Dominion Bridge Company Limited v. Her Majesty the Queen, [1977] CTC 554, 77 DTC 5367

The Chief Justice (concurred in by Pratte and Ryan, JJ) (judgment delivered from the Bench):—This is an appeal from a judgment of the Trial Division dismissing, with costs, an appeal against reassessments of the appellant under Part I of the Income Tax Act for the 1967, 1968 and 1969 taxation years.

In respect of each of those years there was an amount added to the appellant’s stated income as being “Overstatement of cost of sales”, which amounts were

As I understand the appellant’s position on the appeal, it is an attack on the finding of fact made by the Trial Division that, in effect, as I understand it, was that the activities, during the relevant periods, of a wholly-owned subsidiary—referred to as “Span”—in respect of the acquisition of the appellant’s “off-shore’’ steel requirements were really carried on by it, under direction of the appellant, as an integral part of the appellant’s steel processing business, and were not a trading business carried on by Span as a business separate from the appellant’s business.

In my view, arrived at after the best consideration that I have been able to give to the appellant’s submissions, this finding was a finding of fact that was open to the learned trial judge on the evidence before him and there is no ground for interfering with it.

It follows from that finding of fact that the appellant’s costs of the steel in question must be computed by reference to the costs incurred by Span on behalf of the appellant and not by reference to amounts shown by the companies’ books and papers as having been paid by the appellant to Span for it. My understanding is that this was the basis of the reassessments as far as the items in question are concerned. No question was raised as to the amounts of those items.

It follows that, in my view, the appeal should be dismissed with costs.