Bolus-Revelas-Bolus Limited v. Minister of National Revenue, [1971] CTC 230, 71 DTC 5153

GIBSON, J.:—This is an appeal from the decision of the Tax Appeal Board, reported [1969] Tax A.B.C. 548, which disallowed the appellant’s appeal against a re-assessment for income for the taxation year 1965.

The appellant in 1965, in respect to its income, claimed and deducted a capital cost allowance for certain equipment within the description of property prescribed in Class 8 of Schedule B to the Income Tax Regulations.

The two pieces of equipment were respectively a Sky Ride ’ ’ and a Mine Ride’’, being articles of equipment usually found in an amusement park. The capital cost of the Sky Ride to the appellant was $151,693.49 and of the Mine Ride $42,709.21 making a total of $194,402.70. The capital cost allowance claimed as a deduction by the appellant from its income in 1965 amounted to $40,548.

The Sky Ride was manufactured by a company in Bern, Switzerland and is similar to two others which that company built, one of which was operated at the Brussels World Fair and the other of which is operated in Disneyland, California.

The subject Sky Ride, along with this Mine Ride, were purchased from a United States firm by the name of Diversified Amusements Incorporated and had been operated in an amusement park called Freedomland in New York City and which had gone bankrupt.

Some of the background facts of this case are as follows:

The appellant, Bolus-Revelas-Bolus Limited, is the owner of the land in Niagara Falls, Ontario upon which the Seagram Tower is built. Another company called Tower Company Limited, formed by a group of businessmen in 1960, entered into a long-term lease of the land and constructed the Seagram Tower.

Another company, one-half owned by the appellant and the half by Niagara Tower Company Limited, was also incorporated and called Margus Securities Limited whose objects and purposes were carrying on an amusement park business. Its first venture was in constructing and operating the Seagram Tower Gift Shop and Snack Bar. Subsequently, another building was constructed and leased to a company by the name of International Resort Facilities Limited who opened a Duty-Free Centre’’. This venture was not successful and International Resort Facilities defaulted on its lease. In the meantime, Margus Securities Limited acquired some adjoining land for development as an amusement area.

As stated, in 1965 the appellant purchased the Mine Ride from Diversified Amusements Incorporated of the United States for $42,709.21. The Mine Ride at all times was and is the property of the appellant, and it was not the intention in 1965 or since that the related, but not associated companies of Margus Securities and Niagara Tower Company Limited, were to be involved in its operation. In order to obtain the rights to operate the Mine Ride, the appellant negotiated amendments to its lease with Niagara Tower Company Limited. In addition, plans and working drawings of the Mine Ride were completed in 1965 by an architect retained by the appellant and tenders were called for certain of the construction but no work w’as proceeded with. For a short period in 1965, also, the appellant had a partner in the proposed operation of this Mine Ride by the name of Mr. Samuel Kotzer. Mr. Kotzer had put $20,000 into the project but it was returned to him by the appellant when the proposed operation of this Mine Ride had to be postponed because of the general financial difficulties of these said related companies.

Margus Securities Limited in 1965 purchased the Sky Ride from Diversified Amusements Incorporated.

In respect to the Sky Ride, apparently Mr. Louis Bolus, an officer of Margus Securities Limited and also of the appellant, was instrumental in the Margus decision to acquire an amusement ride called ‘‘The Sky Ride” having seen the device at Freedomland, New York City, in company with Mr. Charles Augspurger, president of Niagara Tower Limited. The evidence is that it was purchased by Margus for installation in the Tower vicinity.

The appellant later purchased ‘‘The Sky Ride” from Margus at a cost of $151,693.49 when Margus began to experience economic difficulties.

All the engineering information including results of soil tests, drawings, ete. and the preliminary construction costs were acquired by the appellant in the purchase of the Sky Ride and an additional $3,351.69 was spent by the appellant in further studies.

Before this sale to the appellant, tenders were asked for in respect to part of the work of constructing the Sky Ride.

Niagara Tower Company Limited subsequently became insolvent and defaulted its payments under the lease and the property reverted to the appellant. This was the subject of an order of the Supreme Court of Ontario.

After that and presently, the appellant operated and operates this enterprise.

The appellant took over the lease of the “Duty Free Centre’’ and operated a gift shop in a portion of it and Margus sublet the balance. In May 1966 this property was purchased from Margus and since then the appellant has continued to operate the gift shop and to collect the rents from the other tenants.

