KEARNEY,
J.:—This
is
an
appeal
from
a
decision
of
the
Tax
Appeal
Board
dated
November
28,
1961
(28
Tax
A.B.C.
193),
wherein
it
was
held
that
an
assessment
made
by
the
appellant,
which
added
$335,477.22
to
the
respondent’s
previously
declared
income
for
its
taxation
year
1954,
was
annulled
and
the
latter’s
appeal
therefrom
was
maintained.
In
its
income
tax
return
for
the
year
1954
the
respondent
claimed
as
a
capital
gain
the
amount
of
$335,477.22
which
it
realized
on
the
sale
of
a
farm
which
it
had
acquired
on
October
5,
1949.
I
have
had
occasion
to
make
reference
to
the
instant
case
in
M.N.R.
v.
Valclair
Investment
Co.
Ltd.,
[1964]
C.T.C.
22,
in
which
I
rendered
judgment
earlier
today.
The
facts
and
principals
involved
are,
mutatis
mutandis,
substantially
the
same
in
both
cases.
The
properties
in
the
Cosmos
and
Valclair
cases,
though
not
contiguous,
were
in
the
same
general
area
behind
Mount
Royal.
The
respondent,
admittedly
a
Canadian
investment
company
duly
incorporated
in
1949
under
the
laws
of
the
province
of
Quebec,
in
the
same
year
purchased
the
property
in
question,
which
was
known
and
described
as
part
of
Lots
100
and
101
in
the
official
plan
and
book
of
reference
of
the
Incorporated
Village
of
Côte
des
Neiges,
measuring
1,224,546
and
138,083
sq.
ft.
respectively,
for
$235,960.08
(Ex.
A-1),
or
approximately
17e
per
square
foot.
In
1953
the
respondent
received
an
unsolicited
offer
of
$470,000
for
lot
No.
100,
which
it
accepted,
and
the
deed
of
sale
was
executed
in
the
respondent’s
taxation
year
1954.
There
was
a
farmhouse
and
accessory
buildings
located
on
the
farm,
both
of
which
were
rented
for
some
$500
per
annum
to
a
tenant
farmer
who
had
operated
the
farm
for
many
years
prior
to
its
acquisition
by
the
respondent
and
who
continued
to
do
so
until
it
was
sold
in
1954.
The
financial
statements
of
the
Company
for
the
years
1950
to
1959,
inclusive,
were
filed
as
a
single
exhibit
(A-2).
As
appears
by
its
statement
for
1950,
the
Company’s
authorized
capital
stock
consisted
of
10,000
four
percent
(4%)
cumulative
preferred
shares
of
$100
each,
7,000
of
which
were
fully
paid
up,
and
10,000
common
shares,
5,003
of
which
were
issued
for
$2
per
share.
As
appears
by
its
balance
sheet
for
1950,
with
its
available
funds,
amounting
to
$710,000,
the
Company
invested
over
$450,
000
in
stocks,
bonds
and
loans,
and,
after
investing
$235,000
in
the
aforesaid
lands,
had
a
cash
balance
of
about
$7,000.
The
Company
never
paid
any
dividend.
It
retained
possession
of
that
part
of
Lot
101
which
it
had
acquired
and
was
still
in
possession
of
it
at
the
date
of
trial.
The
gains
realized
on
the
sale
of
Lot
100
in
1954
were
reinvested
in
well-recognized
stocks
and
bonds
and
which
in
1959
amounted
to
approximately
$900,000.
00
per
cent
of
the
Company’s
capital
stock
was
held
by
Canadian
interests
and
the
other
half
by
French
interests,
but
who
were
not
the
same
parties
as
those
interested
in
Valclair
Investment.
At
the
time
of
acquisition
and
sale
of
the
property,
Mr.
Joseph
Blain,
Q.C.,
who
was
the
main
witness
to
testify,
was
a
director
of
the
Company
and
a
member
of
its
Administrative
Committee;
Mr.
Marius
Doye
was
its
president.
Mr.
Blain
held
one
qualifying
share
in
his
own
right
and
50
per
cent
of
the
issued
capital
in
trust
for
the
owners
thereof.
The
evidence
discloses
that
the
purchase
of
the
land
was
an
isolated
transaction
and
a
conscious
attempt
by
the
directors
of
the
Company
to
diversify
its
investments
and
acquire
a
long-term
investment.
The
property
was
sold
exactly
as
it
was
bought—for
cash.
There
was
no
advertising,
no
subdivision,
no
promotion
of
the
land
for
sale,
neither
was
it
listed
with
a
real
estate
agent.
Following
a
marked
rise
in
land
values
in
1953
the
Company
accepted
the
aforesaid
unsolicited
offer
for
the
property
in
1954
or
about
five
years
after
its
acquisition.
The
facts
in
this
case
are
not
essentially
different
from
those
in
the
Valclair
case
and
the
arguments
raised
by
the
respective
counsel
for
the
parties
were
the
same
in
both
cases.
I
consider,
for
the
reasons
given
in
the
case
of
M.N.R.
v.
Valclair
Investment
Co.
Ltd.,
[1964]
C.T.C.
22,
that
the
present
appeal
should
be
dismissed
with
costs.
Judgment
accordingly.
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