Falconbridge Nickel Mines Limited v. Minister of National Revenue, [1971] CTC 789, 71 DTC 5461

CAMERON, D.J.:—This is an appeal from a re-assessment to income dated May 29, 1969 with respect to the appellant’s 1958 taxation year. Prior to the hearing the parties had agreed upon and filed a Stated Case and Question Agreed to Between the Parties, which reads as follows :

1. The Appellant was incorporated in 1928 under the laws of Ontario and since its incorporation has carried on the business of exploring for, mining and processing minerals. The Appellant’s fiscal year is the calendar year.

2. The only outstanding issue in the appeal from the income tax assessment for the taxation year 1958 is as to the method of computing the income of the Appellant which was exempt from tax under section 83(5) of the Act (hereinafter referred to as the “new mine income issue”). The issue as to whether certain legal expenses were deductible in computing the income of the Appellant (hereinafter referred to as the “legal expenses issue”) has been settled. “Income” as used in this Stated Case and Question means “income” as defined in section 4 of the Act.

3. During the years 1951 to 1956, inclusive, the Appellant brought into production five nickel-copper mines in the Sudbury District of Ontario (hereinafter referred to as the “new mines”). Income derived from the operation of each of the new mines during “the period of 36 month commencing with the day on which the mine came into production” (hereinafter referred to as the “36 months’ period”) was certified as being exempt from tax under section 83(5) of the Act.

4. The ore extracted from each of the new mines was treated in concentrators and the smelter of the Appellant in the Sudbury District and the resultant nickel-copper matte was shipped by rail and water to Norway where it was refined in the refinery of the Appellant. The metals from the ore were then sold by the Appellant. The sale of the metals took place approximately four months after the ore containing the metals had been extracted from the new mines.

5. In the case of each of the new mines, because of the lapse of time between the extraction of the ore and the sale of the metals from such ore, sales were made during the 36 months’ period of metals from ore which had been extracted from the new mine during approximately four months immediately prior to the 36 months’ period, and sales were made during approximately four months immediately subsequent to the 36 months’ period of metals from ore which had been extracted from the new mine during the 36 months’ period. The amount of ore extracted from each of the new mines during the four months immediately prior to the 36 months’ period and sold during such period was substantially less than the amount of ore extracted from each during the last four months of the 36 months’ period and sold subsequent to such period.

6. In computing under section 83(5) of the Act the income of the Appellant derived from the operation of each of the new mines during its 36 months’ period, the Respondent included the income arising or accruing from all sales made during the 36 months’ period of metals from ore which had been extracted from the mine (including sales of metals from ore which had been extracted from the mine prior to the commencement of the 36 months’ period) but excluded the income arising or accruing from sales made after the 36 months’ period of metals from ore which had been extracted from the mine during the 36 months’ period. The Appellant, on the other hand, included the income arising or accruing from sales of metals from all ore which had been extracted from the mine during the 36 months’ period (including sales of metals from such ore made subsequent to the 36 months’ period) but excluded the income arising or accruing from sales made during the 36 months’ period of metals from ore which had been extracted from the mine prior to the commencement of the 36 months’ period. Both the Respondent and the Appellant, in computing the income derived from the operation of each of the new mines, assumed that the metals from the first ore extracted from the new mine were the first metals sold.

7. The effect of applying the different methods adopted by the Respondent and the Appellant of computing the new mine income entitled to exemption from tax under section 83(5) may be illustrated by reference to one of the new mines, the East Mine, for which the 36 months’ period was from November 1, 1954, to October 31, 1957 :

										Exempt Income	Exempt Income
										as computed by	as computed by
										the Respondent	the Appellant
Income from sales made during
the 36 month’s period of metals
from	ore		extracted			from			the	Included	Excluded
mine in the four months prior										($214,317.28)
to the 36 months’ period —
Income from sales made during
the 36 months’ period of metals
from	ore		extracted			from			the	Included	Included
mine	during			the	36		months’
period —
Income from sales made in the
four	months			subsequent				to the
36 months’ period from ore ex										Excluded	Included
tracted		from		the	mine during						($682,620.26)
the 36 months’ period —

Amount by which the total exempt income derived from the East Mine, as computed by the Appellant, was reduced on assessment by the Respondent: $468,302.98.

