Collier,
J:—The
appellant
is
a
Canadian
corporation
which,
in
1965,
1966
and
1967,
carried
on
business
both
in
Canada
and
the
United
States
with
a
permanent
establishment
in
both
countries.
In
1965
it
earned
profits
in
both
countries
and
under
section
41
of
the
Income
Tax
Act
it
deducted
the
Canadian
equivalent
of
tax
paid
to
the
United
States
on
the
profits
made
in
that
country.
This
deduction
was
$168,397.75.
In
1966
the
appellant
had
no
profits
or
losses
in
the
United
States.
In
1967
it
suffered
a
loss
in
its
operations
in
the
United
States
and,
under
United
States
law,
a
part
of
the
loss
was
carried
back
to
the
1965
taxation
year.
In
fact,
the
appellant
suffered
an
overall
loss
in
all
its
operations
in
1967
but
could
only
carry
back
part
of
its
loss
in
Canada
to
the
year
1966.
The
carry-back
under
United
States
law
of
the
1967
loss
to
the
1965
taxation
year
resulted
in
the
appellant
being
paid
a
refund
which
had
a
Canadian
equivalent
of
$168,397.75.
This
refund
was
paid
on
April
15,
1968.
The
respondent,
by
Notice
of
Reassessment
dated
March
16,
1970,
reassessed
the
appellant
in
respect
to
its
income
for
the
1965
taxation
year
and
disallowed
the
foreign
tax
credit
previously
granted.
In
addition,
the
Minister
levied
interest
on
this
reassessment;
this
amounted
to
$36,129.89.
The
appellant
contends
that
it,
in
1965,
did
precisely
what
it
was
authorized
to
do
under
paragraph
41
(1)(a):*
deducted
income
tax
actually
paid
by
it
to
another
country.
The
appellant
further
contends
that
because
it
suffered
a
subsequent
loss
in
the
United
States
which
allowed
some
tax
relief,
the
respondent
cannot
go
back
to.
1965
and
reassess.
Counsel
for
the
Minister
relies
on
subsection
46(4)t
of
the
Income
Tax
Act
and
takes
the
position
that
the
Minister
can
reassess
at
any
time
within
four
years
and
as
often
as
the
circumstances
require.
The
respondent
argues
that
new
facts
or
new
circumstances
arose
when
the
United
States
gave
the
appellant
the
tax
refund
in
1968.
I
sympathize
with
the
taxpayer
in
this
case
but
in
my
view
the
meaning
of
subsection
46(4)
is
clear
and
the
respondent
was
entitled
to
do
what
he
did.
Some
inequities
may
result
in
cases
of
this
kind.
For
example,
a
Canadian
taxpayer
may
carry
on
business
in
some
country
where
business
losses
can
be
charged
back
for,
say,
five
years.
In
that
hypothetical
case
it
would
be
my
opinion
the
Minister
could
not
reassess
in
respect
to
an
earlier
tax
credit
which
was
eventually
refunded
if
the
four-year
period
stipulated
in
subsection
46(4)
had
expired.
Another
possible
inequity
might
arise
where
the
foreign
country,
under
its
tax
statutes,
reassessed
the
taxpayer
two
or
three
years
later
and
increased
the
tax
payable
for
a
previous
year.
There
might
be
some
difficulty
on
the
part
of
the
Canadian
taxpayer
in
subsequently
claiming
the
benefit
of
that
reassessment
in
Canada,
in
view
of
the
time
limitation
periods
in
the
Income
Tax
Act.
Regardless
of
possible
inequities,
however,
to
my
mind
paragraph
41(1)(a)
and
subsection
46(4)
are
unambiguous
and
in
my
view
the
Minister
properly
reassessed
the
appellant
in
this
case.
The
appeal
will
therefore
be
dismissed
with
costs.
There
remains
the
question
of
the
assessment
of
interest
in
the
sum
of
$36,129.89.
Mr
Walker
for
the
appellant
concedes
that
there
is
nothing
this
Court
can
do
in
that
regard.
The
respondent,
in
assessing
interest,
is
merely
following
the
provisions
of
the
Income
Tax
Act.
In
my
opinion,
in
the
circumstances
of
this
case,
the
assessment
of
interest
is
unjust.
The
appellant
here
paid
for
1965
all
the
Canadian
taxes
rightfully
owing
at
that
time
and
it
is
unfair
that
the
appellant,
because
of
a
relief
provision,
in
another
country,
the
unexpected
effect
of
which
occurred
two
years
later,
should
pay
interest
over
the
period
of
time
involved
here.
I
point
out
the
Minister’s
reassessment
was
not
made
until
March
16,
1970.
As
I
have
said,
this
Court
is
powerless
to
assist.
Perhaps
relief
will
be
granted
elsewhere.
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