A
J
Frost
(orally:
January
21,
1977):—This
is
an
appeal
with
respect
to
the
appellant’s
1974
taxation
year.
The
appellant
company
is
a
developer
and
house
builder.
In
1974
the
appellant
company
spent
$71,933.81
on
underground
services,
that
is,
watermains,
sewers,
etc,
with
respect
to
the
development
of
a
land
subdivision
project
in
the
Municipality
of
Fort
Garry.
The
subdivision
was
comprised
of
77
building
lots,
and
the
amount
of
$71,933.81
represents
the
cost
of
infra-structure
within
the
subdivision
area
up
to
the
individual
lot
lines.
The
appellant
is
in
the
business
of
selling
lots
and
building
houses.
He
sells
lots
and
enters
into
contracts
for
sale
and
construction
from
a
field
office
or
offices
within
the
subdivision.
In
its
financial
reporting
to
shareholders,
the
appellant
company
Capitalized
the
amount
spent
on
underground
services
by
debiting
deferred
charges
and
then
writing
off
the
cost
in
proportion
amounts
as
the
individual
lots
were
sold.
It
was
agreed
at
the
hearing
by
the
chartered
accountants
present
that
this
was
the
correct
accounting
treatment,
as
the
amount
spent
on
underground
services
was
in
the
nature
of
a
capital
asset.
Under
the
municipal
law
of
the
Province
of
Manitoba,
the
land
designated
as
streets
in
the
subdivision
and
the
entire
infra-structure
became
the
property
of
the
municipality
from
the
main
connection
at
the
line
of
subdivision
to
the
individual
lot
lines.
In
the
opinion
of
the
Board
the
Minister’s
position
is
commercially
sound
and
follows
generally
accepted
accounting
principles.
For
this
reason,
the
Board
would
like
to
agree
with
the
respondent,
but
there
IS
no
provision
in
the
Act
which
says
generally
accepted
accounting
principles
govern
in
taxation.
Paragraph
20(1
)(ee)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended,
in
so
far
as
it
applies
to
subdivisions,
cannot,
in
my
opinion,
be
interpreted
as
clear
legislation
from
an
accounting
viewpoint.
The
facts
are
that
in
this
case,
as
in
the
case
of
most
subdivisions,
the
developer’s
place
of
business
is
within
the
service
area
where
he
normally
maintains
a
field
office
or
offices.
It
would
be
flying
in
the
face
of
facts
to
say
the
appellant,
a
developer
of
a
large
subdivision,
had
a
municipal
office
with
a
single
number
when
there
are
77
municipal
addresses
within
the
subdivision
on
different
streets.
The
Board
has
never
known
a
collective
place
of
business.
The
Board
has
no
alternative
but
to
allow
the
appeal
as
the
taxpayer
has
the
right
to
rely
on
the
wording
of
paragraph
20(1)(ee)
of
the
Act
as
it
read
in
1974.
If
a
statute
does
not
tax
in
clear
unequivocal
language,
the
courts
have
generally
leaned
towards
the
taxpayer.
For
these
reasons,
the
appeal
is
allowed.
Appeal
allowed.
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