Asit Hazra v. Minister of National Revenue, [1978] CTC 2844, [1978] DTC 1618

A W Prociuk:—The appellant, Asit K Hazra, appeals from the respondent’s reassessment of his income for the taxation year 1975, wherein his claim in respect of his non-resident parents, as an additional exemption in the sum of $1,174 was disallowed on the ground that neither of them were dependent upon the appellant for their support, within the meaning of paragraph 109(1)(f) of the Income Tax Act which reads as follows:

109. (1) For the purpose of computing the taxable income of an individual for a taxation year, there may be deducted from his income for the year such of the following amounts as are applicable:

(f) an amount expended by the individual during the year for the support of a person who, during the year, was dependent upon the individual for support and was . .

(i) his parent or grandparent and dependent by reason of mental or physical infirmity,

(ii) his brother or sister

(A) under 21 years of age,

(B) 21 years of age or over and dependent by reason of mental or physical infirmity, or

(C) 21 years of age or over and in full-time attendance at a school or university,

not exceeding an amount equal to,

(iii) if the person has not attained the age of 16 years before the end of the year, $300 less /2 of the amount, if any, by which the income for the year of the person exceeds $1,100, and

(iv) in any other case, $550 less the amount, if any, by which the income for the year of the person exceeds $1,150;

It is noted that in 1975 the maximum that could be claimed was $646 per dependant if the recipient’s income was not over $1,332.

The appellant, aged 32, migrated from India to Canada a few years ago. He completed his studies in Canada and the United States, having obtained a degree in engineering and now holds a position with the Federal Government in that capacity.

His parents and younger brother reside in Calcutta, India. His father was a civil engineer and was employed with a railway company there until his mandatory retirement at age 58 in 1969. His mother was never employed and earned no income. In 1975 his father was 64 years of age and his mother was 50.

The appellant testified that each complains occasionally of physical ailments, but I gather from the evidence that neither could be termed as physically infirm. On retirement his father’s income was reduced from approximately 36,000 rupees per annum to approximately 10,469 rupees, of which 90%, more or less, represents his retirement pension and the remainder interest derived from investment securities.

His bank account is in the neighborhood of seven to eight thousand rupees on an on-going basis. Converted into Canadian currency, his income, on the evidence of the appellant, was in the neighborhood of $1,200 per annum in 1975. He owns a two-bedroom apartment or condominium where both parents and the appellant’s brother live. The father owns an automobile and also has a railway pass for himself and his wife, which permits him to travel free on holidays and visit relatives.

The appellant commenced to send some money to his parents in 1973, after he had completed his education and obtained employment. Thus, in 1973 and 1974 he claimed additional dependent’s exemption in respect of his parents and which the respondent did not challenge.

In 1975 however, the scene changed. The appellant sent a total of $1,820 to his parents and to his brother, and sought to claim this amount as a deduction from his income.

His brother is a university law student in Calcutta, India, and earns no income. The sum of $1,820 was apportioned by the appellant as follows: $608 to his father; $606 to his mother; and the remaining $606 to his brother.

In the final reassessment by the respondent, the appellant was allowed to deduct $646 as a maximum in respect of his brother, but the remainder of the amount was disallowed.

The appellant also sent money to his married sister in India, but he did not claim her as an additional dependent.

The issue here is whether the remaining $1,174 ought to be allowed as a deduction from his income, with respect to his parents. It is necessary therefore to determine whether, on the facts as presented here, his parents were, in 1975, dependent upon the appellant for Support.

Ms Watchuk, counsel for the respondent, submitted that they were not. They could not be classed as physically or mentally infirm; they owned their own dwelling place; they had some other assets including an automobile, and the father was in receipt of a pension, which on a comparative basis to other pensions in India, according to Exhibit R- 1, was rather substantial.

Exhibit R-1 is an excerpt from an American publication. by the United States Health and Welfare Department, dealing with welfare and pension benefits in India. This document was produced by counsel, as I understand it, merely as an aid to throw or shed some light on the situation in that area in India. I don’t know ‘exactly what probative value the document itself has, but it did indicate, at least in general terms, what the welfare and pension situation is, and that was of some assistance. *

If I interpret the said Exhibit correctly, and understood her. submissions properly, people employed in railway, mining or public service in India, mostly receive a once-in-a-lifetime bulk pension on the termination of their employment or retirement, and in these catagories the bulk payment would amount to approximately $500 in Canadian money. Here, the appellant’s father, as counsel submitted, receives more than twice the amount annually.

The appellant, in my opinion, quite properly pointed out that it is almost impossible to compare the life style and standard of living between Canada on the one hand, and India on the other. I asked some questions to [sic] the appellant;' mainly in the expectation that the answers would in some measure assist me in determining this troublesome question of dependency for’ support, which is nowhere defined. I am told that Revenue Canada experiences this problem all the time in trying to determine the same issue.

It can only be concluded that each case must be decided on its own set of facts. It is, in reality, in my opinion, tantamount to conducting a means test on the basis of the information available.

It is not of course within my office to determine what standard of living the appellant’s parents ought to enjoy in retirement. Nor am I in a position to state what the father’s income in India commands by way of goods and services. The appellant is naturally, within his limits, anxious to supplement his parent’s income and he does. Are his parents dependent on him for support? Or, more specifically, were his parents dependent on the appellant for their support in the taxation year 1975?-

In answer to a question put to the appellant as to how his parents got along before he was able to send them money, he replied that the father was obliged to encroach on his sayings, that is, on his capital to supplement his pension.

The Board has no information as to the father’s estate and extent of capital at the present time except what came out in the evidence indirectly. But, there was interest from Capital savings or securities.

Taking all the evidence under consideration. including the fact that the Board has, for all practical purposes no knowledge of the life styles and the cost of living in India, I have concluded with some hesitation, that the appellant’s parents in 1975 did not depend upon the appellant for support and accordingly, they may not be claimed as his additional dependents for income tax purposes.

The appeal, accordingly, is dismissed.

Appeal dismissed.