Gibson,
J.
:—For
about
forty
years
before
October
1,
1961,
the
decedent
W.
J.
Fraleigh
carried
on
a
construction
business
in
the
City
of
Hamilton,
Ontario,
as
an
individual
proprietorship.
On
October
1,
1961,
he
transferred
certain
of
the
assets
of
this
business
to
a
newly
incorporated
Ontario
company
by
the
name
of
W.
J.
Fraleigh
Construction
Limited,
a
private
company
controlled
by
him.
This
company
also
assumed
the
liabilities
of
that
business.
The
liabilities
assumed
exceeded
the
assets
by
$40,642.08,
which
difference
was
characterized
on
the
opening
balance
sheet
of
this
company,
as
at
October
1,
1961,
as
goodwill.
In
fact,
it
is
agreed
by
the
parties,
there
was
no
value
that
could
be
attributed
to
goodwill
at
that
time.
The
decedent
then
personally
advanced
$97,000
cash
to
this
company
in
1961,
which
was
put
in
the
company
bank
account.
In
1964,
on
instructions
of
the
decedent,
about
$83,000
of
this
loan
was
transferred
from
a
loan
account
in
his
name
on
this
company’s
books
to
the
contributed
surplus
account
of
the
company.
In
1963
one
of
the
assets
assumed
by
the
company
as
of
October
1,
1961,
referred
to
on
the
balance
sheet
as
Queenston
Apartments,
was
written
off
for
a
net
loss
of
about
$25,000.
Financially,
therefore,
the
decedent
on
balance
was
in
arrears
in
excess
of
$17,000
in
respect
to
these
transactions
with
W.
J.
Fraleigh
Construction
Limited.
The
decedent
died
on
September
12,
1965.
The
respondent
submits
that
on
October
1,
1961,
on
the
assumption
of
the
assets
and
liabilities
of
the
decedent’s
business
by
W.
J.
Fraleigh
Construction
Limited,
when
those
liabilities
exceeded
the
assets
by
$40,642.08,
that
W.
J.
Fraleigh
Construction
Limited
conferred
a
benefit
of
that
amount
on
the
decedent
within
the
meaning
of
Section
8(1)(c)
of
the
Income
Tax
Act.
The
appellant,
among
other
things,
submits
that
as
at
October
1,
1961,
at
worst,
W.
J.
Fraleigh
Construction
Limited,
by
the
said
transaction,
promised
to
confer
a
benefit
on
the
decedent
in
the
sum
of
$40,642.08,
but
that
it
never
did
actually
confer
such
a
benefit;
and,
therefore,
no
"‘benefit”
was
“conferred”
by
W.
J.
Fraleigh
Construction
Limited
on
the
decedent
in
1961
within
the
meaning
of
those
words
in
Section
8(1)
(c)
of
the
Income
Tax
Act.
In
my
view,
whether
or
not
in
the
circumstances
of
this
case
a
‘‘benefit’’
was
“conferred”
on
the
decedent
within
the
meaning
of
those
words
in
Section
8(1)
(c)
of
the
Income
Tax
Act
is
a
question
of
fact
to
be
determined.
The
evidence
in
respect
of
the
basic
fact
upon
which
this
re-assessment
rests
is
overwhelming
and
unequivocal,
and
it
nullifies
it.
Clearly
on
this
evidence
no
“benefit”
was
“conferred”
on
the
decedent
by
W.
J.
Fraleigh
Construction
Limited
in
1961,
or,
for
that
matter,
at
any
time.
Instead,
the
reverse
is
the
situation.
In
the
result,
therefore,
the
appeal
is
allowed
with
costs
and
the
re-assessment
is
referred
back
for
re-assessment
not
inconsistent
with
these
Reasons.
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