In 1965 and since, the appellant, through its shareholders, had and has sufficient financial capacity to put these two rides into operation, but it has not done so. Since 1965, the thinking of the appellant has changed in that it has got into two other projects: (1) the construction of an incline railway in front of the Tower to the so-called Table Rock House in conjunction with the Niagara Parks Commission; and (2) the building of a new bus terminal for the City of Niagara Falls on the site where the amusement park was to have been built.

In addition, the original idea of having Margus Securities Limited build the amusement park complex was stalled in 1965 prior to the appellant acquiring the Sky Ride because Niagara Tower Limited went into receivership and the financial feasibility of establishing this amusement park became doubtful.

As stated, when this happened in 1965, the appellant bought from Margus Securities Limited the Sky Ride.

In evidence, the appellant stated that when it purchased it, allegedly in 1965, it intended itself to install and operate it as soon as financial conditions warranted such.

The bill of sale of the Sky Ride to the appellant is dated December 31, 1965. The agreement in respect to it and other things is dated the blank day of 1966, and it. recites that ‘‘it is agreed that the effective date of this agreement is May 25, 1965”. The witness Mr. Louis Norman Bolus, general manager and president of the appellant, stated before the Tax Appeal Board, as put to him in evidence by counsel for the respondent at this trial, that this said agreement dated the blank day of 1966 was executed in fact in 1966 but he said at this trial that his present recollection is that it was executed in 1965.

In its notice of objection dated November 15, 1967 the appellant stated as follows:

Mr. Louis Bolus was instrumental in the Margus decision to acquire the “Skyride” having seen the device at Freedomland, New York, New York, in company with Mr. Charles Augspurger, President of Niagara Tower Limited. The ride was purchased by Margus for installation in the Tower vicinity. It has been stated previously that there would be no question of the deductibility of capital cost allowances to Margus if the Company had continued as owner.

Thus, when the Margus financial position weakened, there was a danger that these two assets would be lost and in consideration of the weak financial condition of the partner company, Niagara Tower Company Limited, Bolus-Revelas-Bolus, in order to protect its position in the amusement business at Niagara Falls, acquired the “Skyride”. All of the engineering information including results of soil tests, drawings, etc., and the preliminary construction costs were acquired in the purchase and subsequently, Bolus-Revelas- Bolus spent an additional $3,351.69 in further studies.

The intended vehicle for the amusement area development was Margus and the 50% ownership was considered an equitable arrangement between the two companies. When the financial circumstances placed Margus in jeopardy, Bolus-Revelas-Bolus took action to ensure its use of the Ride and acquired it from that company.

Both Rides are still in storage and no attempt has been made to dispose of them. The Company will instal and operate them as soon as financial conditions permit.

In respect to the Mine Ride, the respondent read in evidence from the discovery of Mr. Louis Bolus, an officer of the appellant company questions and answers numbered 340 to 345 :

Q340. Now subsequent to the time that the mine ride was acquired,

did you undertake negotiations with any other party to undertake in the erection of a mine ride with you?

MR. MORGAN

Other than Mr. Kotzer?

MR. PITFIELD

Q341. Yes, other than Mr. Kotzer. A. No, not after March of 1965.

(342. Not after March of 1965? A. During that year.

Q343. Did you in subsequent years? A. We have had several groups now approaching us since 1965 to work with us on the same basis as Mr. Kotzer to install the ride—we have not to date—since the whole concept of our taking over the tower has changed with the installation of the new bus terminal for the City of Niagara Falls and the installation of the inclining railway—to Table Rock House itself—which both instances cost BRB Limited a total of four hundred and twenty-five thousand dollars ($425,000.00).

Q344. And what was the arrangement which was considered would the mine ride have been operated by the Appellant, with share participation of Bolus-Revelas-Bolus Limited—would a separate company have been set up? A. Yes, we would take our property location which would pay our rental and —to BRB Limited and form another company which would operate the mining ride, which our company would take fifty per cent ownership in it—and the other fifty per cent would be sold to another group that would be operated by BRB Limited.

Q345. The new company would be operated by BRB Limited? A. That’s right.

