The
Chairman:—This
is
another
appeal
arising
from
the
disallowance
by
the
respondent
of
a
claimed
deduction
from
a
company’s
taxable
income.
The
taxation
year
involved
is
1966
and
the
place
of
hearing,
Toronto.
The
material
facts
are
quite
simple.
Appellant
has
an
insurance
agency
at
151
Bloor
Street
West.
On
November
1,
1962,
August
23,
1963,
and
November
29,
1963,
it
lent
$7,500,
$4,000
and
$3,500,
re-
spectively,
with
interest
at
15%,
to
American
International
Bowling
of
Canada
Limited,
hereinafter
called
“Bowling”,
which
was
one
of
its
valued
customers,
but
had
got
into
deep
water,
financially.
The
said
loans
were
made
in
the
hope
of
saving
Bowling
from
going
out
of
business.
There
was
some
temporary
relief
afforded,
but
in
the
long
run
Bowling
proved
unable
to
weather
the
crisis
that
ensued
and
finally
collapsed.
The
total
of
$15,000
so
advanced
by
the
appellant
was
set
up
in
its
books
as
a
bad
debt
and
deducted
from
income
in
1966,
this
deduction
being
disallowed
by
the
respondent
in
1969.
The
present
proceeding
is
the
result.
Respondent
contends
that
the
advances
constituted
a
capital
outlay,
on
the
grounds
that
the
appellant
was
not
in
the
money-lending
business
and
such
a
bad
debt
did
not
arise
from
its
usual
and
ordinary
dealings.
Furthermore,
the
advances
did
not
serve
to
earn
any
income
for
the
appellant.
It
is
also
to
be
noted
that
the
appellant
did
not
recover
any
part
of
the
moneys
advanced
nor
did
it
receive
any
interest
thereon.
Moreover,
the
appellant’s
financial
position
hardly
warranted
the
lending
of
money
to
a
customer
as,
in
1966
for
instance,
the
appellant
did
not
declare
any
income,
but
reported
a
loss.
I
am
in
full
agreement
with
the
position
taken
by
the
respondent
and
consider
that
the
appeal
cannot
succeed
and
should
be
dismissed,
as
was
intimated
by
me
when
the
hearing
was
concluded.
Appeal
dismissed.
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