GILLANDERS
J.A.:—This
is
an
appeal
by
way
of
special
case
pursuant
to
section
85
of
the
Assessment
Act.
The
facts,
the
question
involved,
and
the
opinion
of
the
learned
County
Judge
are
fully
and
clearly
stated
in
the
special
case
as
follows:
“Facts:
The
appellant
is
a
corporation
incorporated
under
Part
XI
of
The
Ontario
Companies
Act
for
the
following
objects,
namely
;
'
(a)
To
acquire,
own,
lease,
prospect
for,
open,
explore,
develop,
work,
improve,
maintain
and
manage
mines
and
mineral
lands
and
deposits
and
to
dig
for,
raise,
crush,
wash,
smelt,
assay,
analyse,
reduce,
amalgamate,
refine,
pipe,
convey
and
otherwise
treat
ores,
metals
and
minerals,
whether
belonging
to
the
Company
or
not,
and
to
render
the
same
merchantable
and
to
sell
or
otherwise
dispose
of
the
same
or
any
part
thereof
or
interest
therein;
and
(b)
To
take,
acquire
and
hold
as
consideration
for
ores,
metals
or
minerals
sold
or
otherwise
dispose
of
or
for
goods
supplied
or
for
work
done
by
contract
or
otherwise,
shares,
debentures
or
other
securities
of
or
in
any
other
company,
having
objects
similar
in
whole
or
in
part
to
those
of
the
Company
hereby
incorporated
and
to
sell
and
otherwise
dispose
of
the
same.
"‘In
the
year
1936,
the
Company
embarked
on
a
programme
of
development
of
its
mining
properties
and
for
the
purpose
of
obtaining
finances
for
the
completion
of
its
programme,
disposed
of
shares
of
its
capital
stock,
realizing
from
the
sale
thereof
$182,500.00,
expending
during
the
same
period
the
sum
of
approximately
$75,000.00.
In
the
year
1937
further
sales
of
stock
realized
the
sum
of
$67,550.00,
and
approximately
$81,000.00
was
expended
in
the
development
of
its
properties.
"Pending
the
expenditure
of
the
monies
raised
from
the
sale
of
this
capital
stock,
the
directors
of
the
Company
placed
them
on
deposit
in
an
incorporated
Trust
Company
and
during
the
year
1937
received
on
account
of
interest
on
the
capital
on
deposit,
the
sum
of
$2,292.79.
‘‘The
Head
office
of
the
Company
is
located
in
the
City
of
Toronto
in
office
space
assessed
to
the
Company’s
solicitors,
and
the
Company
does
not
appear
on
the
assessment
roll
of
the
City
of
Toronto
other
than
in
respect
of
the
assessment
in
respect
of
income
forming
the
subject
matter
of
this
appeal.
4
‘During
the
year
1937,
the
expenses
of
operating
the
Company,
other
than
monies
expended
in
the
development
of
its
properties,
amounted
to
$8,003.95,
which
amount
was
made
up
as
follows:
|
Organization
Expenses
_
|
$
465.50
|
|
Directors’
Fees
|
.
|
331.64
|
|
Interest
and
Exchange
|
|
34.66
|
|
Legal
and
Audit
|
.
1,009.20
|
|
Printing
and
Stationery
|
|
6.02
|
|
Postage
|
|
6.00
|
|
Salaries
|
.
1,350.00
|
|
Sundry
Expenses
|
.
|
716.60
|
|
Telephone
and
Telegraph
|
|
15.01
|
|
Transfer
Fees
|
.
1,484.91
|
|
Taxes
..................................................
|
600.05
|
|
Fire
Insurance
|
.
1,984.36
|
|
$8,003.95
|
‘‘The
whole
income,
except
a
small
item
of
$6.43,
was
derived
from
interest
on
money
on
deposit
with
the
said
Trust
Company
and
amounted
to
$2,292.79.
I
held
that
the
said
amount
of
interest
was
assessable
income
after
allowing
the
statutory
deduction
of
$1,500.00,
and
the
assessment
was
therefore
fixed
by
me
at
$792.79.
I
did
not
allow
the
contention
of
the
Com-
pany
that
the
amount
of
its
expenses
of
operation
should
be
deducted
from
the
amount
received
as
interest
in
determining
the
amount
of
taxable
income.
“
“
My
reason
for
so
holding
is
that
the
appellant
company
16
not
occupying
land
for
the
purpose
of
carrying
on
its
business
in
Toronto,
and
is,
therefore,
not
liable
to
business
assessment.
Such
a
company,
by
the
provisions
of
section
9,
sub-section
1,
paragraph
(a)
of
the
Assessment
Act,
is
assessable
in
respect
of
its
full
income.
In
any
case,
the
income
received
by
it
from
the
trust
company
as
interest
on
money
deposited
is
income
not
derived
from
the
business
in
respect
of
which
the
appellant
company
would
be
assessable
under
section
8
of
the
Assessment
Act.
