Ikram Ullah Makki v. Minister of National Revenue, [1978] CTC 2260, 78 DTC 1189

The Chairman:—This is the appeal of Ikram Ullah Makki from an income tax assessment in respect of the 1975 taxation year whereby the Minister disallowed certain additional personal exemptions claimed by the appellant as payments made to two of his non-resident nephews.

Facts

The appellant sought to deduct from his 1975 income an amount of $606.25 for his infirm sister; $301.25 for his nephew Khalique S A Hadi and $405.80 for his nephew Hassan Mujtuba Makki. By reassessment the Minister allowed the appellant to deduct the maximum allowance of $646 in respect of the appellant’s non-resident infirm sister. However, the Minister disallowed the deductions claimed in respect of the appellant’s nephews, both of whom are non-resident minors and attending school in Karachi.

In reassessing the appellant, the Minister accepted that the appellant’s sister was infirm and dependent on the appellant for support. Consequently, the Minister allowed the maximum deduction provided in paragraph 109(1)(f) of the Income Tax Act, SC 1970-71-72, c 63, as amended.

In disallowing the deductions claimed by the appellant for the support of his nephews, the Minister nevertheless accepted that the nephews were minors and that they attended school in Karachi (Exhibits R-1 and R-2), but concluded that paragraph 109(1)(e) of the Income Tax Act, SC 1970-71-72, c 63, as amended, was not applicable.

Paragraph 109(1)(e) reads:

(e) Niece or nephew.—for each niece or nephew of the individual or his spouse, who, during the year, resided in Canada, was wholly dependent upon the individual for support and was a person described in subparagraph (d)(i),

(ii) or (iii), if, during the year,

(i) the mother of the niece or nephew, as the case may be, was living apart from, and was separated pursuant to a divorce, judicial separation or written separation agreement from, her husband or former husband and was not in receipt of any amount as alimony or other allowance payable on a periodic basis for the maintenance of the niece or nephew,

(ii) the father of the niece or nephew, as the case may be, was physically or mentally infirm, or

(iii) the father of the niece or nephew, as the case may be, was deceased and the mother was not remarried,

an amount equal to,

(iv) if the niece or nephew has not attained the age of 16 years before the end of the year, $300 less /2 of the amount, if any, by which the income for the year of the niece or nephew, as the case may be, exceeds $1,100, and

(v) in any other case, $550 less the amount, if any, by which the income for the year of the niece or nephew, as the case may be, exceeds $1,150;

Paragraph 109(1)(e) of the Income Tax Act is not applicable because the appellant’s nephews were admittedly non-residents of Canada. The Minister also questioned whether the nephews were wholly dependent on the appellant. Even though counsel for the respondent admitted that the appellant’s sister was living alone and that the facts of the instant appeal met some of the requirements of paragraph 109(1)(e), the nephews were non-residents in Canada and no relief could be given under paragraph 109(1 )(e).

In attempting to apply the extended meaning of a “child” to the nephews, pursuant to section 252 of the Income Tax Act, SC 1970-71-72, c 63, as amended, it is clear that the appellant who resides in Canada does not, in law or in fact, have the custody or the control of his nephews.

The appellant argued that he visited the children and sent letters counselling them and that he did have the custody and control of his nephews. In my view, the dictionary and the ordinary meaning and implication of the words custody and control would eliminate the possibility of considering that the appellant in Canada could have the custody and control of his school-age nephews in Karachi. Section 252 of the Income Tax Act therefore cannot apply to the circumstances of this appeal.

Moreover, even if the extended meaning of child in section 252 of the Income Tax Act did apply, no relief could be obtained pursuant to paragraph 109(1 )(d) because before a deduction can be claimed the “child” or “children” (in this instance the appellant’s nephews) must be wholly dependent on the appellant for support.

Although the appellant claimed that the nephews were wholly dependent on him for support there is no valid evidence that that is indeed the case and the onus of proving that his nephews are wholly dependent on him rests with the appellant.

In his pleadings and submissions the appellant seeks the Board’s sympathetic review of the appeal on legal as well as on humanitarian grounds.

The legal aspects of the case have been reviewed and the Board points out that the maximum deductions allowed by the Income Tax Act were in fact allowed in respect of the appellant’s sister. In so far as the nephews are concerned there is no section of the Act which permits granting, on their behalf, dependant exemption under the circumstances revealed by the facts of this appeal. The application of the pertinent sections of the Act is considered by the appellant as giving rise to an anomalous and unfair treatment of his efforts to comply with his moral responsibilities toward his nephews. The Board, regardless of any sympathetic tendencies that it might entertain, cannot consider or grant tax relief on purely humanitarian grounds.

The Board therefore has no alternative but to dismiss the appeal.

Appeal dismissed.