In respect to the Sky Ride, the respondent read questions and answers from the said evidence of Mr. Louis Bolus, questions and answers numbered 381 to 390:

Mr. PITFIELD

Q381. Now I asked you whether or not any steps had been taken to erect the Skyride— A. Not at this point—due to the fact that Bolus-Revelas-Bolus Limited entered into an agreement with the Niagara Parks Commission to install a com- plete incline railway ride to convey people to and from the top of the escarpment to the bottom of the escarpment— this was installed and opened in 1967—the Parks Commission chose—paid for their section of the ride that remained on their property and the BRB Limited would pay for the section on its property—and the investment in this ride was some one hundred thousand dollars ($100,000.00) and the Niagara Parks Commission some three hundred thousand dollars ($300,000.00)—in addition to this we built the official bus terminal for the City of Niagara Falls to have access to all major charter lines such as Canada Coach, Greycoach, and Greyhound in the United States—so it was in these two areas we further—to further the business of the Tower and to bring more people, that we felt at the moment that these were number one producing income, more so than the Skyride—so the Skyride has been sort of delayed—we are also actively negotiating which started originally in 1964, and is now being completed in 1970, for a twelve million dollar monorail system, which is going to be built throughout the whole City of Niagara Falls, with the main terminal being at Seagram Tower.

Q382. But this is not completed yet? A. Yes, it has. It is now under construction—we have now five steel plants fabricating the steel to be installed this summer.

Q384. But it is not in operation? A. It is not in operation as yet.

Q385. And subsequent to the time that the Appellant—or I’m sorry—that Margus Securities Limited acquired the Skyride, were negotiations undertaken with any other parties to assist in the erection and development of the Skyride?

A. We had an offer from White Holdings in Niagara Falls, who own and operate the Burning Springs and the Hollywood Wax Museum—to completely install the Skyride in the location where it was anticipated for it—we did not want to get involved in this at the moment because our plans were changing with the installation of the bus terminal and the incline railway and a now proposed hotel to completely wrap around the front of the tower itself.

Q386. And did the Appellant undertake any negotiations concerned—with another party—concerning the erection of the Skyride—were—would these negotiations that you have talked about with White Holdings Limited taken by the Appellant? A. Yes.

Q387. And were those undertaken by Margus? A. No, by Bolus-Revelas-Bolus.

Q388. And what was contemplated that that arrangement would be? A. It would be that Bolus-Revelas and Bolus would install the equipment together with White Holdings.

Q389. And would this be done by a new company to be incorporated apart from Bolus-Revelas-Bolus Limited? A. Yes, it would be.

Q390. And the shareholders would presumably be in some proportion between the contributions of the outsiders and the Appellant? A. That is correct.

Counsel for the appellant in argument submitted that these answers given by Mr. Louis Bolus were answers given in 1971 as to what the intention of the appellant was in 1971, but they do not reflect the correct intention of the appellant in 1965 and are contrary to the evidence supporting such latter intention.

The appellant, after reciting the fact that the Minister in disallowing this deduction of capital cost allowance in respect to these two rides stated that his reason for doing so was that ‘‘according to the records examined, there seems to be no confirmation that the intention of acquiring such assets was for the purpose of gaining or producing income’’, submitted: The company’s whole course of conduct in recent years points to its exploitation of this geographical area for profits from its visitors. The land that was acquired was leased to the Niagara Tower Company Limited. This was the most practical manner in which the structure could come into being due to its high cost. The Margus Securities investment on a 50/50 basis with the Tower Company was a well conceived arrangement since each of the principal companies sought to share in addition profits to be gained in the Tower area. The appellant was the owner of two amusement rides; the amusement ride business was a very vital part of the appellant’s scheme for profit making ; that it was difficult to comprehend how a device such as these two rides, involving equipment which has to be set up, put together, to be operational, could be acquired for any purpose other than for the purpose of carrying on the amusement ride business with the primary intent of gaining or producing income; that the appellant always considered itself to be in the amusement park business, and it was intended that the Mine Ride and the Sky Ride be erected and made operational for the purpose of earning and gaining income and that this will be done as soon as financial conditions improve from a situation which was not of its own making but due to the failure of the Niagara Tower Company Limited in its operation.

