MNR v. Minden, 62 DTC 1044, [1962] CTC 79 (Ex Ct)

THorson, P.:—This is an appeal from the decision of the Income Tax Appeal Board, sub nom. No. 545 v. M.N.R. (1958), 20 Tax A.B.C. 31, dated July 17, 1958, allowing the respondent’s appeals against her income tax assessments for 1950, 1951, 1952, 1953, 1954 and 1955.

The circumstances leading to the appeal, apart from the facts on which it must be determined, may be stated briefly. As appears from notices of re-assessment, each dated December 26, 1956, the Minister in re-assessing the respondent for 1950 and 1951 added the sums of $3,168.50 for 1950 and $8,862.70 for 1951 to the amounts of taxable income respectively reported by her on her income tax returns for these years. He then deducted in each case a portion of her income so determined on the ground that it was deemed to be her husband’s income. The amount so deducted is not in issue in the appeal. Then, as appears from notices of re-assessment, each dated May 1, 1957, the Minister in re-assessing the respondent for the years 1952, 1953, 1954 and 1955 added the sums of $4,311.51 for 1952, $5,638.35 for 1953, $7,343.95 for 1954 and $1,644.61 for 1955 to the amounts of taxable income respectively reported by her on her income tax returns for these years. He also deducted in each case a portion of her income so determined on the ground that it was deemed to be her husband’s income. But, subsequently, as appears from notices of re-assessment, each dated February 28, 1958, the Minister in re-assessing the respondent for the years 1952, 1953, 1954 and 1955 added back the amounts which he had previously respectively so deducted.

After compliance with the statutory requirements regarding notice of objection to the assessments the respondent appealed against them to the Income Tax Appeal Board. The appeals were all heard together and allowed. It is from this decision that the present appeal was taken.

This appeal was heard in Toronto immediately after the hearing of the appeal in M.N.R. v. Spencer, [1961] C.T.C. 109. It is one of the sixteen appeals referred to in the reasons for judgment in that case in which the Minister has appealed from decisions of the Income Tax Appeal Board allowing taxpayers’ appeals against assessments in the belief that it was bound to do so by reason of the decision of Cameron, J., in Cohen v. M.N.R., [1957] Ex. C.R. 236; [1957] C.T.C. 251, hereinafter referred to as the Cohen case.

The amounts which the Minister added back to the amounts of the respondent’s declared income represented profits realized by her in the years under review from agreements for the sale of land which she had purchased at a discount and from her interest in certain second and third mortgages which had been purchased at a discount.

The issue in the appeal is thus a familiar one, namely, whether the profits realized by the respondent from the transactions into which she had entered were capital accretions from investments, as claimed by her, and therefore, not subject to income tax or profits from a business or an adventure in the nature of trade, as found by the Minister, and, therefore, taxable income within the meaning of Sections 3 and 4 and Section 127(1) (e) of The Income Tax Act, S.C. 1948, c. 52, as amended, or Sections 3 and 4 and Section 139(1) (e) of the Income Tax Act, R.S.C. 1952, c. 148.

Sections 3 and 4 of the Acts referred to provide as follows:

“3. The income of a taxpayer for a taxation year for the purposes of this Part is his income for the year from all sources inside or outside Canada and, without restricting the generality of the foregoing, includes income for the year from all

(a) businesses,

(b) property, and

(c) offices and employments.

4. Subject to the other provisions of this Part, income for a taxation year from a business or property is the profit therefrom for the year.’’

And Section 127(1) (e), later Section 139(1) (e), defines business as follows :

“(e) ‘business’ includes a profession, calling, trade, manufacture

or undertaking of any kind whatsoever and includes an adventure or concern in the nature of trade but does not include an office or employment ; ’ ’

The distinction between profits that are subject to income tax and those that are not, together with the test to be applied in determining on which side of the dividing line they fall, was clearly stated in the well-known case of Californian Copper Syndicate (Limited and Reduced) v. Harris (1904), 5 T.C. 159.

