O'Connor,
J.T.C.C.:—These
appeals,
respecting
the
appellants’
1990
and
1991
taxation
years,
were
heard
on
common
evidence
in
Toronto,
Ontario
on
May
9,
1994
pursuant
to
the
Informal
Procedure
of
this
Court.
Facts
(a)
In
1990
the
appellants
resided
at
71
Cass
Avenue,
T.H.
43,
Scarborough,
Ontario
(the
"property")
which
was
their
principal
residence;
(b)
The
appellants
financed
the
purchase
of
the
property
in
December
1989
with
a
first
mortgage
of
$138,000,
a
second
mortgage
of
$18,400
and
a
third
mortgage
of
$9,200;
(c)
For
1990
and
1991
the
appellants
reported
rental
income,
expenses
and
losses
in
certain
amounts.
In
the
notice
of
appeal
the
appellants
considerably
reduced
these
claimed
losses
to
$2,416,87
for
each
appellant
in
1990
and
$1,931.22
for
each
appellant
in
1991.
A
small
amount
of
net
rental
gain
was
established
for
1992.
The
forthright
testimony
given
by
the
appellant,
Antony
Javatilaka,
is
accepted
by
the
Court.
He
and
his
wife
immigrated
to
Canada
in
1989.
They
bought
the
property
and
registered
three
mortgages
to
finance
same.
The
tax
preparer
for
the
1990
and
1991
returns
considerably
exaggerated
the
expenses
allocable
to
the
rented
area
of
the
property
and
made
errors
in
attributing
only
1/3
(rather
than
1/2)
of
the
loss
in
1990
to
Celinia
and
no
portion
of
the
loss
in
1991
to
Celinia.
The
notices
of
appeal
attempt
to
correct
these
matters.
Based
on
the
testimony
of
Antony
Javatilaka
as
to
the
tenants
he
sought
and
obtained,
the
rentals
he
was
able
to
obtain
and
the
allocation
of
expenses
as
set
forth
in
the
notices
of
appeal,
the
Court
finds
that
a
reasonable
expectation
of
profit
existed
in
1990
and
1991
notwithstanding
the
large
amount
of
the
mortgages
and
the
appeals
of
Antony
Javatilaka
for
1990
and
1991
are
allowed
with
costs.
The
appeal
of
Celinia
Javatilaka
is
also
allowed
for
the
1990
year
but
is
dismissed
for
the
1991
year
as
no
notice
of
objection
as
required
by
section
169
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
was
served
by
her
on
the
Minister
of
National
Revenue
for
that
year.
Appeals
allowed
in
part.
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