8. The question in issue is whether in computing under section 83(5) of the Act the income of the Appellant derived from the operation of each of its new mines during the 36 months’ period

(i) there is to be included income arising or accruing from sales made during the 36 months’ period of metals from ore which had been extracted from the mine prior to the 36 months’ period; and

(ii) there is to be excluded income arising or accruing from sales made subsequent to the 36 months’ period of metals from ore which had been extracted from the mine during the 36 months’ period.

9, The parties agree that if the above question is answered in the affirmative, the appeal in respect of the new mine income issue is to be dismissed with costs and the assessment referred back to the Respondent for re-assessment to give effect to the settlement of the legal expenses issue; and that if the question is answered in the negative, the appeal in respect of the new mine income issue is to be allowed with costs and the assessment referred back to the Respondent for re-assessment in accordance with such answer and to give effect to the settlement of the legal expenses issue.

The hearing of the appeal was therefore limited to argument on the question in issue as above stated in paragraph 8 based on the facts set out in the Stated Case. As the answer to the question so raised is dependent on the interpretation to be placed on Section 83(5) of the Income Tax Act, R.S.C. 1952, c. 148 as amended, I shall set out at once the provisions of that subsection and of subsection (6) as well as Section 1900 of Part XIX of the Regulations (as they were in 1958) :

83. (5) Subject to prescribed conditions, there shall not be included in computing the income of a corporation income derived from the operation of a mine during the period of 36 months commencing with the day on which the mine came into production.

(6) In subsection (5)

(a) “mine” does not include an oil well, gas well, brine well, sand pit, gravel pit, clay pit, shale pit or stone quarry (other than a deposit of oil shale or bituminous sand) ;

and

(b) “production” means production in reasonable commercial quantities.

1900. For the purpose of subsection (5) of section 83 of the Act, the following conditions are hereby prescribed:

(a) the corporation shall maintain separate accounting records in respect of the mine

(i) for the period beginning with the commencement of operation of the mine by the corporation and ending with the day before the day on which the mine came into production, and

(ii) for each taxation year of the corporation which includes a part of the 36 months beginning with the day on which the mine came into production;

(b) if the operation of the mine was the only business carried on by the corporation on the day before the day on which the mine came into production, the corporation shall end its taxation year and close its books of account as of that day;

(c) if paragraph (b) does not apply, the corporation shall close its accounting records in respect of the mine on the day that is 36 months after the day on which the mine came into production; and

(d) the corporation shall file a return in triplicate in prescribed form with the Minister.

A short summary of the agreed facts will be helpful at this point. The issue is regarding the method to be used in computing the income of the appellant which was exempt from tax under Section 83(5) for ‘‘new mine income’’. During the years 1951 to 1956 inclusive, the appellant brought into production five nickelcopper mines in the Sudbury District and paragraph 6 of the Stated Case indicates the methods respectively used by the respondent and the appellant in computing the income of the appellant therefrom ‘‘during the period of 36 months commencing with the day on which the mines came into production’’, the word ‘‘production’’ being defined in Section 83(6) (b) as “production in reasonable commercial quantities’’. The ore extracted from the new mine was treated in concentrators and a smelter of the appellant in the Sudbury district and the resultant nickelcopper matte was shipped to Norway where it was refined in the appellant’s refinery there, and the metals from the ore were then sold. Normally there was a delay of four months between the date of extraction of the ore and the date of sale of the metals obtained therefrom ; as will be seen later, it is this delay which has resulted in the present dispute as to the proper interpretation of Section 83(5).

By way of illustrating the effect of applying the methods used respectively by the respondent and the appellant in computing the exempt income, the East Mine is taken as an example, the resulting figures being shown in paragraph 7. Counsel for the appellant admitted that for each of the five ‘“‘new mines” the appellant had received the usual certificates from the respondent giving the dates of commencement and termination of ‘‘the period of 36 months’’ commencing with the day on which each new mine came into production in reasonable commercial quantities, such period in respect of the East Mine being from November 1, 1954 to October 31, 1957 ; he also agreed that the appellant in respect of each new mine had complied with the prescribed conditions set out in Regulation 1900 (supra).

It will be noted from paragraph 7 :

(a) that both parties in computing the exempt income for that period included therein the income arising or accruing from sales made during that period of 36 months of metals from ore extracted during the said period of 36 months ;

(b) that the respondent in so computing the exempt income of the appellant included income arising or accruing from sales made during the period of 36 months of metals from ore extracted from the mine in the 4 months prior to the period of 36 months, where the appellant excluded that income of $214,317.28 from its claim for exemption; and

(c) that in respect of income arising or accruing from sales of metals made in the 4 months subsequent to the period of 30 months from ore extracted from the mine during the period of 36 months ($682,620.26) the appellant included that amount in computing its exempt income, whereas the respondent disallowed that claimed exemption in toto.