There the Lord Justice Clerk said, at page 165:

“It is quite a well settled principle in dealing with questions of assessment of Income Tax, that when the owner of an ordinary investment chooses to realize it, and obtains a greater price for it than he originally acquired it at, the enhanced price is not profit in the sense of schedule D of the Income Tax Act of 1842 assessable to Income Tax. But it is equally well established that enhanced values obtained from realization or conversion of securities may be so assessable, where what is done is not merely the realization or change of investment, but an act done in what is truly the carrying on or carrying out, of a business.’’

and then, at page 166, he made the famous statement of the test to be applied:

“What is the line which separates the two classes of cases may be difficult to define, and each case must be considered according to its facts; the question to be determined being— Is the sum of gain that has been made a mere enhancement of value by realizing a security, or is it a gain made in an operation of business in carrying out a scheme of profitmaking ? ’ ’

The italics are mine.

In the Spencer case (supra) I had occasion to refer to the decision of Cameron, J., in the Cohen case because of the difficult situation that had arisen due to the fact that the Income Tax Appeal Board had allowed so many taxpayers’ appeals in the belief that it was bound to do so by reason of the decision in that case and I expressed the following opinion, at page 124 :

“it is plainly erroneous to regard the decision in the Cohen case as an authority governing the determination of the issues in the appeals from decisions of the Income Tax Appeal Board to which I have referred or as laying down a pattern of principles of general application in cases where a person had purchased mortgages at a discount or acquired them with a bonus and realized profits from them at their maturity. The decision did not purport to be such an authority or to lay down such a pattern. It was based on a conclusion reached by Cameron, J., as the result of inferences that he drew from the facts as he viewed them and its applicability is restricted accordingly. ’ ’

The remarks that I made in the Spencer case (supra) relating to the Cohen case are as applicable in this case as they were in that one, and are incorporated in these reasons without repetition of them. The fact that in the present case the respondent realized her profits from agreements for sale that had been purchased at a discount instead of exclusively from mortgages of the kind dealt with in the Spencer case does not involve any difference of principle.

After expressing the opinion in the Spencer case (supra) to which I have referred, I went on to say, at page 125:

‘ Indeed, there is no rule of general application in cases of the kind referred to except that in every case the question whether the profits realized by a person who has purchased mortgages at a discount or acquired them with a bonus are enhancements of the value of investments or gains made ‘in an operation of business in a scheme of profit making’ or profits from an adventure or adventures in the nature of trade and, therefore, income within the meaning of Sections 3 and 4 of the Income Tax Act is a question of fact and its determination must depend on the facts and surrounding circumstances of the case and the true nature of the transactions from which the profits were realized.’’

And I said further, at the same page :

“The statement thus made is merely a particular application of the well established principle that, in determining whether the profits realized from particular transactions, or a single transaction, were capital accretions or profits from a business or an adventure in the nature of trade and, therefore, taxable income, ‘each case must be considered according to its facts’, as the Lord Justice Clerk said in the Californian Copper Syndicate case (supra).”

In the Spencer case (supra) I referred, at page 115, to many eases in which the test laid down in the Californian Copper Syndicate case has been approved, and, at page 125, I referred to numerous cases in which the principle that ‘‘each case must be considered according to its facts’’ has been stated by the Supreme Court of Canada. The citations referred to are incorporated in these reasons.

It follows, accordingly, that the decision in the present case must be made according to its own facts and surrounding circumstances so that the true nature of the transaction from which the respondent realized the profits which the Minister included in the assessments under review may be determined.

I, therefore, proceed with a review of the facts. The respondent is the wife of Arthur Minden, a barrister and solicitor practising in Toronto and the head of the law firm of Minden, Pivnick and Gross. She knew very little about the transaction from which she had realized her profits. On her examination for discovery she stated that she had bought to agreements for sale and her interest in the mortgages at her husband’s suggestion and that she had left everything to him. Consequently, the facts relating to the agreements of sale and her interest in the mortgages must be gathered from the evidence of Mr. Minden who gave evidence on her behalf.

I shall deal first with the evidence relating to the agreements for sale. A general summary of the facts relating to their purchase was filed by counsel for the respondent as Exhibit 1. It showed that in the three year period between September, 1949, and September, 1952, the respondent purchased a total of 125 agreements for sale in 11 transactions spread over the period. The exhibit gave the date of each transaction, the number of agreements involved in it, the name of the vendor, the face value of the agreements at the date of purchase, the amount of the discount at which they were purchased and the cost of the agreements to the respondent. The exhibit showed the purchase of 36 agreements in September, 1949, in two lots, 24 in January, 1950, 4 in March, 1950, 15 in May, 1950, in three lots, 9 in September, 1951, 10 in November, 1951, 10 in May, 1952, and 16 in September, 1952. The face value of the 124 agreements at the time of their purchase, that is to say, the total of the amounts remaining unpaid on them, was $103,393, the total amount of the discounts at which they were purchased was $21,971.20 and the total amount of their cost to the respondent was $81,421.80. There were three vendors involved in the transaction, namely, Mr. R. H. Leggett, Granite Securities and Mrs. Mary E. Welch, but the only person with whom Mr. Minden dealt was Mr. Leggett. He was the owner of the shares in Granite Securities and Mrs. Welch was his mother-in-law. Mr. Minden, or someone in his law office, represented the respondent in the purchase transactions. His office also acted for Mr. Leggett who was a client of the firm. All the legal work connected with tthe transactions was done in his office. The 124 agreements referred to were the only agreements that the respondent purchased.

