Fournier,
J.:—This
is
an
appeal
from
the
decision
of
the
Income
Tax
Appeal
Board,
dated
August
26,
1953,
dismissing
the
appellant’s
appeal
from
his
income
tax
assessment
for
1950,
whereby
the
Minister
reduced
the
amount
of
the
capital
cost
allowance
claimed
by
the
appellant
in
his
income
tax
return
for
that
year.
The
facts
not
being
disputed,
no
verbal
evidence
was
heard
at
the
hearing
of
this
appeal.
The
pleadings
and
documents
filed
state
that
Gerard
Miron
was
at
all
time
material
a
shareholder
of
Miron
&
Frères
Limitée,
the
appellant
company.
In
1948
he
bought
a
farm
property
in
the
Town
of
St.
Michel
for
the
price
of
$90,000.00
and
in
1949
he
sold
this
property
to
Miron
&
Frères
Limitée
for
the
price
of
$600,000.00.
The
farm
contained
a
stone
quarry
and
since
its
acquisition
the
company
has
operated
the
property
as
such.
At
the
time
of
the
sale
Gerard
Miron
was
the
owner
of
200
common
voting
shares
of
the
1,000
issued
by
the
company
and
his
brothers
owned
the
balance
of
the
shares
less
three
shares
out
of
800
which
were
owned
by
other
parties.
One
of
his
brothers
owned
200
shares
and
each
of
the
other
four
brothers
owned
149
shares.
On
June
7,
1951,
the
company
in
its
income
tax
return
for
its
taxing
year
1950
signed
by
Gerard
Miron,
President,
claimed
a
capital
cost
allowance
of
$44,000.00
on
its
purchase
price
of
the
above
property.
On
January
4,
1952,
the
Minister
in
assessing
the
appellant
reduced
the
capital
cost
allowance
to
$6,800.00.
On
March
11,
1952,
the
company
served
a
notice
of
objection
to
this
assessment.
On
July
22,
1952,
the
Minister
issued
his
notification
in
which
he
notified
the
company
of
his
intention
to
reduce
the
capital
cost
allowance
still
further
from
$6,800.00
to
$3,163.00,
but
confirmed
the
said
assesment
in
other
respects
as
having
been
made
in
accordance
with
the
Act
and,
in
particular,
on
the
ground
that,
for
the
purposes
of
paragraph
(a)
of
subsection
(1)
of
Section
11
of
the
Act
and
the
Income
Tax
Regulations
made
thereunder,
the
capital
cost
of
the
property
acquired
from
Gerard
Miron
had
been
determined
at
its
cost
to
the
said
Gerard
Miron
in
accordance
with
the
provisions
of
subsection
(2)
of
Section
20
of
the
Act.
From
this
assessment
the
company
appealed
to
the
Income
Tax
Appeal
Board
and
the
appeal
was
dismissed.
The
appeal
to
this
Court
is
from
that
decision.
The
appellant
contends
that
the
above
sale
of
the
said
property
from
Gerard
Miron
to
the
company
was
a
transaction
between
parties
dealing
at
arm’s
length
and
that
subsection
(2)
of
Section
20
and
subsection
(5)
of
Section
127
of
the
Act
are
not
applicable
in
the
present
case.
Therefore
the
appellant
claims
that
it
should
receive
a
capital
cost
allowance
based
on
the
amount
it
paid
for
the
property
and
not
on
the
cost
to
the
former
owner.
The
Minister
by
having,
in
his
assessment,
allowed
a
capital
cost
allowance
on
the
cost
to
the
previous
owner
gave
an
erroneous
interpretation
to
subsection
(5)
of
Section
127
of
the
Act.
The
sections
of
the
Income
Tax
Act
referred
to
above
read
as
follows
:
"20.
(2)
Where
depreciable
property
did,
at
any
time
after
the
commencement
of
1949,
belong
to
one
person
(hereinafter
referred
to
as
the
original
owner)
and
has,
by
one
or
more
transactions
between
persons
not
dealing
at
arm’s
length,
become
vested
in
the
taxpayer,
the
following
rules
are,
notwithstanding
section
17,
applicable
for
the
purposes
of
this
section
and
regulations
made
under
paragraph
(a)
of
subsection
(1)
of
section
11,
(a)
the
capital
cost
of
the
property
to
the
taxpayer
shall
be
deemed
to
be
the
amount
that
was
capital
cost
of
the
property
to
the
original
owner
;
127.
(5)
For
the
purposes
of
this
Act,
(a)
A
corporation
and
a
person
or
one
of
several
persons
by
whom
it
is
directly
or
indirectly
controlled
;
(b)
Corporations
controlled
directly
or
indirectly
by
the
Same
person,
or
(c)
Persons
connected
by
blood
relationship,
marriage
or
adoption
shall
without
extending
the
meaning
of
the
expression
‘to
deal
with
each
other
at
arm’s
length’,
be
deemed
not
to
deal
with
each
other
at
arm’s
length.’’
