Keith,
J:—In
my
judgment
this
appeal
must
fail
and
since
the
entire
argument
has
been
taken
down
by
the
Court
Reporter,
it
is
unnecessary
for
me
to
deliver
elaborate
reasons.
The
appellant,
a
wholly
owned
Ontario
subsidiary
of
a
United
States
corporation,
is
engaged
in
the
business
of
importing
films
or
videotapes
from
its
parent
company
which
it
in
turn
makes
available
to
television
broadcasters
in
Canada
under
very
profitable
licensing
contracts.
The
appellant
complains
that
the
respondent
has
improperly
applied
subparagraph
22(1)(l)
of
The
Corporations
Tax
Act,
SO
1972
c
143
as
amended
by
SO
1973
c
42,
the
relevant
portions
of
which,
as
so
amended
read
as
follows
in
the
taxation
years
in
question:
(1)
In
computing
the
income
of
a
corporation
from
a
business
or
property
no
deduction
shall
be
made
in
respect
of,
(I)
five-twelfths
of
the
aggregate
of
amounts
each
of
which
is
an
amount
in
respect
of
(iii)
a
right
in
or
to
use
of
motion
picture
films
or
films
or
videotapes
for
use
in
connection
with
television
that
have
been
or
are
to
be
used
or
reproduced
by
the
corporation
in
Canada,
that
were
paid
or
credited,
or
deemed
to
be
paid
or
credited,
in
the
fiscal
year
to
a
non-resident
person
with
whom
the
corporation
was
not
dealing
at
arm’s
length,
On
behalf
of
the
appellant
it
is
submitted
that
this
section
can
only
apply
where
the
taxable
corporation
itself
uses
the
film
or
videotape
by
broadcasting
and
that
this
interpretation
is
necessary
because
the
words
“used
or
reproduced”
are
followed
immediately
by
the
words
“by
the
corporation”.
Counsel
for
the
appellant
in
support
of
this
interpretation,
noted
that
the
words
“by
the
corporation”
never
appeared
in
the
relevant
section
of
the
Income
Tax
Act
(Canada)
and
were
eliminated
from
the
Ontario
section
by
a
1977
amendment.
I
think
these
matters
are
of
no
significance.
The
only
“use”
that
this
taxpayer
can
make
of
the
films
and
videotapes
that
were
sent
to
it
by
its
parent
company
for
distribution
in
Canada
was
to
license
them
to
others.
The
word
“use”
whether
used
as
a
verb
or
a
noun,
has
many
uses
and
is
used
in
varying
ways
depending
upon
the
context.
The
context
in
this
case
is
television
broadcasting.
Broadcasting
in
this
country
is
subject
to
strict
statutory
authority
and
regulation.
The
appellant
is
neither
licensed
nor
equipped
to
use
the
films
and
videotapes
it
imports
by
broadcasting
them.
Yet
it
is
very
legitimately
in
the
field
of
earning
income
by
using
the
same
films
and
videotapes
as
an
article
of
commerce
for
licensing
to
others
who
can
broadcast
them.
If
it
is
necessary
for
any
purpose
to
expand
on
these
reasons,
I
will
be
glad
to
do
so
on
application
by
either
party.
Are
you
asking
for
costs,
Mr
Stoodley?
MR
STOODLEY:
Yes,
My
Lord.
HIS
LORDSHIP:
Anything
to
say
about
that,
Mr
Foster?
MR
FOSTER:
Yes
My
Lord,
I
would
ask
that
there
be
no
costs
on
the
basis
that
I
feel
the
application
brought
on
behalf
of
ITC
was
based
on
a
lack
of
clarity
in
the
section
and
with
the
regulations,
that
they
had
a
right
to
bring
them
to
the
Court.
HIS
LORDSHIP:
I
am
inclined
to
agree
with
Mr
Foster,
Mr
Stoodley,
particularly
because
of
the
1977
amendment.
MR
STOODLEY:
Thank
you,
My
Lord.
HIS
LORDSHIP:
I
shall
so
endorse
the
record.
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