The evidence relating to the nature of the agreements, and the properties covered by them, is important. Mr. Leggett had acquired the properties in his own name or in that of Mrs. Welch or Granite Securities. They were lots that were remnants of old subdivisions that had not been sold when the subdivisions were being promoted. Mr. Minden supposed that they had gone back to their municipalities for non-payment of taxes but he did not know whether Mr. Leggett had purchased them from the municipalities. The lots were mostly in North York but Mr. Minden thought that some of them were around the area of the DeHaviland Airport near Dufferin Avenue in Toronto. Most of the lots were in subdivisions that had no water-mains in them and all of them were vacant. At the dates referred to in Exhibit 1 the lots had been sold by Mr. Leggett, Granite Securities or Mrs. Welch under agreements for sale at small purchase prices ranging from $800 to $1,000 or $1,200 per lot, with small down payments and balances payable in two or three years. A sample agreement of sale was filed as Exhibit 3. It was between Mary

E. Welch as vendor and Frederick Boyd and his wife Renee Boyd as purchasers. It was dated February 13, 1952, and covered a lot in North York. The purchase price was $1,100 with a down payment of $100 and the balance payable at the rate of $20 per month with the final payment due on March 1, 1954. This agreement was generally typical of the agreements purchased by the respondent. Most, if not all, of the agreements carried interest at the rate of 5 per cent payable quarterly on the unpaid balance of purchase price. Mr. Minden said that it was possible that the later agreements might have carried interest at 6 per cent but he was not sure.

Mr. Minden said that there was a risk attached to holding the agreements. The performance of the locality up to 1949 or 1950 had not been good. The lots were remnants of old subdivisions that had not been sold. The houses in the area were modest and not up to modern standards of construction. The lots had been sold to persons who wanted to buy a piece of land just to own it. As Mr. Minden put it, their purchase was a form of savings representing a stake for the future giving them a promise that some day they would build a home. The risk factor was the small down payment and the class of purchaser but Mr. Minden thought that the purchasers would be reasonably reliable. The agreements were riskier than first class mortgages because of the small down payments and the unimproved nature of the lots.

After the agreements had been purchased Mr. Minden turned them over to his office for collection of the payments. As monies were received on them they were deposited to the credit of the respondent’s savings account. The firm charged her with legal fees but Mr. Minden could not recall whether they were for collections or on some other basis. The respondent did not sell any of the agreements that had been purchased for her but held them all to their maturity. Subject to one or two little adjustments all the agreements were paid in full at their maturity. In his examination in chief Mr. Minden stated that the lots had been sold with small down payments and the balance payable in two or three years. On his cross-examination he said of the agreements purchased in 1949 that they were mostly two year agreements. As a matter of fact, many of them were paid up within a shorter period. Indeed, by way of illustration of the short term nature of the agreements it was shown that by the end of 1950 there were 21 agreements that had not been paid in full. I should add that as the interest was collected it was remitted to the respondent and she reported it in her income tax returns.

The manner in which the respondent came to purchase the agreements may be described briefly. She did not go out looking for agreements nor did anyone do so on her behalf. Mr. Leggett came to Mr. Minden’s law office and offered them at a discount of 20 per cent. Mr. Minden stated that he recommended the purchases to the respondent, saying that she had money available and it looked like a good investment. Here there is a variance between Mr. Minden’s evidence and the respondent’s. On her examination for discovery, when she was asked what induced her to acquire the agreements for sale she replied my husband thought he could increase my interest and he suggested that these were available, did I want to buy them, and whatever he suggests’’. She admitted that it was at her husband’s suggestion that she acquired the agreements. She had nothing to do with finding them and knew very little about the matter except that they were bought for her. She did not go out to look at any of the properties. She left everything with her husband.

