Brulé,
T.C.J.:—The
appellant
is
objecting
to
an
assessment
of
her
1981
income
tax
return
in
which
she
showed
a
capital
gain,
which
amount
was
adjusted
lower
by
Revenue
Canada,
but
which
the
appellant
later
said
the
subject
shares
of
the
capital
gain
did
not
belong
to
her
and
should
not
be
a
part
of
her
income
in
1981.
Facts
The
appellant
and
her
husband
were
the
shareholders
of
Jim
Robb
Contracting
Ltd.
(the
"Company").
In
1965
the
Company
transferred
equipment
to
a
subsidiary
of
Cinola
Mines
Ltd.
("Cinola")
and
received
in
return
4600
shares
of
Cinola.
These
shares
were
street
certificates
and
were
unregistered.
Subsequent
to
the
acquisition
of
the
Cinola
shares
they
became
2,300
shares
of
Consolidated
Cinola
Mines
Ltd.,
a
publicly
traded
company.
Subsequent
to
this
transaction
the
Company
experienced
certain
financial
difficulties,
the
appellant
and
her
husband
were
divorced
and
he
left
the
country.
Prior
to
his
leaving
he
destroyed
most
of
the
company
records
which
may
have
provided
details
germane
to
this
hearing.
After
the
exhusband's
departure
the
appellant
was
left
with
some
$60,000
-
$70,000
debts
of
the
Company
which
she
satisfied.
On
November
15,
1976,
the
Company
was
struck
from
the
British
Columbia
Companies
Registry
thus
dissolving
the
Company.
In
1981
the
appellant
discovered
the
shares
of
Cinola
while
going
through
some
old
papers.
She
then
sold
these
for
a
net
amount
of
$37,186.49,
which
was
reported
in
her
1981
taxation
return
as
a
part
of
the
capital
gain
transaction.
In
that
return
the
appellant
declared
the
cost
of
the
shares
as
$184
showing
a
taxable
gain
of
$18,501.26.
This
was
reduced
by
Revenue
Canada
to
$16,293.24.
Analysis
The
declaration
by
the
appellant
that
she
should
not
be
subject
to
a
capital
gains
tax
on
the
sale
of
the
shares
cannot
be
maintained.
Her
declaration
that
the
shares
were
the
property
of
the
Company
is
not
valid
as
the
Company
no
longer
existed
when
the
shares
were
sold.
Who
then
owned
them
and
when
were
they
acquired
by
the
owner?
Originally
the
Company
took
the
shares
in
exchange
for
certain
equipment.
Thus
the
Company
was
the
owner
and
for
all
purposes
continued
to
be
so.
When
the
appellant
paid
all
the
Company
debts
presumably
the
Company
became
indebted
to
her.
The
existence
of
the
shares
at
that
time
was
not
known
or
the
appellant
might
have
then
claimed
them
in
satisfaction
of
her
paying
the
debts.
This
was
not
done.
When
the
Company
was
struck
off
the
records,
even
though
not
known,
the
shares
existed.
The
only
logical
person
to
become
the
owner
of
these
shares
at
that
time
was
the
appellant.
Indeed,
counsel
for
the
Minister
allowed
that
the
shares
were
rightfully
hers.
In
the
absence
of
any
previous
claim
for
the
shares
the
time
she
may
be
considered
as
acquiring
them
was
the
date
of
the
dissolution
of
the
Company—November
15,
1976.
Having
determined
that
the
appellant
legally
acquired
the
shares
on
November
15,
1976,
what
then
is
the
basis
of
the
Minister's
assessment?
In
a
letter
to
the
appellant
dated
April
16,
1985,
Revenue
Canada,
Taxation
said:
The
adjusted
cost
base
of
the
shares
should
be
the
fair
market
value
of
the
shares
at
the
time
they
were
acquired
by
you.
In
making
his
assessment
the
Minister
showed
an
adjusted
cost
base
to
the
appellant
of
the
shares
to
be
$4,600,
although
no
explanation
was
presented
to
the
Court
how
the
Minister
arrived
at
this
figure.
In
M.N.R.
v.
Beatrice
Minden,
[1962]
C.T.C.
79;
62
D.T.C.
1044,
Thorson,
P.
said
at
page
89
(D.T.C.
1050):
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.
Counsel
for
the
Minister
suggested
that
the
appellant
acquired
the
shares
in
1973
or
1976.
They
were
still
owned
by
the
Company
which
was
still
in
existence
in
1973
and
one
can
conclude
that
the
shares
were
acquired
as
set
out
above
in
1976.
The
cost
base
to
the
appellant
then
would
be
the
closing
market
price
of
the
shares
on
November
15,
1976.
The
appeal
will
be
allowed
and
the
matter
referred
back
to
the
Minister
for
reconsideration
and
reassessment
on
the
basis
that
if
the
fair
market
value
of
the
shares
of
the
publicly
traded
company
as
of
November
15,
1976,
was
more
than
$4,600
then
such
greater
amount
shall
be
deemed
to
be
the
adjusted
cost
base
to
the
appellant
for
the
purposes
of
the
sale
of
the
shares
by
her
in
1981.
Appeal
allowed.
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