The respondent submitted: (1) that in order for the appellant to claim capital cost allowance in respect to the Mine Ride and the Sky Ride in the 1965 taxation year, the appellant must establish that it acquired assets of a class in Schedule B to the Income Tax Regulations during the year, and that the assets were acquired for the purpose of gaining or producing income from a business carried on by the appellant; the respondent further submitted that the determination that the purpose for which the assets were acquired was to gain or produce income is objective in nature and must be ascertained from a consideration of all the facts and circumstances surrounding the acquisi- tion; (2) that at law the appellant did not acquire legal title, nor the incidents of title, including possession, risk and use, to the Sky Ride during the 1965 taxation year, and therefore regardless of the purpose for which it may have been acquired, no capital cost allowance may be claimed in respect of the 1965 taxation year (M.N.R. v. Wardean Drilling Ltd., [1969] Ex. C.R. 166; [1969] C.T.C. 265) ; and (8) that in the event that the Court should find that the Sky Ride was acquired in 1965, as was the Mine Ride, then the respondent submitted that the appellant did not acquire the assets for the purpose of gaining or producing income from a business, because: (a) at no time did the appellant intend or evidence any intention to operate the amusement park rides beneficially on its own behalf ; (b) at no time did the appellant commence to carry on, nor did it intend to commence to carry on business as an operator for anticipated profit of an amusement park or an amusement park ride, rather at all times the appellant remained the owner, manager and lessor of lands and the owner and operator of a gift shop; and (c) at most the appellant hoped that in the event all else failed it might be able to commence carrying on business as the operator of an amusement park and rides and by acquiring the rides the appellant put itself in the position of being able to undertake such an operation if at some future date it should prove expedient to do so; and therefore any claim to capital cost allowance in respect of the said assets is precluded by Section 1102(1)(c) of the Income Tax Regulations.

The relevant statutory and regulation provisions are as follows :

3. The income of a taxpayer for a taxation year for the purposes of this Part is his income for the year from all sources inside or outside Canada and, without restricting the generality of the foregoing, includes income for the year from all

(a) businesses,

(b) property, and

(c) offices and employments.

4. Subject to the other provisions of this Part, income for a taxation year from a business or property is the profit therefrom for the year.

11. (1) Notwithstanding paragraphs (a), (b) and (h) of subsection (1) of section 12, the following amounts may be deducted in computing the income of a taxpayer for a taxation year:

(a) such part of the capital cost to the taxpayer of property, or such amount in respect of the capital cost to the taxpayer of property, if any, as is allowed by regulation;

12. (1) In computing income, no deduction shall be made in respect of

(a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from property or a business of the taxpayer,

20. (5) In this section and regulations made under paragraph (a) of subsection (1) of section 11,

(e) “undepreciated capital cost” to a taxpayer of depreciable property of a prescribed class as of any time means the capital cost to the taxpayer of depreciable property of that class acquired before that time minus the aggregate of . . .

1101. (1) Where more than one property of a taxpayer is described in the same class in Schedule B and where

(a) one of the properties was acquired for the purpose of gaining or producing income from a business, and

1102. (1) The classes of property described in this Part and in Schedule B shall be deemed not to include property

(c) that was not acquired by the taxpayer for the purpose of gaining or producing income,

In Ben’s Limited v. M.N.R., [1955] Ex. C.R. 289; [1955] C.T.C. 249, Cameron, J. had to consider a claim for capital cost allowance in respect to certain frame buildings which were situated on lands and premises which had been purchased by the appellant. The evidence was that the appellant bought the premises for the purpose of building an extension to its factory and not for the purpose of gaining or producing income from the frame houses which were situated upon such premises.

Cameron, J. stated, at page 253, that the question for the Court was not:

. . . whether the appellant’s outlay as a whole was for the purpose of gaining or producing income, but rather this: “Was the property referred to in Class 6 as ‘a building of frame’ acquired by the appellant for the purpose of gaining or producing income?”’

The Court held that on the whole of the evidence ‘‘the frame buildings located on the land purchased were not acquired for the purpose of gaining or producing income and that the sole purpose in making the outlays was that of acquiring the land as a site for the extension of the factory’’.

Accordingly, the deduction for capital cost allowance was disallowed.

In The Royal Trust Company v. M.N.R., [1957] C.T.C. 32, Thorson, P., at page 43, stated as follows:

There is a specific limitation in the exception expressed in Section 12(1) (a) on the kind of outlay or expense that may be deducted. It must have been made or incurred, in the case of a taxpayer engaged in a business, for the purpose of gaining or producing income from his business.