It is common ground that income was not realized by the appellant corporation until the metals produced from the ores extracted were actually sold. In this connection reference may be made to Section 4 of the Income Tax Act which reads :

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.

Put shortly, the problem before me is to endeavour to construe the provisions of Section 83(5) so as to determine whether or not the phrase ‘‘during the period of 36 months’’ refers to ‘‘income derived’’, as submitted by the respondent; or whether the phrase refers to the immediately preceding words ‘‘the operation of a mine’’, as submitted by the appellant. If the appellant’s contention is correct, namely that the intention of Parliament was to grant an exemption from income tax in respect of all production of ore from a new mine during the period of 36 months, and whether the metals produced from the ore were sold and income derived in or after that period of 36 months, then the questions submitted will be answered in the negative and the appeal allowed. If on the other hand the Minister’s contention that the phrase ‘‘during the period of 36 months’’ refers to ‘‘income derived’’ and that Parliament intended not to exempt from income tax all ore produced during that period but rather only income arising or accruing in the exempting period of 36 months from production of the new mine, then the questions submitted must be answered affirmatively and the appeal would be dismissed.

It will be convenient to refer generally to the phrase ‘‘during the period of 36 months” as ‘‘the exemption period’’.

The onus is on the taxpayer to establish the existence of facts or law showing an error in relation to the taxation imposed (see R. W. S. Johnston v. M.N.R., [1948] S.C.R. 486; [1948] C.T.C. 195). It must also be kept in mind that Section 83(5) is an exempting section and must therefore be strictly construed. Reference may be made to the statement of Sir W. J. Ritchie, C.J. of the Supreme Court of Canada in Wylie v. City of Montreal (1885), 12 S.C.R. 384 at 386, where he said:

I am quite willing to admit that the intention to exempt must be expressed in clear unambiguous language; that taxation is the rule and exemption the exception, and therefore to be strictly construed.

In this connection see also the decision of Thorson, P., in the Exchequer Court of Canada, in Lumbers v. M.N.R., [1943] Ex. C.R. 202 ; [1943] C.T.C. 281, which was affirmed by the Supreme Court of Canada ([1944] 8.C.R. 167; [1944] C.T.C. 67), and also a further decision by Thorson, P. in W. A. Sheaffer Pen Company of Canada Limited v. M.N.R., [1953] Ex. C.R. 251; [1953] C.T.C. 345, in which he said at page 255 [349] :

Then I put the rule of construction of an exempting provision of the Income War Tax Act as follows:

“Just as receipts of inoney in the hands of a taxpayer are not taxable income unless the Income War Tax Act has clearly made them such, so also, in respect of what would otherwise be taxable income in his hands a taxpayer cannot succeed in claiming an exemption from income tax unless his claim comes clearly within the provisions of some exempting section of the Income War Tax Act: he must show that every constituent

element necessary to the exemption is present in his case and that every condition required by the exempting section has been

complied with.”

A similar rule of construction should be applied in the case of a statutory right of deduction such as that conferred by Section 5(p) from which it follows that if a taxpayer cannot clearly bring his claim for deduction within the express terms of the provision conferring the right of deduction he is not entitled to it.

The precise point here in issue has not previously been raised so far as I am aware, except in one case before the Tax Appeal Board in Newfoundland Minerals Ltd. v. M.N.R., [1969] Tax A.B.C. 436. The decision of the Board was stated in the head- note as follows:

HELD: What was exempted by Section 83(5) was the income expressed in dollars and cents during the 36-month period in respect of the mine. It follows that the profit realized subsequently from ore mined during that period was taxable. Appeal dismissed.

An appeal was taken by the taxpayer to the Exchequer Court of Canada (see Practice Note, [1969] C.T.C. 639) and, according to the material before me, the Minister at the hearing moved to strike out the notices of appeal on the ground, inter alia, that neither the Tax Appeal Board nor the Exchequer Court had jurisdiction to hear an appeal from a ‘‘notification’’ that no tax was payable, and that the Minister had not either re-assessed or confirmed the assessment of October 6, 1965, but had, pursuant to Section 58(3), vacated the assessment. In the result, the motion by the Minister was granted, the endorsement by the Court on the record being stated:

Order to go striking out the Notices of Appeal herein on the grounds that there is no right of appeal because the notice from the Minister dated 14 September, 1966, was a notice of the Minister’s vacation of his 1963 assessment of the taxpayer for tax.