I now summarize the evidence relating to the respondent’s acquisition of her interest in the mortgages from which she realized some of her profits. On March 3, 1952, Mr. Minden, as trustee for his law partners Mr. Pivnick and Mr. Gross and on his own behalf, entered into an agreement with Joseph F. Zin- erone for the purchase of 25 second and third mortgages owned by him. The face value of the mortgages, that is to say, the total of the amounts remaining unpaid on them at the date of their purchase was $48,893.58 and the amount of the purchase price paid for them by Mr. Minden was $36,120.80, so that they were acquired at a discount of about 25 per cent of their face value. Mr. Zingrone was a builder for whom Mr. Minden’s law firm had done some conveyancing. The mortgages were nearly all second mortgages but there were some third mortgages among them. They were drawn for a period of between three and five years and bore interest at about 6 per cent, although some of them might have been at 5 per cent. They were on lots on which pretty fair houses had been built. Most of them were north or west of Weston in the Toronto Metropolitan area. The houses had been sold at prices ranging from $12,000 to $14,000, with down payments ranging from $1,500 to $2,500. They had been sold subject to standard first mortgages placed by lending institutions, some of them being under the National Housing Act. The first mortgages were larger than normal and the down payments smaller. The Zingrone mortgages were mortgages from the purchasers of the houses back to Mr. Zingrone covering the difference between the purchase price on the one hand and the first mortgage and down payment on the other. They were, of course, riskier than first mortgages would have been but the evidence was that they were all paid at their maturity. According to Mr. Minden when Mr. Zingrone came to him with the mortgages they were encumbered with a loan and the amount of the purchase price which Mr. Minden paid for them was used by Mr. Zingrone partly to pay off the loan and the balance to supply him with money that he needed.

In 1953 the respondent came into the picture. Mr. Pivnick had a 30 per cent interest in the mortgages, Mr. Gross a 30 per cent interest and Mr. Minden a 40 per cent interest. Mr. Pivnick required monies for a private purpose and sold his interest to the respondent. The amount paid for such interest was not disclosed. After this purchase Mr. Minden, Mr. Gross and the respondent continued to hold the mortgages until they were paid off. No attempt was made to sell any of them prior to their maturity. Mr. Minden’s law office collected the payments as they were made and distributed them among the partners. The respondent did not buy any other mortgages or lend any money on the security of mortgages of real estate. Mr. Minden also stated that the respondent never advertised that she was willing to buy mortgages or held herself out as willing to do so or solicited or canvassed anyone to sell mortgages to her and that no one ever did any of these things on her behalf.

It is also a fact that Mr. Minden, in addition to acting for the respondent in connection with the transactions, gave her financial assistance. At one stage in his evidence he stated that he had recommended the purchase of the agreements to her and said ‘‘She had money available’’. But it was established that he lent her some money. On her examination for discovery the respondent said that she did not know the exact details of the amount that she borrowed from her husband but admitted that during 1950 he lent her the sum of $13,000 which she used in the purchase of some of the agreements for sale and then said “I never knew quite the amount that was necessary. He just said that he would put up whatever was necessary.’’ On Mr. Minden’s cross-examination it was established that he advanced moneys to the respondent on three occasions, namely, $12,500 on October 31, 1949, $5,700 on March 2, 1950, and $2,000 on June 20, 1950. It was his understanding that the first amount had something to do with the mortgages or the agreements but that the other amounts had nothing to do with them. Then, in October, 1951, $7,200 was returned to him and on March 31, 1951, $13,000 was returned. Earlier in his evidence he said that he was not sure whether the sum that he lent the respondent was involved with the Leggett transactions or the Zingrone one. I should add that no interest was charged by Mr. Minden on the loan to his wife.

There is no doubt that Mr. Minden was the respondent’s agent in connection with the transactions in question. He stated that she knew in a general way what he was doing on her behalf but did not know the details and was not consulted about each agreement. She never made any inspection of any of the properties covered by the transactions but relied on him. As a matter of fact he did not himself make any inspection of them although he knew the general area of their location, nor did he make any investigation of the financial responsibility of any of the purchasers. He was quite happy to rely on Mr. Leggett. And it is beyond dispute that the respondent gave her husband a free hand to act for her. This was clear from her answers on her examination for discovery that were put in. She did not even know the year in which she purchased the agreements. I have already referred to her statement that she acquired the agreements at her husband’s suggestion and that she had nothing to do with finding them and knew very little about the matter except that they were bought for her. She did not go out and look at the properties. Indeed, as she put it, “I left everything with my husband.”

