Delmer
E
Taylor:—This
is
an
appeal
against
an
income
tax
assessment
in
which
the
Minister
of
National
Revenue
disallowed
the
deduction
of
$1,749.95
for
the
purchase
of
10
new
chesterfields
in
1972
but
claimed
as
“repairs
and
maintenance’’,
and
of
$5,317.40
for
15
chesterfields,
1
coffee
table,
1
end
table
and
6
clothes
dryers
in
1973,
treated
in
the
same
manner.
The
respondent
relied,
inter
alia,
upon
paragraphs
18(1
)(a)
and
18(1
)(b)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63
as
amended.
Facts
The
appellant
owns
two
apartment
blocks
in
the
City
of
Regina
in
the
Province
of
Saskatchewan,
containing
72
suites,
61
of
which
are
furnished.
The
appellant
agreed
at
the
hearing
that
the
only
item
which
remained
in
dispute
was
the
expenditure
for
the
25
new
chesterfields,
and
not
the
tables
or
clothes
dryers.
Contentions
In
the
notice
of
objection,
dated
January
17,
1975,
for
the
year
1973,
the
position
of
the
appellant
was:
We
object
to
the
reassessment
from
repairs
and
maintenance
to
fixed
assets
account
for
the
reupholstery,
and
purchase
of
chesterfields
and
chairs,
and
small
furniture
purchases.
(ie
end-tables
and
coffee-tables),
as
the
cost
of
replacing
was
cheaper
than
the
recovering
of
such
items.
(letter
enclosed).
It
is
our
contention
that
these
items
are
not
classified
as
major
repairs
and
might
be
replaced
in
such
short
periods
of
time
as
two-three
years.
We
therefore
contend
that
they
are
repairs
and
maintenance
and
are
properly
shown
as
such.
The
position
of
the
respondent
was
that:
the
expenditures
in
respect
of
the
purchase
of
the
chesterfields
and
small
furniture
claimed
as
deductions
from
income
were
capital
outlays
within
the
meaning
of
paragraph
18(1
)(b)
of
the
Income
Tax
Act.
Evidence
The
appellant
presented
the
following
information
in
support
of
his
contention:
December
16,
1974.
Dear
Sir:
We
are
enclosing
a
copy
of
a
quotation
from
Sally’s
Upholstery
for
charges
to
recover
chesterfield
suites.
We
would
also
like
to
inform
you
(sic)
office
that
when
we
first
checked
on
the
price
of
recovering
chesterfield
suites
during
our
early
years
the
cost
was
between
$200-$250,
this
price
we
received
from
Wheat
City
Upholstery.
After
checking
the
price
of
new
suites
and
found
them
to
be
much
cheaper
than
recovering,
we
naturally
purchased
the
new
suites.
We
would
like
to
stress
the
fact
that
buying
new
suites
was
much
more
economical
than
having
the
old
ones
recovered.
Also,
up
until
the
last
two
years
we
felt
quite
justified
in
writing
them
off
as
an
expense
seeing
as
we
were
not
increasing
the
capital
expense
of
the
furniture
but
were
just
keeping
the
furniture
at
an
even
level
of
quality.
Yours
truly,
(Sgd)
C
W
Cudmore
Citation
Investments
Ltd
per
C
W
Cudmore.
Enclosed.
January
3,
1974.
Citation
Investments
Ltd,
1109
Grey
Street,
Regina,
Saskatchewan.
Dear
Sirs:
Please
be
advised
that
the
price
for
recovering
chesterfield
suites
for
the
year
1974
will
be
as
follows:
f,
1.
To
recover
suites
using
standard
materials
|
a)
Labour
|
$150.00
|
|
b)
Cushions—$5.00
each
plus
5%
tax
|
27.25
|
|
c)
Material—11
yards
average
@
$6.95
plus
tax
|
80.27
|
|
$257.42
|
2.
To
recover
suites
using
top
quality
materials
and
the
type
of
suite
that
is
more
complicated
in
design
and
structure
|
a)
Labour
(depends
on
design)
|
$200.00
|
$250.00
|
|
b)
Cushions
(foam
rubber)
$15.00
ea
|
78.75
|
78.75
|
|
c)
Material—20
yds
at
$12.00-$15.00
yd.
|
|
|
plus
5%
tax
|
252.00
|
315.00
|
|
$530.75
to
$643.75
|
Note—The
price
of
material
will
vary
as
price
increases
from
suppliers
dictates.
Thank
you
for
your
past
patronage
and
I
hope
that
we
can
be
of
service
to
you
in
the
future.
Yours
truly,
(Signature)
Sally’s
Upholstery.’
Argument
The
proposition
of
the
appellant
was
that
the
expenditure
incurred
was
less
than
that
which
would
have
been
involved
had
the
furniture
been
recovered,
and
such
recovering
would
have
been
deductible
as
a
current
expense.
Counsel
for
the
respondent
while
recognizing
the
basic
logic
from
a
business
viewpoint
of
the
appellant’s
position,
nevertheless
did
not
agree
it
should
have
any
merit
in
determining
the
nature
of
the
final
expenditure.
Reference
was
made
to
two
cases:
Alexandra
Hotel
(1960)
Ltd
v
MNR,
[1971]
Tax.
ABC
1135;
.71
DTC
767;
\
,
MNR
v
Haddon
Hall
Realty
Inc,
[1961]
CTC.
509:
62
DTC
1001.
Findings
In
my
view,
the
matter
is
determined
by
the
one
phrase
in
the
notice
of
objection
quoted
above:
.
.
.
might
be
replaced
in
such
short
periods
of
time
as
two-three
years.
(Italics
mine).
I
would
refer
to
the
recent
decision
of
this
Board
In
David
Calvin
v
MNR
(not
yet
reported),
dealing
with
the
same
subject.
Decision
The
appeal
is
dismissed.
Appeal
dismissed.
Email this Content