Urie,
J.A.:
—We
are
all
of
the
opinion
that
the
appeal
must
fail.
We
have
not
been
persuaded
that
the
learned
trial
judge
made
an
error
in
his
assessment
of
the
evidence,
in
his
findings
of
fact
or
in
the
application
of
the
law
to
such
findings.
While
that
opinion
is
sufficient
to
dispose
of
the
appeal,
we
wish
to
add
the
following.
The
appellant
argued
that
since
the
uncontradicted
evidence
was
that
the
fair
market
value
of
the
distribution
assets
which
it
sold
to
Manitoba
Hydro
substantially
exceeded
the
cash
the
latter
paid
for
those
assets,
viz.
$750,000,
it
was
entitled
to
claim
a
gift
to
Manitoba
Hydro
of
the
excess,
namely
$2,850,000,
under
paragraph
110(1)(b)
of
the
Income
Tax
Act
("the
Act")
there
having
really
been
two
separate
transactions
structured
to
permit
such
deductions.
In
our
view,
the
learned
trial
judge
correctly
found
that
there
had
been
only
one
transaction
notwithstanding
that
the
appellant
had
endeavoured
to
separate
it
into
two.
That
commercial
transaction
of
purchase
and
sale
was,
as
we
see
it,
originally
devoid
of
any
gift
element.
The
purchase
price
of
the
distribution
system
was
to
be
$750,000
which,
the
evidence
discloses,
was
the
maximum
sum
that
Manitoba
Hydro's
capital
budget
permitted.
The
only
reason
the
excess
between
that
sum
and
the
fair
market
value
was
added
as
an
alleged
gift
element
which
became
part
of
the
purchase
price,
was
to
make
a
deal
acceptable
to
the
appellant
and
one
which
was
not
morally
offensive
to
Manitoba
Hydro.
As
Cullen,
J.
put
it
$750,000
is
the
linchpin
and,
whatever
“price”
is
arrived
at
it
must
net
out
to
$750,000.
We
agree.
That
being
so
there
was
not
and
could
not
be
a
gift
as
part
of
the
purchase
price.
The
appeal
must,
accordingly,
fail
and
will
be
dismissed
with
costs.
As
to
the
respondent's
cross
appeal
from
the
appellant's
successful
appeal
at
trial
from
the
penalty
imposed
by
the
respondent
in
the
sum
of
$279,136.13,
pursuant
to
subsection
163(2)
of
the
Act,
for
the
reasons
given
by
the
trial
judge
we
would
dismiss
the
cross
appeal
with
costs.
Appeal
and
cross
appeal
dismissed.
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