The
Chairman
(orally:
March
23,
1972):—This
is
an
appeal
by
Kelvingrove
Investments
Limited
from
assessments
by
the
Minister
of
National
Revenue
for
the
taxation
years
1966
and
1967.
These
assessments
resulted
from
a
loss
claimed
by
the
taxpayer
in
the
year
1967
which
it
sought
to
carry
back
to
the
taxation
year
1966.
The
appellant
company
was
incorporated,
under
the
laws
of
the
Province
of
Ontario,
by
letters
patent
dated
July
19,
1956,
with
the
general
objects
of
an
investment
company.
Apparently
its
only
asset,
until
the
year
1965,
was
a
group
of
“fourplexes”
in
the
City
of
Toronto
which
was
disposed
of
in
that
year.
After
a
short
period
of
time,
they
invested,
or
it
invested,
in
another
real
estate
property
which
was
held
for
only
four
or
five
months,
and
since
that
time
the
appellant
has,
to
use
the
words
of
Mr
Duckman,
the
auditor
of
the
company
“used
its
money
as
stock-in-trade”.
settled
by
a
payment
of
some
20-odd
thousand
dollars.
In
fact,
$26,034
was
accepted
in
full
settlement,
and
the
difference
between
that
sum
and
$60,000
was
claimed
as
a
business
loss
by
the
appellant
company.
As
has
been
said
so
often
in
these
cases,
to
some
degree
one
must
look
to
the
letters
patent
of
incorporated
companies
for
guidance,
but
these
are
not
the
“be
all
and
end
all”
and
do
not
necessarily
provide
a
final
solution
to
the
problem.
In
this
case,
as
I
have
said,
the
objects
are
those
of
an
investment
company
and
do
not
contain
any
specific
provision
for
the
company
to
be
a
moneylender.
It
was
not
in
fact
a
moneylender
in
the
true
day-to-
day
acceptance
of
the
term,
and
it
was
not
holding
itself
out
to
the
general
public
as
being
a
moneylender.
So
I
think
one
has
to
look
at
just
what
the
company
was
in
fact
doing.
I
think
it
is
clear
from
the
evidence
of
Mr
Duckman
and
from
the
exhibits
filed
that
the
appellant
company
was
using
its
money
as
its
stock-in-trade,
and
I
think
it
is
clear
that,
in
the
general
course
of
its
business,
it
made
a
loan
to
a
company
that
subsequently
defaulted.
Whether
or
not
the
appellant
could
be
classified
as
a
moneylender
I
do
not
think
it
is
necessary
for
me
to
decide,
because
the
whole
course
of
its
operation
was
the
placing
of
money
for
a
return
of
a
profit,
which
it
did
with
some
degree
of
success,
in
so
far
as
its
dealings
with
the
bank
were
concerned.
However,
in
this
instance,
it
did
not
meet
with
success.
In
my
view,
the
money
was
placed
in
the
ordinary
course
of
the
appellant’s
business
and
was
a
proper
business
outlay
under
paragraph
12(1)(a)
of
the
Income
Tax
Act,
and
the
appeal
will
therefore
be
allowed.
Appeal
allowed.
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