Section 83(5) was considered in Hollinger North Shore Exploration Co. Ltd. v. M.N.R., [1960] Ex. C.R. 325; [1960] C.T.C. 136, but on another point. In that case, Thurlow, J. came to the conclusion that the word ‘‘derived’’ as used in the subsection was equivalent to “arising or accruing’’, stating at page 332 3 I :

I can see no distinction for the present purpose between the meaning of the expression ‘‘income derived from mining,” which was considered in the Gilhooly case, [1945] Ex. C.R. 141; [1945] C.T.C. 203, and that of “income derived from the operation of a mine”. In each case, I think the word “derived” is broader than “received” and is equivalent to “arising or accruing” (vide C.I.R. v. Kirk, [1900] A.C. 588), but in neither case is the expression limited to income arising or accruing from the operation of a mine by the particular taxpayer.

The appeal in that case was with respect to the taxpayer’s income for 1956, and at page 328 [139] of the judgment it states: “It is not disputed that the whole of the year 1956 was within the period of 36 months after the mine came into production.” An appeal from that judgment was dismissed by the Supreme Court of Canada, ([1963] S.C.R. 132; [1963] C.T.C. 51), the Court stating at page 134 [54] :

I share the view expressed by the learned trial judge that the ordinary meaning of the words “derived from the operation of a mine” is broader than that contended for by appellant, that the word “derived” in this context is broader than “received” and is equivalent to “arising or accruing” (vide C.I.R. v. Kirk, [1900] A.C. 588 at 592) and that the expression is not limited to income arising or accruing from the operation of a mine by a particular taxpayer.

In Craies on Statute Law, 6th ed., page 66, it states :

The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intention expressed in the Acts themselves. “The tribunal that has to construe an Act of a legislature, or indeed any other document, has to determine the intention as expressed by the words used. And in order to understand these words it is natural to inquire what is the subject- matter with respect to which they are used and the object in view.” In Barnes v. Jarvis Lord Goddard, C.J. said: “A certain amount of common sense must be applied in construing statutes. The object of the Act has to be considered.” If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the lawgiver.

“Where the language of an Act is clear and explicit, we must give effect to it, whatever may be the consequences, for in that case the words of the statute speak the intention of the legislature.”

The rule now under review is expressed in various terms by different judges. The epithets “natural,” “ordinary,” “literal,” “grammatical” and “popular” are employed almost interchangeably, but their indiscriminate use leads to some confusion, and probably the term “primary” is preferable to any of them, if it be remembered that the primary meaning of a word varies with its setting or context and with the subject-matter to which it is applied; for reference to the abstract meaning of words, if there be any such thing, is of little value in interpreting statutes.

Section 83(5) is part of the Income Tax Act and the subject matter is the computation of the income of certain corporations. The object in view in enacting this subsection was clearly to provide an incentive to bring new mines into production by permitting a corporation to exclude from the computation of its income tax income derived (arising or accruing) from the operation of a mine during the period of exemption—i.e. 36 months— commencing with the day on which the mine came into production in reasonable commercial quantities. All this is clear from the language of the subsection itself and I recall no argument by either party at the hearing which would suggest otherwise.

Now if the subsection had to be read in isolation, assisted only by the findings which I have made as to its subject matter and the object in view of Parliament in enacting it, there might possibly be uncertainty as to whether ‘‘the exemption period” referred to ‘‘income derived” or to the words ‘‘the operation of a mine’’. In my view, however, the task of interpreting the meaning of the subsection is not limited to a consideration of the words of the subsection itself, but regard may be had to the terms of the statute.

In Maxwell on Interpretation of Statutes, 12th ed., it is said under. the heading ‘‘An Act is to be regarded as a whole’’, on page 8:

Passing from the external aspects of the statute to its contents, it is an elementary rule that construction is to be made of all the parts together, and not of one part only by itself. It has been said that one of the safest guides to the construction of sweeping general words which are hard to apply in their full literal sense is to examine other words of like import in the same instrument, and to see what limitations must be imposed on them; and if it is found that a number of such expressions have to be subjected to limitations and qualifications, and that such limitations and qualifications are of the same nature, that circumstance forms a strong argument for subjecting the expression in dispute to a like limitation and qualification.

