DUMOULIN,
J.:—This
is
an
appeal
from
a
decision
of
the
Tax
Appeal
Board,
dated
February
8,
1961,
which
affirmed
a
reassessment
made
by
the
Minister
of
National
Revenue
in
respect
of
the
appellant’s
income
tax
for
the
years
1955,
1956
and
1957.
By
consent
of
both
parties,
the
entire
record
of
evidence
heard
and
all
exhibits
filed
before
the
Tax
Appeal
Board
are
produced
in
the
instant
case.
Mr.
Meyer
Shuchat,
the
appellant,
describes
his
business
pursuits
as
those
of
a
manufacturer
and
merchant
of
fur
garments
“.
.
.
controlling
and
operating
the
following
corporate
firms:
(a)
S.
&
G.
Furs
Inc.,
manufacturers
of
fur
coats
and
fur
garments
for
wholesale
distribution
;
(b)
M.
Shuchat
Fur
Co.
Limited,
manufacturers
of
fur
coats
and
fur
garments
to
order
for
consumers
;
(c)
A.
J.
Alexander
Furs
(Montreal)
Ltd.,
operators
of
retail
fur
shops.”’
In
1946,
the
appellant
constructed
for
investment
purposes
in
Montreal
a
four-storey
building
to
which
he
added,
in
1950,
two
floors.
Shuchat
next
proceeds
to
say
that
(cf.
“A.
Statement
of
Facts”)
:
5.
On
May
28,
1954,
the
City
of
Montreal
prepared
and
publicized
its
final
plans
for
the
opening
of
Burnside
Street
and
on
June
1,1955,
the
City
Council
of
Montreal
approved
expropriation
in
accordance
therewith.”
In
paragraph
6,
the
appellant
states
that
he
prepared
plans
for
improvements
to
the
‘‘Shuchat
Building’’,
with
a
view
to
developing
the
site
as
a
corner
location
having
a
large
frontage
on
the
projected
new
commercial
thoroughfare.
To
this
effect
(paragraph
7)
additional
financing
was
required
and
obtained,
early
in
1955,
from
the
Canada
Trust
Company
to
the
extent
of
$140,500,
a
sum
which
raised
the
mortgage
on
the
property
aforesaid
to
a
total
of
$300,000.
Paragraph
9
notes
that
an
unusual
delay
of
three
years
occurred
before
the
City
of
Montreal
realized
its
decision
for
the
extension
of
Burnside
Street
and
the
actual
demolition
of
the
expropriated
buildings.
It
is
furthermore
alleged
that
this
unwonted
proceeding
of
expropriation
without
prior
possession
was
adopted
after
Shuchat
had
increased
the
initial
mortgage
by
so
much
as
$140,500.
Paragraph
12
is
the
culmination
of
a
somewhat
lengthy
preamble
setting
out
that:
12.
8.
&
G.
Furs
Inc.,
a
firm
wholly
controlled
by
the
appellant,
was
indebted
to
its
bankers
to
the
extent
of
$139,054,
and
the
appellant,
having
no
immediate
use
for
the
$140,500.00
in
capital
funds
received
from
the
Canada
Trust
Company,
and
being
unable
to
return
same
to
his
mortgage
creditor,
transferred
these
funds
from
his
own
account
to
8.
&
G.
Furs
Inc.
as
a
personal
loan
to
the
firm,
repayable
on
demand,
without
interest,
whenever
such
funds
shall
be
required
for
building
operations.
’’
Pursuant
to
the
premises
thus
outlined,
the
appellant
would
avail
himself
of
the
income
tax
deduction
permitted
by
Section
11(1)
(c)
of
the
Act.
I
quote:
“(11.
(1)
Notwithstanding
paragaphs
(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:)
(c)
an
amount
paid
in
the
year
or
payable
in
respect
of
the
year
(depending
upon
the
method
regularly
followed
by
the
taxpayer
in
computing
his
income),
pursuant
to
a
legal
obligation
to
pay
interest
on
(i)
borrowed
money
used
for
the
purpose
of
earning
income
from
a
business
or
property
(other
than
borrowed
money
used
to
acquire
property
the
income
from
which
would
be
exempt),”
The
appellant’s
contention
that
in
extending
to
S.
&
G.
Furs,
Inc.,
an
otherwise
idle
amount
of
$140,500
constituted
a
capital
investment,
the
proceeds
of
which
would
be
income
from
a
business
or
property,
can
hardly
be
substantiated
under
the
circumstances
of
the
case.
§.
&
G.
Furs,
Inc.,
is
a
company
duly
endowed
with
its
own
legal
entity,
completely
separate
from
that
of
the
appellant,
and,
therefore,
had
no
financial
connection
whatever
in
law
with
Shuchat’s
personal
income.
If
this
assumption
is
exact,
the
money
appellant
borrowed
from
Canada
Trust
Company
and
subsequently
passed
on
to
S.
&
G.
Furs,
Inc.,
was
not
used
for
the
purposes
of
earning
his
own
personal
income.
Other
considerations
also
militate
strongly
against
the
admission
of
the
instant
plea.
First
of
all,
the
incidents
alleged
by
Shuchat
concerning
the
three
years’
delay
before
the
City
of
Montreal
undertook
the
broadening
of
Burnside
Street,
cannot
in
the
least
give
rise
to
any
responsibility
on
the
part
of
the
Minister
of
National
Revenue,
respondent.
Next,
should
it
be
feasible
to
borrow
money
in
one’s
own
name,
invest
these
loans
in
firms
or
companies
controlled
by
the
borrower
and
deduct
from
one’s
income
tax
the
interest,
as
was
done
in
the
present
case,
such
a
practice
would
easily
circumvent
the
meaning
of
the
Income
Tax
Act.
It
seems
obvious
that
whatever
yield
accrued
from
the
loan
by
the
appellant
to
8.
&
G.
Furs,
Inc.,
had
no
direct
relationship
and
nothing
to
do
with
the
earning
of
Mr.
Shuchat’s
personal
income,
as
required
by
Section
11(1)
(c)
of
the
Act.
For
the
reasons
above,
this
Court
dismisses
the
appeal
and
the
respondent
will
be
entitled
to
recover
its
legal
costs
after
taxation.
Judgment
accordingly.
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