There remains only the evidence relating to the prevailing rates of interest. Mr. Minden said that the rates on first class mortgages under the National Housing Act were as low as 4^ and 484, per cent and that the normal rate charged by lending institutions in the period from 1949 to 1952 was 5 per cent. On his eross-examination he stated that the rate on second mortgages was several per cent higher, running from about 10, 12 or 14 per cent without bonus. Mr. J. G. Campbell gave evidence that the prevailing rates on first class mortgages in the Toronto area ran from 414 per cent in 1949, and 1950, to 5 per cent in 1951 and 91% per cent in 1952.

I have no hesitation in finding that the profits which the respondent realized from her agreements for sale and her interest in the Zingrone mortgages were taxable income and that, consequently, the appeal herein should be allowed and the Minister’s assessments affirmed.

But before I set out the reasons for so finding I should refer to the fact that in the statements accompanying the notices of re-assessment the respondent was said to be ‘‘deemed to be in the business of lending money on the security of mortgages and agreements for sale’’. This was erroneous. She did not lend any money on the security of mortgages or agreements for sale nor did Mr. Minden do so on her behalf. The agreements for sale and the interest in the mortgages were purchased outright. But the fact that there was this error in the statements accompanying the notices of re-assessment does not affect the validity of the assessments. In considering an appeal from an income tax assessment the Court is concerned with the validity of the assessment, not the correctness of the reasons assigned by the Minister for making it. An assessment may be valid although the reason assigned by the Minister for making it may be erroneous. This has been abundantly established.

In my opinion, it would be unrealistic, indeed fantastic, to think of the respondent’s purchases of the agreements for sale and the interest in the Zingrone mortgages as investments. They were certainly not ordinary investments of the kind contemplated by the Lord Justice Clerk in the Californian Copper Syndicate case (supra). This was not a case of a person acquiring an investment and then choosing to realize it and obtaining a greater price for it than he originally acquired it at. There was no greater price or enhancement of value at all. The respondent received exactly the amounts that were expected when the agreements and the interest in the Zingrone mortgages were purchased. Moreover, the agreements and mortgages were certainly not of the kind that would be considered for investment purposes by a prudent person who was primarily concerned with securing a fair return on his money. Nor is it reasonable to think that when Mr. Minden recommended the transactions to the respondent there was any intention on his part or on hers of putting money into the purchase of the agreements and the interest in the Zingrone mortgages for the purpose of securing the interest return called for by the agreements and the mortgages. On the contrary, it is clear, in my opinion, that the agreements and the interest in the mortgages were purchased for the purpose of realizing the profits that would result from the receipt of the discounts of 20 per cent on the agreements and 25 per cent on the mortgages when the agreements and mortgages were paid on their maturity, in addition to the interest on them. The attraction of the transactions was not the amount of the income return by way of interest that came from them but the prospect of the profit that would result when the amounts of the discounts were realized. The agreements and the interest in the mortgages were purchased for the purpose of making this profit.

I have carefully reviewed the evidence and the arguments of counsel but I have not been able to find in the transactions into which the respondent entered the indicia that ordinarily characterize an investment. Certainly, a lending institution would not consider the agreements for sale as securities on which they would lend any money nor did the respondent so consider them. And a lending institution would not lend money on the security of the Zingrone second and third mortgages at the rate of interest that they bore. They were not prevailing rates for lending money on second or third mortgages.

The fact that the respondent did not sell any of the agreements for sale or mortgages but kept them all to maturity is not an indication that she made an investment in them. On the contrary, the fact is more consistent with the idea of a business operation on her part, for it was only by holding the agreements and the mortgages to their maturity that the anticipated profits from the realization of the discounts could be fully realized. Indeed, the selling of the agreements or the mortgages prior to their maturity would tend to defeat the very purpose for which they had been purchased, namely, to receive the full amount of the profits resulting from the realization of the discounts on the payment in full of the agreements and mortgages.

Nor can the respondent avail herself of an excuse similar to that put forward by the taxpayer in the Cohen case, namely, that she entered into the short-term agreements because she wanted to keep herself “as liquid as possible”. Indeed, the purchase of short-term agreements and mortgages is more indicative of a business operation than of an investment for it makes for rapid turnover and an increase of opportunity for profit making.

