JACKETT,
P.:—This
is
an
appeal
from
a
decision
of
the
Tax
Appeal
Board
dismissing
the
appellant’s
appeal
from
a
reassessment
of
the
appellant’s
liability
for
income
tax
under
Part
I
of
the
Income
Tax
Act
for
the
1962
taxation
year.
The
sole
question
in
issue
is
whether
a
profit
made
by
the
appellant
in
1962
from
the
sale
of
a
parcel
of
land
was
a
profit
from
a
transaction
entered
into
in
the
course
of
the
current
operations
of
a
business,
in
which
event
the
respondent.
properly
included
that
profit
in
the
computation
of
the
appellant’s
income
for
the
year,
or
was
a
profit
from
the
sale
of
a
capital
asset
of
a
business,
in
which
event
the
profit
should
not
have
been
included
in
computing
the
appellant’s
income.
The
appellant,
who
lives
near
Campbellville,
Ontario,
was
born
in
Germany,
where
he
became
a
well-known
owner
and
trainer
of
standard
bred
horses
before
he
came
to
Canada
with
his
family
in
1951.
When
he
came
to
Canada
in
1951,
the
appellant
purchased
a
farm
near
Campbellville
and
began
a
cattleraising
and
dairy
farm
business
which
he
continued
to
carry
on
until
1956
when
he
converted
that
business
to
a
business
of
train-
ing
horses.
In
order
to
establish
himself
as
a
trainer
in
Canada,
the
appellant
purchased
some
inexpensive
thoroughbred
horses,
trained
them,
and
began
to
race
them
with
such
success
that
other
owners
began
to
hire
the
appellant
to
train
their
horses.
By
1960,
the
appellant
had
some
twenty
horses
under
his
care
and
supervision.
The
extent
of
this
business
may
be
appreciated
by
noting
two
sets
of
figures.
During
the
years
1957
to
1962,
the
appellant
had
a
revenue
each
year
from
winning
purses
by
racing
his
own
horses
as
follows:
1957
—
$
2,470.00
|
3
to
4
horses
|
1958
—
$
5,645.00
|
4
to
5
horses
|
1959
—
$
8,565.00
|
4
to
5
horses
|
1960
—
$28,562.14
|
20
horses
|
1961
—
$20,340.60
|
8
to
10
horses
|
1962
—
$21,660.00
|
3
to
4
horses
|
During
the
same
period,
his
revenues
from
boarding
and
training
horses
belonging
to
others
were
as
follows
:
1957
—nil
|
|
1958
—
$
1,600.00
(estimated)
|
2
horses
|
1959
—
$
1,635.00
|
3
to
4
horses
|
1960
—
$
1,638.00
|
8
to
4
horses
|
1961
—
$16,547.03
|
20
horses
|
1962
—
$26,598.60
|
20
to
25
horses
|
Quite
apart
from
these
activities,
which
I
will
refer
to
as
the
appellant’s
farming
business,
the
appellant
had
a
substantial
source
of
income
during
the
years
1959
to
1962
from
activities
which
I
will
refer
to
as
his
real
estate
activities.
The
appellant
knew
many
wealthy
persons
who
lived
in
Germany
and
as
a
result
of
the
political
situation
that
existed
there
in
the
late
1950’s,
many
of
these
persons
were
anxious
to
invest
money
abroad.
The
appellant
assisted
such
persons
to
find
land
that
they
bought
in
the
area
near
his
farm
at
Campbellville.
In
some
cases,
the
appellant
merely
assisted
his
German
acquaintances
to
find
and
choose
land
that
they
decided
to
buy,
in
which
cases
they
made
payments
to
him,
which
are
referred
to
in
the
evidence
as
commissions.
In
other
cases,
he
first
acquired
some
interest
in
the
land,
either
in
partnership
with
real
estate
brokers
or
dealers,
or
alone,
and
then
benefited
on
the
re-sale
to
the
German
purchasers
by
participating
in
the
resulting
profits.