And on page 62 :

(iii) Lastly, the meaning of a section may be determined, not so much by reference to other individual provisions of the statute, as by the scheme of the Act regarded in general.

The scheme of the Income Fax Act, at least in part, may be ascertained from a reading of the following sections, all of which are well known to those having to deal with income tax matters.

2. (1) Residents.—An income tax shall be paid as hereinafter required upon the taxable income for each taxation year of every person resident in Canada at any time in the year.

(3) Taxable Income.—The taxable income of a taxpayer for a taxation year is his income for the year minus the deductions permitted by Division C.

3. World income.—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. Income from business or property. 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.

It seems clear to me therefore that the Act contemplates that each taxpayer (since the definition of ‘‘person’’ in Section 139

(1) (ac) includes a body corporate) shall in each of its taxation years pay an income tax upon its taxable income for such taxation year. Were it not for the provisions of Section 83(5) the income arising or accruing from the operation of a mine would form part of the computation of the corporation in determining its taxable income in each year. By Section 4, income for a taxation year from a business or property (which would include mining) is the profit therefrom for the year—subject, of course, to the provisions of Part I.

In Section 83(5) the word ‘‘income’’ is used twice and I see no reason why its meaning should not be the same on each occasion. I think also that as income is not defined in the interpréta- tion Section 139, it should here have the same meaning as that contained in Section 4 inasmuch as Section 83(5) is dealing

(1) with a computation of the income of a corporation (which would normally comprise all its profits for the year, subject to any permitted deductions) and (2) the income derived from the operation of a mine during a period of 36 months commencing with the day on which the mine came into production in reasonable commercial quantities.

Applying these basic principles and the meaning of ‘‘ derived ’ ’ as ‘arising or accruing” (as stated in the case of Hollinger North Shore Exploration Co. Ltd. v. M.N.R. (supra)) Section 83(5) would then be read as following :

83. (5) Subject to prescribed conditions, there shall not be included in computing the profit of a corporation from its business or property for the year the profit from its business or property for the same year arising or accruing from the operation of a mine during the period of 36 months commencing with the day on which the mine came into production in reasonable commercial quantities.

I think it may be said that Section 83(5) relates primarily to the computation of the profit of the corporation for a taxation year which, by the very terms of the subsection, does not include the profit from what may be called ‘‘a new mine’’. But the exemption is clearly not intended to be a permanent exemption. Since the first computation of the corporation to ascertain its profit must be for its taxation year, it is inconceivable that the subsection could possibly bear the meaning that there should not be included in that computation income or profit arising or accruing at any time after the expiry of the period of exemption.

I should state that when I first examined the subsection, it seemed to me that its meaning was clear and unambiguous, namely that the exemption applied to all income (or profit) arising or accruing by sales of minerals within the 36-month period of exemption—as submitted by the respondent, and further consideration strengthens that opinion. The provision for exemption requires a separate computation of profit derived from the new mine by the taxpayer and, to determine profit, means to ascertain on generally accepted accounting principles the profits for the taxation year after deducting expenses of that taxation year.

If the contention of the appellant were accepted that the the exemption relates to all production of the mine during the 36-month period of exemption, whenever the mine be sold a number of questions and problems would arise:

(1) There is nothing in the section which in clear terms exempts production of a mine from tax. The only use of the word “production” is in the phrase ‘‘commencing with the day on which the mine came into production’’.

(2) Such an interpretation would mean that the corporation could possibly mine all or a very substantial quantity of the ore during a period of exemption, stock-pile it and sell it at any time thereafter, possibly 5, 10, 20 years or more after the end of the exemption period, and thus avoid payment of all income tax on income arising from such sales. If that had been the intention of Parliament it could have used apt words to produce such a result.

In my view, the essential condition of the subsection is that there should be a realization of income during the 36-month period, regardless of the time when the ore was extracted. There is no realization of income or profit therefrom except by sale.

The interpretation of the section advanced by the appellant is not in harmony with the general scheme of the Act, and in particular with the requirements that call for an annual tax return showing income (or profits) for the year, which can only be arrived at by deducting from income the cost of production and other deductions for that year.

