The Chairman (orally: April 23, 1975):
1 This is an appeal by Shri Krishan Bhalla against reassessments of the Minister of National Revenue for the 1970 and 1971 taxation years.
2 This is another of those troublesome cases where a professional man, this time a doctor, has claimed an allowance under paragraph 12(1)(a) of the old Income Tax Act for the operation of a second motor vehicle used predominantly for business purposes, but admittedly used for pleasure on occasions. In most instances the appellants are not as candid as this appellant, and very often will not concede that the car, which is primarily a business car, is sometimes used for pleasure as distinct from business.
3 The appellant in this case, however, has put forth a very novel argument, one with which I have not had to deal previously, and, put briefly, it is as follows:
4 That during the years in question the appellant leased a motor vehicle, the price of which was fixed without regard to the number of miles that the appellant might drive. The argument follows, then, that any personal use the motor vehicle may have been put to did not increase the cost to the taxpayer of the vehicle, and therefore the cost of the business vehicle should be totally deductible.
5 As I have said, in many cases of this nature, the thing I deplore most is the inconsistency from district office to district office as to what will be allowed to a doctor or a lawyer for the use of the so-called “second vehicle”. In this case the doctor does not complain about the allowance of 75% of the operating costs of the motor vehicle but only complains about disallowance of 25% of the leasing cost because, as I have said, his argument, ably presented by his counsel, is that it made no difference what the vehicle was used for in addition to usual business needs because the price was constant.
6 As I have said in the case of Dr Robert H Gourlay v Minister of National Revenue, [1973] C.T.C. 2282, 73 D.T.C. 222; this is a benefit that is conferred on a certain class of taxpayer but is not conferred generally on all taxpayers who may drive more than one vehicle. The basis of this benefit, is, of course, that people in the professions of medicine or law, for example, are treated as being in business for themselves rather than as employees, and therefore, if they can bring the costs of operation of their automobiles within paragraph 12(1)(a) of the old Income Tax Act, they are entitled to a deduction.
7 It is trite law to say that, in interpreting any fiscal statute where a deduction is claimed, the deduction can only be allowed if the taxpayer can bring himself clearly within the terms of the relevant section. I cannot see that there is any difference between a person who buys and owns a car and deducts capital cost allowance thereon and one who leases. In my view, the result is the same, and the benefit that accrues to the individual for personal use must always be considered.
8 As I have said in the Gourlay case, as well as in other decisions which have not been reported, it is my firm belief that there should be some consistency in the various taxation districts as to what the ratio of allowance is and, except in very unusual circumstances, which, on the evidence before me, I do not find to exist in this case, that allowance should, in my view, be 75% for business use and 25% for personal use.
9 I am of that opinion and, until reversed in a very clear manner, I propose to deal with this type of case on that basis. Therefore, the appeal will be dismissed.
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