The
extent
of
the
appellant’s
revenue
from
his
real
estate
activities
appears
from
the
following
figures:
1959
—
Commissions
|
$36,436.28
|
—
Profits
|
nil
|
1960
—
Commissions
|
$
9,000.00
|
—
Profits
|
$80,647.98
|
1961
—
Commissions
|
$32,722.08
|
—
Profits
|
$30,500.00
|
1962
—
Commissions
|
$37,349.32
|
—
Profits
|
nil
|
No
problem
has
arisen
in
connection
with
the
appellant’s
revenues
from
his
real
estate
activities.
He
has
made
returns
of
these
commissions
and
profits
as
income
and
paid
income
tax
accordingly.
The
problem
that
has
arisen
arises
with
reference
to
a
100-
acre
parcel
of
land
that
the
appellant
himself
purchased
outright
on
August
18,
1960,
for
$10,000.
This
parcel
is
one
and
one-half
to
two
miles
from
his
farm
and
he
says
that
he
acquired
it
because
he
had
an
immediate
need
for
it
for
the
production
of
hay
for
use
in
his
farming
business
and
because
he
had
the
idea
that
ultimately
he
would
use
it
for
a
horse
breeding
operation
when
he
became
too
old
to
continue
his
boarding
and
training
operations.
In
fact,
he
did
take
two
crops
of
hay
off
the
land
in
question
for
use
in
his
farming
business,
but,
by
the
latter
part
of
1961,
he
received
an
offer
of
over
$80,000
for
it,
which
he
accepted
and
thus
made
the
sale
in
1962
that
gave
rise
to
the
profit
of
$22,887.56
that
is
in
issue
in
this
appeal.
The
Tax
Appeal
Board
appears
to
have
concluded
that,
as
the
appellant
was
in
a
business
of
trading
in
farm
properties
and
as
the
profit
in
issue
was
the
result
of
‘‘turning
to
account
of
real
estate
acquired’’,
it
followed
that
the
profit
was
a
profit
from
that
business.
The
problem
involved
does
not
appear
to
me
to
be
that
simple.
Certainly,
if
the
property
in
question
was
acquired
by
the
appellant
with
a
view
to
re-sale
at
a
profit,
or
if
it
was
acquired
with
a
view
to
using
it
in
the
farming
business
or
re-sale
at
a
profit
as
circumstances
might
make
most
expedient,
then,
in
my
view,
when
it
was
re-sold
a
little
over
a
year
after
it
was
acquired,
the
sale
must
be
regarded
as
having
taken
place
in
the
course
of
the
appellant’s
real
estate
activities
and
the
resultant
profit
must
be
regarded
as
a
profit
from
a
business.
If,
on
the
other
hand,
at
the
time
when
the
appellant
acquired
the
property,
the
only
purpose
he
had
in
mind
for
it
was
to
incorporate
it
in
his
farming
business,
and
if
he
did
make
it
a
part
of
the
property
on
which
he
carried
on
his
farming
business,
its
subsequent
sale
would
be
a
sale
of
a
capital
asset
of
that
business
even
though
it
occurred
within
a
very
short
time
after
acquisition.
Putting
the
matter
another
way,
where
a
person
carries
on
business
as
a
trader
in
real
estate
and
some
other
business
at
the
same
time,
if
he
buys
a
parcel
of
land
for
re-sale
at
a
profit
and
does
so
re-sell
it,
the
resulting
profit
is
a
profit
from
his
trading
business
even
though
he
found
a
use
for
the
land
in
his
other
business
during
the
period
that
he
owned
it;
but,
on
the
other
hand,
a
profit
that
he
makes
upon
the
sale
of
land
acquired
for
the
sole
purpose
of
being
used,
and
that
has
in
fact
been
used,
as
part
of
the
capital
assets
of
the
other
business
is
not,
as
such,
a
profit
from
his
business
as
a
trader
in
real
estate,
and
the
length
of
the
period
between
purchase
and
sale
of
a
parcel
of
land
by
such
a
person
is
not
relevant
except
in
so
far
as
it
is
some
indication
as
to
whether
the
land
was
inventory
of
the
trading
business
or
a
capital
asset
of
the
other
business.