Had I come to the conclusion that the meaning of Section 83(5) was uncertain and ambiguous and permitted the two interpretations advanced on behalf of the parties, I would have had to consider the opening words of the section, namely “Subject to prescribed conditions’’ and the regulation passed thereunder, namely Section 1900 of the Regulations (supra). The general authority for the making of regulations by the Governor in Council is found in Section 117 which reads in part as follows:

117. (1) The Governor in Council may make regulations

(a) prescribing anything that, by this Act, is to be prescribed or is to be determined or regulated by regulation,

In Craies on Statute Law, 6th ed., it is stated at page 157 :

8. REFERENCE TO STATUTORY RULES MADE UNDER THE ACT

Where the language of an Act is ambiguous and difficult to construe the court may for assistance in its construction refer to rules made under the provisions of the Act, especially where such rules are by the statute authorising them directed to be read as part of the Act.

For not only is every part of the statute itself to be taken into consideration in order to ascertain the meaning of any obscure expression, but “recourse may (also) be had to rules which have been made under the authority of the Act, if the construction of the Act is ambiguous and doubtful on any point, and if we find that in the rules any particular construction has been put on the Act, it is our duty to adopt and follow that construction.” (Per James and Mellish, L.J. in Ex p. Wier (1871) L.R. 6 Ch. App. 875, 879. Cf. Re Andrew (1875) 1 Ch.D. 358; Att.-Gen. v. De Keyser’s

Royal Hotel (1920) A.C. 508, 551, Lord Moulton.

It is not necessary to repeat the provisions of Regulation 1900. Its scope is limited to Section 83(5) and it prescribes the "‘conditions” authorized by the opening words of that subsection. It requires the corporation to maintain separate accounting records in respect of the mine; these must be filed in triplicate in prescribed form with the Minister, doubtless for the purpose of checking their contents to determine whether the exemptions of income so claimed are correct. These returns must be made for each taxation year of the corporation which includes a part of the 36 months beginning with the day on which the mine came into production; and if the new mine was not the only business carried on by the corporation on the day before the day on which the mine came into production (as it is in the instant case), the corporation is required to close its accounting records in respect of the new mine on the day that is 36 months after the day on which the mine came into production.

It is clear therefore that the requirement that the corporation must maintain separate accounting records in respect to the mine does not extend beyond the termination of the 36-month period of exemption, namely in the case of the East Mine, on October 31, 1957. It unquestionably follows from the regulation (and the appellant admits having complied with its conditions) that the 36-month period of exemption ending on October 31, 1957 is the only period when income arising or accruing from the operation of a mine was exempt from inclusion in the total income of the corporation. No provision is made in the Regulations requiring the corporation to maintain ‘‘accounting records’’ after the expiry of the day that is 36 months after the day on which the mine came into production. It may be noted also that in Regulation 1900 it is provided by subsection (a) thereof that the corporation shall maintain separate accounting records in respect of the mine for the period beginning with the commencement of the operation of the mine by the corporation and ending with the day before the day on which the mine came into production. In my view, this provision makes it clear that any income earned before the period of exemption from ore produced prior thereto is not exempt from taxation.

In my opinion the terms of Regulation 1900 establish also that the phrase ‘‘during the period of 36 months’? refers to "‘income derived’’ and not to "‘the operation of a mine’’.

It is of some importance to note that Regulation 1900 in the form earlier set out herein, was enacted many years ago and has remained unchanged.

For the reasons stated, I have come to the conclusion that the re-assessment dated May 29, 1969, with respect to the appellant’s 1958 taxation year, in so far as it relates to the new mine income issue and applicable to all five mines brought into production during the years 1951 to 1956 (as set out in paragraph 3 of the Stated Case) must be affirmed.

Accordingly I answer the two questions set out in paragraph 8 of the Stated Case in the affirmative and, consequently, as provided in paragraph 9 thereof, the appeals in respect of the new mine income issue will be dismissed with costs.

However, as provided in paragraph 9, the re-assessment will be referred back to the respondent for a further re-assessment to give effect to the settlement of the ‘‘legal expenses issue’’. Minutes of settlement on that issue were filed as Exhibit 1 at the hearing and provided :

(a) that the appeal of the appellant in regard to legal expenses be allowed;

(b) that in respect to the issue the Minister will re-assess the appellant for its 1958 taxation year allowing the appellant to deduct one-half of the legal expenses of $18,930.12 ;

and

(c) that there will be no order as to costs with respect to that issue.