CATTANACH,
J.:—This
is
an
appeal
from
a
decision
of
the
Tax
Appeal
Board
(1959),
22
Tax
A.B.C.
171,
dated
June
19,
1959,
dismissing
the
appellant’s
appeal
from
its
income
tax
assessment
for
its
taxation
year
ending
January
31,
1955.
The
appellant,
West
York
Coach
Lines
Limited,
operated
bus
services
in
the
suburban
areas
of
the
City
of
Toronto,
as
well
as
a
charter
bus
business.
The
real
property
used
in
connection
with
the
bus
operations
was
owned
by
an
affiliated
company,
West
York
Motors
Limited.
In
1953
the
Ontario
Municipal
Board
concurred
in
an
application
for
the
amalgamation
of
the
City
of
Toronto
with
surrounding
municipalities
and
the
recommendations
of
the
said
Board
were
enacted
into
law
by
chapter
73
of
the
Statutes
of
Ontario,
1953.
The
sections
of
the
said
statute
relating
to
public
transportation
include
the
following
:
“102.
On
and
after
the
1st
day
of
January,
1954,
there
shall
be
a
commission
to
be
known
as
Toronto
Transit
Commission,
with
the
powers,
rights,
authorities
and
privileges
vested
in
it
by
this
Act.
109.
(2)
Except
in
accordance
with
an
agreement
made
under
subsection
3,
no
person
other
than
the
Commission
shall,
after
the
1st
day
of
July,
1954,
operate
a
local
public
passenger
transportation
service
within
the
Metropolitan
Area,
with
the
exception
of
steam
railways
and
taxis.
(3)
An
agreement
may
be
entered
into
between
the
Commission
and
any
person
legally
operating
a
local
public
passenger
transportation
service
wholly
within
or
partly
within
and
partly
without
the
Metropolitan
Area
on
the
1st
day
of
January,
1954,
under
which
such
person
may
continue
to
operate
such
service
or
any
part
thereof
for
such
time
and
upon
such
terms
and
conditions
as
such
agreement
provides.
(5)
Where
a
local
public
passenger
transportation
service
is
legally
operating
partly
within
and
partly
without
the
Metropolitan
Area
on
the
1st
day
of
April,
1953,
and
continues
in
operation,
and
will
be
required
by
subsection
2
to
cease
to
operate
within
the
Metropolitan
Area
on
the
1st
day
of
July,
1954,
or
upon
the
termination
of
an
agreement
made
under
subsection
3,
(a)
the
Commission
may
agree
with
the
owner
of
the
service,
not
later
than
one
month
before
the
date
upon
which
the
service
will
be
required
to
cease
to
operate
within
the
Metropolitan
Area,
to
purchase
the
assets
and
undertaking
used
in
providing
the
entire
service
or
to
purchase
the
portion
thereof
that
is
allocated
to
the
provision
of
the
service
within
the
Metropolitan
Area;”
Negotiations
were
begun
by
the
Toronto
Transit
Commission
for
the
acquisition
of
the
business
and
undertaking
carried
on
by
the
appellant,
plus
the
real
estate
owned
by
West
York
Motors
Limited,
used
in
conjunction
with
its
bus
operation.
An
offer
of
$250,000
was
made
by
the
Toronto
Transit
Commission
during
the
first
part
of
June,
1954,
which
was
refused
by
the
appellant.
A
subsequent
offer
of
$450,000
was
made
on
or
about
June
15,
1954,
which
was
acceptable
to
the
appellant
(this
amount
being
suggested
by
the
appellant
as
the
proper
amount)
and
culminated
in
an
agreement
of
sale
dated
June
21,
1954,
between
the
appellant
and
West
York
Motors
Limited
as
vendors
and
the
Toronto
Transit
Commission.
The
agreement
provided
for
the
payment
of
$450,000
for
all
the
assets,
together
with
all
goodwill
in
respect
of
the
bus
services,
including
charter
services,
the
take-over
date
being
July
1,
1954.
It
was
not
recorded
how
much
of
the
total
purchase
price
was
to
be
allocated
to
the
fixed
assets,
buses,
equipment
and
goodwill
respectively.
Prior
to
entering
into
the
agreement
dated
June
21,
1954,
the
Toronto
Transit
Commission
employed
two
persons
to
evaluate
the
buses
owned
by
the
appellant.
The
first
was
E.
M.
Hurst,
president
of
Bus
Sales
of
Canada,
Limited,
and
eastern
representative
of
Motor
Coach
Industries,
Limited,
manufacturers
of
highway
buses;
and
the
second
was
G.
S.
Gray,
who
was
Transit
Controller
for
Canada
during
the
war
years
and
subsequently
vice-president
in
charge
of
sales
for
a
bus
manufacturing
company.
On
March
23,
1954,
these
two
appraisers
placed
a
valuation
of
$172,300
on
the
appellant’s
buses.
In
compiling
its
income
tax
return
for
the
fiscal
period
ending
January
31,
1955,
the
appellant
reported
the
sum
of
$65,187.53
as
the
proceeds
of
the
disposition
of
the
buses,
being
the
amount
at
which
the
buses
were
carried
in
its
books.
