D
E
Taylor
[TRANSLATION]:—This
is
the
appeal
of
Produits
d’Acier
Phoenix
Ltée
for
1975,
1976
and
1977.
The
appeal
is
vacated
for
1976.
For
the
other
two
years,
the
problem
is
described
in
the
notice
of
appeal
dated
May
6,
1980,
and
the
Minister’s
position
is
in
the
reply
to
the
notice
of
appeal
dated
November
27,
1980.
Both
documents
form
part
of
this
decision.
Counsel
for
the
appellant
referred
to
certain
precedents,
in
particular
Time
Motors
Limited
v
MNR,
[1969]
CTC
190;
69
DTC
5149.
He
emphasized
especially
the
following,
at
5151:
The
wording
of
that
provision
clearly
refers
to
accounting
practice.
The
only
expression
applicable
to
the
present
case
is
not
“contingent
liability”
but
“contingent
account”.
This
means
that
the
provision
is
to
be
construed
by
reference
to
proper
accounting
practice
in
a
business
of
the
kind
with
which
one
is
concerned.
I
am
fully
in
agreement
with
the
rule
above
stated.
Counsel
for
the
respondent
here
noted
that
the
amounts
at
issue
in
the
said
case
and
the
credit
notes
are
quite
different
from
those
in
the
case
at
bar.
I
have
only
one
other
case
as
a
reference,
that
of
Harlequin
Enterprises
Limited,
cited
in
[1977]
CTC
208
76
DTC
5164;
and
in
my
opinion
the
instant
appeal
by
Phoenix
is
of
entirely
the
same
type
as
in
Harlequin.
The
appeal
relates
directly
to
the
Harlequin
appeal
and
the
result
is
the
same
in
all
respects.
It
is
impossible
to
regard
the
amounts
at
issue
in
the
case
at
bar
as
other
than
potential
reserves,
and
they
fall
exactly
within
the
provisions
of
paragraph
18(1
)(a)
of
the
Income
Tax
Act.
In
my
view,
the
Board
has
no
option
but
to
dismiss
the
appeal.
Appeal
dismissed
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