M
J
Bonner:—The
appellant
appeals
from
assessments
of
income
tax
for
the
1976
and
1977
taxation
years.
Were
it
not
for
investment
tax
credits
which
were
not
allowed
on
assessment
I
would
have
no
hesitation
in
dismissing
the
appeals.
The
first
issue
raised
by
the
appellant
was
whether
the
Minister
was
justified
for
1977
in
including
recaptured
capital
cost
allowance
in
income.
The
appellant’s
thesis
was
that
the
Minister,
in
effect,
had
insufficient
evidence
to
warrant
the
assumptions
that
certain
assets
were
sold.
The
assumptions
made
by
the
Minister
are
not
inconsistent
with
the
evidence
of
the
appellant’s
own
returns
of
income
and
the
evidence
of
the
state
of
the
company’s
returns.
It
lies
ill
in
the
mouth
of
an
appellant
to
say
that
the
Minister
was
probably
wrong
or
could
have
been
wrong
in
making
assumptions
because
my
books
do
not
support
those
assumptions
where,
as
here,
there
is
uncontroverted
evidence
that
the
books
were
in
a
dreadful
state.
The
onus,
after
all,
is
on
the
appellant
to
show
that
the
factual
foundation
on
which
the
assessments
rested
was
wrong.
That
onus
is
not
insurmountable
by
any
means,
but
it
does
require
the
appellant
to
show,
on
the
balance
of
probabilities,
that
the
factual
propositions
on
which
he
rests
are
correct.
The
appellant
did
not
suggest
that
the
1976
assessment
was
wrong
in
respect
of
recapture.
The
appellant
argued
further
that
the
Minister
erred
in
failing
to
allow
a
reserve
in
respect
of
the
sale
in
1977
of
the
depreciable
property
in
question
to
a
new
company,
ora
a
relatively
new
company,
it
having
been
incorporated
in
1975
according
to
the
accountant,
1976
according
to
the
appellant,
and
having
started
to
operate
in
1977.
The
appellant’s
thesis
is
that
the
debts
are
bad.
There
were
generalities
in
evidence
that
the
company
was
not
or
would
not
have
been
able
to
pay
if
called
on.
I
regard
that
evidence
as
being
vague
and
insufficient
for
the
purpose
of
discharging
the
onus
on
the
appellant
to
show
that
the
debts
were
bad.
First
of
all,
the
appellant
never
asked
the
company
for
payment.
Secondly,
it
has
not
been
shown
that
the
company’s
assets
were
insufficient
to
meet
a
claim
for
payment
of
the
amounts
in
question.
That
leaves
only
one
item
and
that
is
the
matter
of
investment
tax
credits.
Counsel
for
the
appellant
and
respondent
have
agreed
that
the
appeal
for
1976
should
be
allowed
and
the
assessment
referred
back
for
reconsideration
and
reassessment
on
the
basis
that
an
investment
tax
credit
in
the
amount
of
$1,656.50
be
allowed
and
for
that
reason,
and
for
that
reason
only,
the
1976
appeal
will
be
allowed.
Counsel
for
both
parties
have
also
agreed
that
the
assessment
for
1977
should
be
referred
back
for
reconsideration
and
reassessment
to
allow
the
appellant
an
investment
tax
credit
in
the
amount
of
$4,249.90
and
for
that
reason,
and
that
reason
alone,
the
assessment
will
be
referred
back
to
the
respondent
for
reassessment.
In
all
other
respects
the
appellant
has
not
established
that
he
is
entitled
to
any
relief.
Appeal
allowed
in
part.
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