I
must,
therefore,
decide
whether
the
balance
of
probability
on
the
evidence
in
this
case
is
that
the
only
purpose
that
motivated
the
appellant
to
acquire
the
property
in
question
was
to
incorporate
it
in
his
farming
business
and
that
he
did
in
fact
make
it
a
part
of
the
property
on
which
he
carried
on
his
farming
business
before
he
sold
it.
In
effect,
the
appellant’s
testimony
in
this
Court,
as
I
understood
it,
was
as
follows:
One
Robinson
approached
the
appellant,
knowing
that
he
had
something
to
do
with
arranging
sales
of
farm
properties
in
the
area
to
wealthy
Germans,
to
see
whether
the
appellant
could
produce
a
purchaser
for
Robinson’s
200-acre
farm.
Robinson’s
farm
consisted
of
a
100-acre
parcel
without
buildings
(being
the
property
in
question)
and
a
100-acre
parcel
with
farm
buildings.
The
appellant
recognized
the
100-acre
parcel
without
buildings
as
the
one
that
would
fit
into
the
needs
of
his
own
farming
business
and
asked
Robinson
if
he
would
sell
the
two
parcels
separately,
but
Robinson
indicated
that
he
wanted
to
sell
both
parcels
at
the
same
time
although
he
did
not
insist
on
a
single
purchaser.
The
appellant
arranged
a
sale
to
one
of
his
German
acquaintances
of
the
parcel
with
the
buildings
and,
by
reason
of
his
relations
with
these
gentlemen,
felt
bound
to
make
the
other
100-acre
parcel
available
to
another,
but,
when
it
was
declined
by
the
latter
gentleman,
he
bought
it
for
himself.
Subsequently,
a
little
over
a
year
later,
the
gentleman
who
declined
it
originally
decided
that
he
wanted
it
(apparently
to
round
out
his
surrounding
holdings)
sufficiently
to
cause
him
to
offer
over
$30,000
for
it.
At
that
price,
the
appellant
came
to
the
conclusion
that
the
land
was
not
worth
as
much
to
him
for
his
farming
business
as
the
money
that
he
was
being
offered
for
it,
and
he
sold
it.
The
appellant
was
thoroughly
tested
on
cross-examination.
It
was,
for
example,
suggested
to
him
that
what
he
had
in
mind
from
the
time
he
first
acquired
the
land
was
its
re-sale
to
the
gentleman
who
subseqquently
bought
it
from
him.
The
credibility
of
this
story
was
challenged,
for
example,
by
an
attempt
to
show
that
the
reasons
he
gave
for
wanting
the
land
for
his
farming
operations
were
not
sound.
No
effort
was
spared
in
putting
the
appellant
to
the
defence
of
his
story.
At
the
end
of
the
day,
in
my
view,
after
observing
the
manner
in
which
the
appellant
gave
evidence
as
carefully
as
I
could,
I
was
of
opinion
that
the
appellant’s
story
in
its
main
outlines
was
not
shaken.
As
I
appreciate
the
matter,
I
do
not
have
to
decide
whether
the
appellant’s
judgment
in
deciding
to
acquire
the
land
for
his
farming
business
was
sound.
The
question
is
whether
he
did,
in
fact,
decide
that
it
would
make
a
good
addition
to
his
farming
business
at
a
price
of
$10,000
and
did,
in
fact,
acquire
it
for
that
purpose.
I
am
satisfied,
from
his
evidence,
that
that
is
the
sole
purpose
that
motivated
him
to
acquire
the
land
and
that,
for
over
a
year,
it
was
a
part
of
the
lands
that
he
used
in
his
farming
business.
I
am
also
satisfied
that
the
very
high
price
that
he
was
ultimately
offered
for
it
convinced
him
that
it
was
wise
to
dispose
of
it
and
carry
on
his
farming
business
without
it.
For
the
above
reasons,
the
appeal
will
be
allowed
with
costs
and
the
assessment
will
be
referred
back
to
the
respondent
to
re-assess
on
the
basis
that
the
profit
referred
to
in
paragraph
15
of
the
Notice
of
Appeal
is
not
part
of
the
appellant’s
income
for
the
1962
taxation
year.