It
is
clear
that
certain
words
in
paragraph
(a),
viz.,
‘‘a
corporation
and
a
person
by
whom
it
is
directly
or
indirectly
controlled”,
and
paragraphs
(b)
and
(c)
are
not
applicable
to
the
facts
of
this
case.
The
dispute
between
the
parties
is
on
the
interpretation
to
be
given
to
the
words
"
"
a
corporation
and
one
of
several
persons
by
whom
it
is
directly
or
indirectly
controlled
shall
be
deemed
not
to
deal
at
arm’s
length’’.
Whatever
interpretation
is
given
to
the
above
words,
one
thing
is
certain,
the
Minister
found
as
a
matter
of
fact
that
Gerard
Miron
was
one
of
several
persons
by
whom
the
corporation
was
controlled.
On
this
fact
the
Minister
based
his
assessment.
The
appellant
having
challenged
this
fact,
the
burden
of
proof
that
this
was
incorrect
rested
on
him.
The
onus
was
his
to
show
that
the
Minister’s
conclusion
was
not
warranted
and
he
could
have
brought
forth
evidence
to
that
effect.
His
obligation
was
to
demolish
the
basic
fact
on
which
the
taxation
rested.
This
directive
given
by
Mr.
Justice
Rand
in
the
case
of
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486;
[1948]
C.T.C.
195,
is
followed
by
this
Court.
The
only
evidence
is
to
the
effect
that
Gerard
Miron
was
a
minority
shareholder,
but
the
file
reveals
that
he
was
president
of
the
company.
It
may
be
presumed
that
he
was
also
one
of
its
directors.
Being
a
minority
shareholder
would
not
bar
him
from
being
a
shareholder
with
several
(four
or
five)
shareholders
by
whom
the
corporation
was
controlled.
When
this
took
place
it
would
be
a
question
of
fact.
This
was
the
finding
of
the
Minister
;
if
he
had
found
otherwise,
the
assessment
would
have
been
on
a
different
basis.
Nothing
in
the
pleadings
and
in
the
documents
filed
indicates
that
he
was
not
a
person,
one
of
several
by
whom
the
corporation
was
controlled.
Keeping
in
mind
that
evidence
would
be
adduced
to
substantiate
the
facts,
one
could
imagine
situations
and
circumstances
under
which
a
shareholder
could
be
considered
as
dealing
at
arm’s
length
with
a
corporation
and
this
would
render
the
section
inapplicable.
As
an
instance,
a
minority
shareholder
dies,
say
Gerard
Miron.
His
shares
are
bought
by
an
outsider.
This
new
shareholder
never
takes
part
in
the
activities
or
the
management
of
the
affairs
of
the
company
except
to
receive
his
dividends
and
the
several
other
owners
administer
the
business
of
the
corporation.
I
would
be
inclined,
these
facts
being
proven,
to
consider
that
this
shareholder
was
not
one
of
several
persons
in
control.
I
cannot
agree
that
this
section
applies
only
when
a
sufficient
number
of
shares
to
control
a
company
are
owned
jointly
by
several
persons,
of
whom
the
person
dealing
with
the
company
was
one.
This
would
be
giving
the
phrase
‘‘one
of
several
persons”
a
meaning
difficult
to
justify
in
the
context
of
the
section.
I
would
doubt
also
that
the
decision
in
this
case
would
mean
that
any
transaction
between
a
corporation
and
any
shareholder,
even
though
he
might
own
only
one
share,
could
be
considered
as
a
deal
not
at
arm’s
length.
I
believe
that
this
would
be
a
much
too
sweeping
deduction.
It
seems
to
me
that
the
appellant
has
not
brought
forth
evidence
to
contradict
the
finding
of
the
Minister
that
Gerard
Miron
was
one
of
several
persons
by
whom
the
company
was
controlled.
That
being
so,
he
failed
to
establish
that
the
transaction
in
this
instance
was
at
arm’s
length
and
that
the
provisions
of
Section
20(2)
were
not
applicable.
For
these
reasons,
I
am
of
the
view
that
when
Gerard
Miron,
one
of
the
shareholders,
sold
the
property
to
the
company
he
was
one
of
four
or
five
shareholders
by
whom
the
corporation
was
controlled
and
was
not
dealing
at
arm’s
length
and
that
the
assessment
made
under
the
provisions
of
Section
20,
subsection
(2)
of
the
Income
Tax
Act
is
in
accordance
with
the
law.
Therefore
the
appeal
is
dismissed
with
costs.
Judgment
accordingly.
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