It is not necessary that the outlay or expense should have resulted in income. In Consolidated Textiles Limited v. M.N.R., [1947] Ex. C.R. 77 at 81; [1947] C.T.C. 63, I expressed the opinion that it was not a condition of the deductibility of a disbursement or expense that it should result in any particular income or that any income should be traceable to it and that it was never necessary to show a causal connection between an expenditure and a receipt. And I referred to Vallambrosa Rubber Co. v. C.I.R. (1910), 47 S.C.L.R. 488, as authority for saying that an item of expenditure may be deductible in the year in which it is made although no profit results from it in such year and to C.I.R. v. The Falkirk Iron Co., Ltd. (1933), 17 T.C. 625, as authority for saying that it may be deductible even if it is not productive of any profit at all. I repeated this opinion in the Imperial Oil Limited case. The statements made in the cases referred to, which were cases governed by the Income War Tax Act, are equally applicable in a case under the Income Tax Act.

And at page 44 stated:

The essential limitation in the exception expressed in Section 12(1) (a) is that the outlay or expense should have been made by the taxpayer “for the purpose” of gaining or producing income, “from the business”. It is the purpose of the outlay or expense that is emphasized but the purpose must be that of gaining or producing income “from the business” in which the taxpayer is engaged. If these conditions are met the fact that there may be no resulting income does not prevent the deductibility of the amount of the outlay or expense. Thus, in a case under the Income Tax Act if an outlay or expense is made or incurred by a taxpayer in accordance with the principles of commercial trading or accepted business practice and it is made or incurred for the purpose of gaining or producing income from his business its amount is deductible for income tax purposes.

In M.N.R. v. Alfred Gordon, [1966] C.T.C. 722, the respondent, a doctor, acquired a riverside property including land, buildings and furnishings and alleged that there were unsuccessful efforts to rent the property on a full time basis. No effort was made to resell, but the respondent and his family occupied the premises during the summer months. The respondent claimed capital cost allowance and the Minister disallowed the deductions on the grounds that all of the outlays in connection with the property were personal or living expenses and that the property had been purchased for the personal use of the respondent and his family as a summer residence and not for the purpose of earning income.

Thurlow, J. at page 728, after reciting Section 12(1) (a) of the Income Tax Act, stated as follows:

Though the test is stated negatively in Section 1102, the critical question in the present appeal with respect to all three types of deductions is whether the property was acquired, or the expenditure was incurred “for the purpose of gaining or proudc- ing income” from the property or from a business and the onus of satisfying the Court that the answer should be in the affirmative rested on the respondent. It would, of course, fortify the opposite conclusion if it manifestly appeared that the property was purchased simply as a summer home for the respondent and his family, as counsel for the Minister contended, but it does not appear to me that such a finding is essential to the Minister’s case. Property may, I think, be acquired and expenses may be incurred in respect thereof in the pursuit of a purpose which is neither the gaining of income nor personal enjoyment (for example simply as a hedge against inflation) but what appears to me to be essential to success on the part of the respondent in the present appeal is a positive finding that the property was acquired and the expenses incurred “for the purpose of gaining or producing income”.

The evidence does not satisfy me that that was the respondent’s purpose. While I regard it as unlikely that he would have invested $38,000 in such a property simply to use it as a summer home for two months of each year, I think that one of the things he had in mind was that he might use it for that purpose and as a year round resort as well. These, in fact, were the only purposes which the property served in the fourteen month period involved in the appeal and save for the period of three and one-half months in the spring of 1963 when the property was let to Earl Johnson, they were the only purposes which the property served during the period of nearly five years from the time it was purchased to the time of the trial. In the whole of that period nothing whatever was done with the property to further either the scheme for building and operating cottages or the scheme for developing a convalescent centre, though in the latter case the respondent did say that he had acquired additional information on such establishments. To my mind the most that can be said of these is that they were ideas for possible use of the property and that by acquiring it when he did and holding it the respondent put himself in a position to undertake either or both of them if at some future time it should be expedient to do so. In such circumstances I do not think it can be said that his purpose in acquiring the property was to carry out these schemes. Nor do I think the respondent acquired the property to earn income by letting it either pending his embarkation on either scheme, or generally. He said he hoped to be able to realize $200 per month as rent, but to my mind no one vaguely familiar with what would be reasonable income return on an investment of $38,000 in such a property, and least of all a person of the intelligence and astuteness of the respondent, . . .

