they
were
in
at
that
time,
and
what
use
was
being
made
of
them
if
any.
Nor
is
there
any
evidence
as
to
how
long
they
were
kept
in
Island's
possession
before
being
placed
in
the
appellant's
tax
file.
On
the
issue
of
continuity,
although
counsel
for
the
appellant
relied
to
an
extent
on
Mucalov’s
testimony,
it
establishes
only
that
the
tools
shown
in
Exhibit
A-2
remained
in
the
office
in
which
he
worked
between
1975
and
1982
when
he
arranged
for
their
disposition.
He
had
absolutely
no
personal
knowledge
in
respect
of
any
other
aspect
of
their
collection
or
retention
prior
to
that
time.
In
my
view,
because
the
tools
in
issue
are
not
readily
identifiable
as
assets
belonging
to
the
appellant,
a
reasonable
evidentiary
chain
of
custody
or
continuity,
and
I
include
in
this
context
circumstantial
evidence,
is
necessary
to
establish
their
authenticity
as
the
remaining
Class
12
assets
owned
by
the
appellant.
The
evidence
as
a
whole
leaves
me
with
considerable
apprehension
that
the
items
may
not
be
what
they
are
represented
to
be.
With
respect
to
the
unexplained
failure
to
call
Island
it
seems
appropriate
to
refer
to
Sopinka
and
Lederman,
The
Law
of
Evidence
in
Civil
Cases,
Butterworth
&
Co.
(Canada)
Ltd.,
(1974)
and
I
quote
from
pages
535-36:
In
Blatch
v.
Archer
[(1774),
1
Cowp.
63,
at
p.
65]
Lord
Mansfield
stated:
It
is
certainly
a
maxim
that
all
evidence
is
to
be
weighed
according
to
the
proof
which
it
was
in
the
power
of
one
side
to
have
produced,
and
in
the
power
of
the
other
to
have
contradicted.
The
application
of
this
maxim
has
led
to
a
well-recognized
rule
that
the
failure
of
a
party
or
a
witness
to
give
evidence,
which
it
was
in
the
power
of
the
party
or
witness
to
give
and
by
which
the
facts
might
have
been
elucidated,
justifies
the
court
in
drawing
the
inference
that
the
evidence
of
the
party
or
witness
would
have
been
unfavourable
to
the
party
to
whom
the
failure
was
attributed.
[Murray
v.
Saskatoon,
[1952]
2
D.L.R.
499,
at
pp.
505-506.]
In
the
case
of
a
plaintiff
who
has
the
evidentiary
burden
of
establishing
an
issue,
the
effect
of
such
an
inference
may
be
that
the
evidence
led
will
be
insufficient
to
discharge
the
burden.
In
reaching
my
conclusion
I
have
also
taken
into
account
the
conduct
of
the
appellant
in
1972
and
1973.
It
intended
to
terminate
its
manufacturing
business
and
to
dispose
of
all
of
its
assets
and
in
my
view
it
did
so.
It
arranged
an
auction
and
such
assets
which
might
have
remained
thereafter
were
transferred
to
other
associated
companies.
The
income
tax
returns
filed
for
those
taxation
years
are
also
consistent
with
the
appellant's
intention
to
terminate
its
manufacturing
business.
All
of
this
leads
to
a
conclusion
that
the
subsequent
amendments
and
the
purpose
for
which
they
were
made,
that
is
the
resuscitation
of
a
terminal
loss,
were
nothing
more
than
accounting
revisionism.
In
my
view
there
is
a
breach
of
continuity
with
respect
to
the
possession
of
Class
12
assets
and
it
would
be
unsafe
to
conclude
that
Class
12
assets
existed
in
1982.
It
is
not
necessary
for
me
to
consider
the
respondent's
alternative
arguments.
The
appeals
are
dismissed.
Appeals
dismissed.
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