The fact that the respondent did not seek out the agreements or mortgages or advertise that she was in the market for their purchase or hold herself out as willing to purchase them or advertise for them or solicit them does not make her an investor in them. She acquired them at the suggestion of Mr. Minden, and they came to him in the manner described by him.

Moreover, there is no evidence that the respondent intended an investment. Certainly, she did not give any evidence of such intention. As a matter of fact such evidence on the point as there was 1S against any intention of investment. While Mr. Minden stated that the purchase of the agreements by the respondent “looked like a good investment’’ the respondent said “my husband thought he could increase my interest’’. It seems clear that Mr. Minden put the respondent into the purchase of the agreements and the interest in the Zingrone mortgages so that she could make a profit out of them and thereby increase her interest. Indeed, he lent her money in order to help her to do so. She left everything with him and had no independent intention in the matter.

I, therefore, find that the profits realized by the respondent were not capital accretions from investments, as claimed by her.

In my judgment, the evidence is conclusive that the respondent, through Mr. Minden as her agent, embarked upon and carried out ‘‘a scheme of profit making’’ within the meaning of the expression in the Californian Copper Syndicate case (supra) and that the profits realized by her from the transactions under consideration constituted in truth ‘‘a gain made in an operation of business in carrying out a scheme of profit making’’ and as such were profits from a business within the meaning of the sections of the Act to which I have referred and subject to income tax accordingly.

The fact that the respondent knew nothing about the matter except that the agreements had been bought for her and that she left everything with her husband cannot exempt her from responsibility for his conduct of the transactions as her agent, for, as Mr. Minden said, she knew in a general way what he was doing on her behalf. The reality of the matter is that what Mr. Minden did for his wife and on her behalf as her agent with her full authority in that behalf was ‘‘an operation of business in carrying out a scheme of profit making’’ with the result that the profits realized by the respondent constituted a gain made in such an operation.

There is, in my opinion, no doubt that Mr. Minden engaged the respondent with responsibility for a scheme of profit making. It extended over a period from September, 1949, when the first 36 agreements in two lots were purchased to sometime in 1955 when the last discounts were realized. During the three year period from September, 1949, to September, 1952, 124 agreements for sale were purchased, which averaged out at over 40 per year and, in addition, the respondent in 1953 acquired a 30 per cent interest in the 25 Zingrone mortgages. Moreover, the fact that the agreements for sale and the Zingrone mortgages were of a short term nature resulted in a quick realization of the discounts at which they had been purchased. In my view, the number of the transactions, the second class nature of the agreements and mortgages and the short periods within which the discounts were realized are strong indications that the transactions in question were business transactions. There is support for this opinion in Noak v. M.N.R., [1952] Ex. C.R. 20; [1951] C.T.C. 297; [1953] 2 S.C.R. 136; [1954] C.T.C. 6. In that case Kerwin, J., as he then was, speaking also for Estey and Locke, JJ., said, at page 137 [ [1954] C.T.C. 7] :

‘“The number of transactions entered into by the appellant and, in some cases, the proximity of the purchase to the sale of the property indicates that she was carrying on a business and not merely realizing or changing investments.”

While this was a decision on whether the appellant in that case was carrying on a ‘‘business’’ within the meaning of the term as used in the Excess Profits Tax Act, S.C. 1940, c. 32, the statement which I cited is applicable to the facts of the present case.

I should also refer to certain aspects of the scheme of a financial nature. The total cost of the agreements of sale to the respondent, as shown by Exhibit 1, came to $81,421.80 and, in addition, there was the cost of her interest in the Zingrone mortgages. It is not suggested that the respondent had that amount of money at any one time. Moreover, there is the fact that she borrowed $12,500 from Mr. Minden. It is obvious, therefore, that a turnover of moneys as they came in was needed for the completion of the scheme. This fact is another indication of a business activity.

On the evidence I find that the profits realized by the respondent from the transactions under consideration were profits from a business within the meaning of Sections 3 and 4 of the Acts referred to and, accordingly, subject to income tax.

In the alternative, the profits were profits from an adventure or adventures in the nature of trade and, therefore, profits from a business within the ambit of the definition of ‘‘business’’ to which I have referred.

The Minister was, therefore, right in assessing the respondent for the years in question as he did and the appeal herein must be allowed with costs.

Judgment accordingly.