DUMOULIN,
J.:—This
is
an
appeal
from
a
decision
of
the
Tax
Appeal
Board,
dated
September
26,
1961
(27
Tax
A.B.C.
408)
dismissing
Hargal
Oils’
appeal
in
respect
of
the
re-assessment
of
its
income
tax
for
1958.
The
appellant,
a
public
company
incorporated
under
the
Companies
Act
of
British
Columbia,
has
its
head
office
at
Vancouver,
and,
for
the
taxation
year
ended
June
30,
1958,
was
entirely
engaged
in
the
business
of
petroleum
production
and
exploration
for
petroleum
or
natural
gas.
By
June
30,
1957,
the
company
aforesaid
claims
to
have
incurred
since
the
calendar
year
1952,
drilling
and
exploration
expenses’’
in
a
sum
of
$95,614.57,
which
were
not
deductible
from
its
income
for
previous
years.
Paragraphs
4
and
5
of
the
Notice
of
Appeal
go
on
to
say
that:
‘
‘4.
During
the
year
ended
June
30th,
1958,
but
prior
to
this
date,
the
assets
of
the
Appellant
were
sold
by
the
Appellant
to
Freehold
Gas
&
Oil
Ltd.
(N.P.L.).
5.
The
Appellant
filed
its
income
tax
return
for
the
year
ended
June
30th,
1958,
and
claimed
a
deduction
of
the
sum
of
$29,136.00
for
drilling
and
development
expenses
pursuant
to
the
provisions
of
the
Income
Tax
Act
leaving
a
balance
unclaimed
of
$66,478.57.”
On
December
29,
1959,
the
Minister
disallowed
this
deduction
of
$29,136
and
re-assessed
the
appellant
accordingly.
The
fiscal
provisions
just
alluded
to
are
Section
83A
(R.S.C.
1952,
c.
148),
more
particularly
its
sequences
83A(3)
and
83A(8a).
This
encompassing
enactment
despite—or
perhaps
on
account
of—its
pretensions
at
exhaustiveness,
resolves
itself
into
another
statutory
Noah’s
Ark,
coralling
together
a
menagerie
of
conjectures,
deductions
hinted
at
or
refused
and
criss-cross
references
to
other
sections,
inevitably
jeopardizing
the
task
of
making
head
or
tails’’
of
such
a
jumble.
However,
a
sufficient
and
practical
summing-up
of
the
parties’
conflicting
views
may
be
derived
from
their
respective
beliefs.
Beginning
with
the
appellant’s
Summary
of
Argument,
page
1,
we
are
told
that:
“Basically
the
taxpayer
relies
on
the
provisions
of
paragraph
83A(3).
An
abbreviated
version
of
this
paragraph,
stripped
of
its
non-essentials
for
the
purposes
of
this
case
could
read
as
follows:
‘An
oil
company
may
deduct
from
its
income
for
the
year
exploration
and
drilling
and
other
expenses
in
an
amount
not
exceeding
its
income
for
the
year.
’
’
’
On
page
2,
in
paragraphs
(c)
and
(d),
the
comments
hereunder
appear:
“(c)
The
deductibility
of
the
expenses
is
limited
to
the
income
of
the
company
for
the
year.
This
means
that
there
may
be
a
carry
over
of
expenses
from
year
to
year
by
a
company
(duly
qualified)
which
could
be
applied
against
its
income
in
succeeding
years
to
the
extent
of
that
income
.
.
.
(d)
The
working
of
the
section
[i.e.
83A(3)]
might
be
illustrated
by
a
simple
example
as
follows:
Company
incurs
drilling
and
exploration
expenses
|
from
1952—total
|
$50,000
|
|
|
Income
Year
1
|
10,000
|
|
|
Excess
expenditure
remaining
|
40,000
|
|
|
Income
Year
2
|
30,000
|
|
|
Excess
expenditure
|
10,000
|
|
|
Income
Year
3
|
10,000
|
|
|
Excess
expenditure
_.
|
Nil
|
”
|
Assuredly
these
statements
have,
at
the
very
least,
the
merit
of
clarity.
I
may
immediately
rule
out
Section
83A(3)
as
it
obviously
relates
to
a
different
contingency:
that
of
a
corporation’s
yearly
income
tax
returns.
The
instant
problem
is
wholly
separate
and
falls
in
the
category
dealt
with
in
Section
83A(8a),
namely:
the
determination
of
deductions
allowed
to
a
“successor”
company
for
the
year
it
acquired
the
assets
of
a
“predecessor”
corporation.
To
this
latter
enactment
I
now
return.