When
re-assessing
the
appellant,
the
notice
of
re-assessment
being
dated
January
28,
1957,
the
Minister
took
the
sum
of
$172,300
as
representing
the
amount
paid
to
the
appellant
for
the
buses,
instead
of
$65,187.53,
and
applied
the
recapture
of
capital
cost
allowance
provisions
of
the
Income
Tax
Act
accordingly.
The
appellant
filed
a
notice
of
objection
to
the
aforesaid
reassessment
and
by
notice
dated
November
29,
1957,
the
Minister
confirmed
the
assessment
on
the
ground
that
‘‘under
the
provisions
of
paragraph
(g)
of
subsection
(6)
of
section
20
of
the
Act
it
has
been
determined
that
$172,300
of
the
amount
received
by
the
taxpayer
from
Toronto
Transit
Commission
pursuant
to
an
agreement
dated
21st
June,
1954
was
for
buses
and
therefore
the
amount
added
to
the
taxpayer’s
income
under
subsection
(1)
of
section
20
of
the
Act
has
been
correctly
determined.”
The
appellant
appealed
to
the
Tax
Appeal
Board
which
dismissed
its
appeal.
It
is
from
that
decision
that
the
appeal
to
this
Court
is
brought.
The
relevant
provisions
of
the
Income
Tax
Act,
R.S.C.
1952,
ce.
148,
are
as
follows
:
“20.
(1)
Where
depreciable
property
of
a
taxpayer
of
a
prescribed
class
has,
in
a
taxation
year,
been
disposed
of
and
the
proceeds
of
disposition
exceed
the
undepreciated
capital
cost
to
him
of
depreciable
property
of
that
class
immediately
before
the
disposition,
the
lesser
of
(a)
the
amount
of
the
excess,
or
(b)
the
amount
that
the
excess
would
be
if
the
property
had
been
disposed
of
for
the
capital
cost
thereof
to
the
taxpayer,
shall
be
included
in
computing
his
income
for
the
year.
(6)
For
the
purpose
of
this
section
and
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11,
the
following
rules
apply
:
(g)
Where
an
amount
can
reasonably
be
regarded
as
being
in
part
the
consideration
for
disposition
of
depreciable
property
of
a
taxpayer
of
a
prescribed
class
and
as
being
in
part
consideration
for
something
else,
the
part
of
the
amount
that
can
reasonably
be
regarded
as
being
the
consideration
for
such
disposition
shall
be
deemed
to
be
the
proceeds
of
disposition
of
depreciable
property
of
that
class
irrespective
of
the
form
or
legal
effect
of
the
contract
or
agreement;
and
the
person
to
whom
the
depreciable
property
was
disposed
of
shall
be
deemed
to
have
acquired
the
property
at
a
capital
cost
to
him
equal
to
the
same
part
of
that
amount;
.
.
.’’
The
issue
in
the
appeal
is
whether
the
amount
of
$172,300
is
that
part
of
the
total
amount
of
$450,000,
which
the
appellant
received
from
the
Toronto
Transit
Commission,
that
can
reasonably
be
regarded
as
being
the
consideration
for
the
disposition
of
the
appellant’s
buses
which
were
its
depreciable
property.
If
it
can
be
so
regarded,
the
amount
shall
be
deemed
to
be
the
proceeds
of
the
disposition
of
its
depreciable
property,
within
the
meaning
of
Section
20(1)
of
the
Act.
In
my
opinion,
the
amount
of
$172,300
can
reasonably
be
regarded
as
being
the
consideration
for
the
disposition
of
the
buses,
within
the
meaning
of
Section
20(6)
(g)
of
the
Act.
There
are
ample
grounds
for
this
conclusion.
The
Toronto
Transit
Commission
employed
two
independent
and
qualified
appraisers
to
make
an
evaluation
of
the
buses
before
they
made
their
offer
of
$450,000
for
the
appellant’s
whole
enterprise.
Their
valuation
of
$172,300
was
the
amount
at
which
the
buses
were
taken
into
the
books
of
the
Toronto
Transit
Commission
at
the
time
of
the
purchase.
According
to
Mr.
J.
H.
Kearns,
the
treasurer
of
the
Commission,
this
amount
was
so
entered
because
it
was
the
amount
of
the
appraisal,
and
Mr.
Kearns
also
stated
that
out
of
the
purchase
price
of
$450,000,
$172,300
was
allocated
to
the
buses.
In
view
of
the
conclusion
that
$172,300
is
that
part
of
the
total
amount
of
$450,000
that
can
reasonably
be
regarded
as
being
the
consideration
for
the
disposition
of
the
buses,
it
follows
that
this
amount
is
deemed
to
be
the
proceeds
of
the
disposition
of
the
appellant’s
depreciable
property,
within
the
meaning
of
Section
20(1)
of
the
Act
‘‘irrespective
of
the
form
or
legal
effect
of
the
contract
or
agreement
between
the
appellant
and
the
Toronto
Transit
Commission’’.
The
Minister
was,
therefore,
right
in
re-assessing
the
appellant
as
he
did,
and
its
appeal
herein
must
be
dismissed
with
costs.
Judgment
accordingly.
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