And at page 729 he stated as follows:

On the whole the conclusion which I reach is that the respondent acquired the property largely because, at the price at which it was available, he regarded it as a very good bargain. In deciding to buy I think he had in mind several uses to which he thought it might conceivably be put some day, including the schemes to build and let cottages and to build and operate a convalescent centre, that he also had in mind that he would let it, if he could, to reduce the expense of holding it and that when and so long as it remained unccupied he would make such use of it for his own private purposes as occasion might suggest being confident that having bought at a low price he would ultimately turn the property to account and be ahead whether it produced income in the meantime or not. This, in my opinion, is not acquiring a property “for the purpose of gaining or producing income” with the meaning of any of the three statutory provisions to which I have referred and by which the respondent’s right to the deductions in question is governed and as the property was neither acquired for the purpose of gaining or producing income nor actually used for that purpose at any time during either of the taxation years involved in the appeal, I can see no basis for holding the respondent entitled to any of the deductions in question. It follows that they were properly disallowed.

After considering the whole of this evidence, with some hesitation, I am of the view that the appellant did buy the Sky Ride from Margus Securities Limited in 1965.

In so far as the Mine Ride is concerned, it was purchased in 1965 directly from the original vendor of both rides, namely, Diversified Amusements Incorporated of New York.

The critical matter in respect to the issue on this appeal is the intention of the appellant in 1965.

The issue is this: Were the outlays made by the appellant in 1965 in acquiring these two rides the “Mine Ride” and the “Sky Ride’’ made ‘‘for the purpose of gaining or producing income from the business’’ in which the appellant was engaged or in which it intended to engage?

The difficulties in resolving this issue in this matter are several. The fact is that the officers and shareholders of the appellant are substantially the same as those of Margus Securities Limited. In addition, these officers and shareholders worked with the officers and shareholders of the company known as Niagara Tower Company Limited in promoting their mutual interests. Furthermore, these officers and shareholders of the said companies carried on business in this resort area of Niagara Falls and sometimes directly and sometimes indirectly, all activities that they engaged in were directed at gaining or producing income. The purchase of both the ‘ ‘ Sky Ride ’ ’ and the Mine Ride ’ ’ was for such general purpose. Both were probably capital assets purchased for the purpose of gaining or producing income generally.

As a consequence, the intention of the appellant in 1965 is difficult to discern.

The evidence in this case, however, does establish that these two rides were purchased solely for the purpose of gaining or producing income for the business of the appellant generally in some way. They were not in the category of the outlays made by the parties in acquiring property or equipment in the cases of Ben’s Limited v. M.N.R. (supra) and M.N.R. v. Alfred Gordon (supra).

The facts of this case also may or may not be precisely prescribed in Section 20(6) of the Income Tax Act, which provides for certain special cases in the matter of claiming deductions for capital cost allowances and lays down specific rules in respect to such cases. But this subsection does illustrate that a claim for capital cost allowance is not forever barred if circumstances change; that subsection reads:

20. (6) For the purpose of this section and regulations made under paragraph (a) of subsection (1) of section 11, the following rules apply:

(b) where a taxpayer, having acquired property for some other purpose, has commenced at a later time to use it for the purpose of gaining or producing income therefrom, or for the purpose of gaining or producing income from a business, he shall be deemed to have acquired it at that later time at its fair market value at that time;

After carefully reviewing and considering the whole of the evidence, I am of the opinion that the appellant made the outlays in 1965 in acquiring these two rides for the purpose of gaining or producing income generally from its business, but not for the purpose of gaining or producing income from the specific business of operating these two rides.

The business of the appellant in 1965 was that of owner and lessor of lands and owner and operator of a gift shop. It was not in the business of operating these rides and on the whole of the evidence, it is not possible to find that the appellant probably, in 1965, had the intention itself to get into the business of operating either or both of the Mine Ride ’ ’ and the ‘ ‘ Sky Ride ’

There is no doubt that the appellant intended in 1965 to receive income in some unspecified way from the operation of these rides. But these unspecified ways or options open to the appellant in gaining or producing income for it were all related to the business of operating these rides by some person other than the appellant itself.

As a consequence, the appellant was not entitled to deduct the capital cost allowance amount of $40,548 from its income for the taxation year 1965.

Counsel for the respondent may prepare in both official languages an appropriate judgment to implement the foregoing conclusions and may move for judgment in accordance with Rule 172(1) (b).

The respondent is entitled to the costs of this appeal.