The
respondent,
in
his
written
reply,
admits
that
Freehold
Gas
and
Oil
Ltd.
was
a
‘‘successor
corporation’’
and
Hargal
Oils
a
“predecessor
corporation’’
within
the
meaning
of
the
applicable
sections;
also
that,
‘‘but
for
the
provisions
of
subsection
(8a)
of
section
83A
.
.
.
Hargal
would
be
entitled
to
the
deduction
of
$29,136.00
for
the
1958
taxation
year
as
provided
by
subsection
(3)
of
section
83A”.
Consequently,
in
the
very
words
of
respondent’s
Summary,
paragraph
4:
‘“The
only
issue
in
dispute
is
whether
subsection
8(a)
[
(8a)
I
operates
to
deprive
Hargal
of
any
deduction
under
section
83A
in
the
1958
taxation
year,
being
the
year
the
property
was
transferred
to
Freehold.’’
From
this
last
starting
point,
the
respondent
proceeds
on
a
course
of
reasoning
which,
in
my
opinion,
savours
more
of
hairsplitting
than
of
a
rational
interpretation
of
the
law,
as
might
be
deduced
from
its
paragraph
6,
hereunder
recited
ef.
Summary
of
Argument,
p.
2)
:
“6.
Clause
(iii)
of
paragraph
(e)
of
the
subsection
may
seem
to
imply
that
the
predecessor
might
be
able
to
claim
in
the
year
of
transfer.
This
would
be
the
situation
where,
for
example:
(a)
The
predecessor’s
taxation
year
ended
March
31,
1962;
(b)
The
transfer
took
place
in
May
1962;
(c)
The
successor’s
taxation
year
ended
December
31,1962.”
My
only
additional
comments
to
this
are
that
I
am
at
a
loss
to
find
a
justification
for
it
in
clause
(iii)
of
(e)
;
furthermore
that
it
would
flatly
derogate
from
the
sweeping
and
overriding
prohibition
of
‘‘the
concluding
words
of
subsection
(8a)’’
as
said
in
the
two
first
lines
of
respondent’s
paragraph
5.
I
fully
share,
on
this
point,
the
appellant’s
rejoinder
that:
“(a)
Nothing
in
the
subsection
[viz.
(iii)
of
(e)]
suggests
this
peculiar
and
particular
alleged
limitation.”
In
point
of
fact,
the
solution
is
a
simpler
one,
plainly
implied,
I
believe,
by
the
interplay
of:
1.
The
entitlement
of
Section
83A(8a)
to
wit:
‘‘Property
acquired
by
successor
corporation’’,
especially
devoting
this
section’s
purview
to
the
case
of
a
‘‘successor’’
and
not
that
of
a
‘‘predecessor’’
corporation
;
2.
The
wording
of
clause
(iii)
of
paragraph
(e)
in
which
the
expression
“predecessor
corporation,
etc.”
appears
merely
as
a
condition
precedent
to
a
‘‘successor’’
corporation’s
right
to
a
deduction
;
3.
Finally
the
concluding
and
also
conclusive
lines
of
Section
83A
(8a)
which
sufficiently
speak
for
themselves
res
ipsa
loquitur.
I
quote:
‘‘and,
in
respect
of
any
such
expenses
(i.e.,
inter
alia,
drilling,
exploration
and
prospecting
costs)
included
in
the
aggregate
determined
under
paragraph
(e)
no
deduction
may
be
made
under
this
section
‘by
the
predecessor
corporation
(italics
are
mine)
in
computing
its
income
for
the
taxation
year
in
which
the
property
so
acquired
was
acquired
by
the
successor
corporation
or
its
income
for
any
subsequent
taxation
year.”
Since
those
operational
expenditures
were
not
deductible
from
the
appellant’s
income
for
the
years
1952
to
1957
inclusive,
as
admitted
in
paragraph
3
of
the
Notice
of
Appeal,
then,
nothing
short
of
a
positive
statutory
provision
could
suffice
to
bestow
upon
such
outlays
the
privilege
of
deductibility
otherwise
denied
to
them
during
the
sequential
period
of
their
occurrence.
Again,
a
scrutiny
of
the
verbose
texts
involved
fails
to
convince
me
that
I
should
find
in
them
the
rehabilitating
effect—si
ita
licet
dicere—
sought
by
the
appellant.
Indeed,
it
was
seen
that
the
imperative
direction
in
the
ultimate
paragraph
of
Section
83A(8a)
irretrievably
defeats
the
company’s
interpretation
of
the
law.
I
cannot
reach
any
other
conclusion
but
that
the
sum
of
$29,136
was
properly
added
to
Hargal
Oils’
income
for
the
taxation
year
1958.
For
the
above
reasons,
this
appeal
is
dismissed
and
the
respondent
entitled
to
recover
taxable
costs.
Judgment
accordingly.
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