Statement
of
Question:
""On
the
above
facts
and
on
the
true
construction
of
the
statutes,
particularly
section
9
of
the
Assessment
Act,
as
applied
to
the
facts
so
stated,
was
I
right
in
holding
that
the
Company
was
assessable
in
respect
of
the
income
of
the
Company
received
by
way
of
interest
upon
unexpended
capital
of
the
Company
on
deposit
pending
expenditure
for
the
objects
of
the
Company,
and
in
not
allowing
any
deduction
therefrom
for
any
of
the
Company’s
expenses
of
operation
?‘‘
It
is
admitted
by
counsel
that
the
appellant
company,
not
being
assessed
for
or
liable
to
business
assessment
under
section
8
of
the
Assessment
Act,
is
under
section
9
of
that
Act
liable
to
be
assessed
in
respect
of
income.
The
question
for
determination
is
whether
or
not,
in
the
circumstances,
the
income
is
to
be
determined
by
charging
the
full
amount
received
by
way
of
interested
on
the
unexpended
capital
of
the
Company
and
in
not
allowing
any
deduction
therefrom
for
any
of
the
expenses
of
operation.
This
question
involves
the
construction
of
section
1(f)
of
the
Assessment
Act
defining
i
income,
‘
‘
which
reads
as
follows
:
‘€
"Income’
shall
mean
the
profit
or
gain
directly
or
indirectly
received
by
a
corporation
from
its
business
or
undertaking,
and
shall
include
interest,
dividends
or
profits
directly
or
indirectly
received
from
money
at
interest
upon
any
security
or
without
security,
or
from
stocks,
or
from
any
other
investment,
and
also
profit
or
gain
from
any
other
source.
’
’
Counsel
for
the
appellant
submits
that
in
arriving
at
the
income,
we
must
keep
in
mind
that
it
means
“‘profits
or
gain
received
directly
or
indirectly
from
the
business
or
undertaking”
of
the
Company,
and
that
in
arriving
at
such
profit
or
gain,
while
‘‘interest
.
.
.
received
from
money
at
interest
or
from
stocks
or
from
any
other
investment’’
is
to
be
included,
that
this
is
only
a
factor
in
determining
whether
or
not
there
is
profit
or
gain,
and
further
that
the
moneys
here
on
deposit
under
the
circumstances
of
this
case,
the
Company
being
in
the
throes
of
development,
were
employed
in
its
business
or
undertaking,
and
were
not
in
the
nature
of
an
investment
apart
from
the
business
of
the
Company.
On
the
other
hand
counsel
for
the
respondent
City
Corporation
submits
that
in
ascertaining
the
income
here,
the
Company
was
not
engaged
in
the
mining
operations
for
which
it
was
incorporated;
that
there
is
no
profit
or
gain
from
its
business
or
undertaking,
but
the
interest
from
the
moneys
on
deposit
with
the
Trust
Company
has
no
relation
to
whether
or
not
there
was
profit
or
gain
from
the
business
or
undertaking,
but
must
be
assessed
(subject
to
the
statutory
deductions)
as
income.
He
submits
that
the
expenditures
claimed
were
not
made
to
earn
the
interest
received
from
the
moneys
on
deposit,
and
that
this
money
is
not
in
use
in
the
business
or
undertaking
of
the
Company,
but
is
in
the
nature
of
an
investment,
the
interest
from
which
is
assessable
as
income
under
the
definition
of
the
Act.
Several
cases
were
cited
and
discussed,
none
of
which
decides
the
exact
point
here
under
discussion.
In
City
of
Toronto
and
John
Northway
&
Son
Limited
(1923)
94
O.L.R.
81,
although
the
definition
of
"income’’
was
slightly
different
in
form
from
that
in
the
present
Act;
for
the
purposes
of
this
case
there
is
no
essential
difference.
In
that
case
the
Company
was
liable
for
a
business
assessment
and
under
the
Act
was
also
liable
in
respect
of
any
income
not
derived
from
the
business
in
respect
of
which
it
was
assessable
‘‘in
addition
to
the
business
assessment.
‘
‘
It
was
there
held
that,
the
Company
being
engaged
in
the
business
of
making
and
selling
clothing,
and
not
of
saving
and
trading
in
money,
the
income
from
certain
investments
which
had
been
taken
out
of
the
business
and
were
not
used
in
the
business,
was
liable
to
assessment.
In
re
City
of
Toronto
and
G.
T.
Fulford
Co.
Limited
(1922)
22
O.W.N.
p.
50,
was
a
decision
of
the
Municipal
Board
respecting
the
assessment
of
several
items
received
by
the
appellant
Company.
The
case
is
not
of
assistance
here
except
as
indicative
of
what
income
should
and
should
not
be
viewed
as
derived
from
the
business
of
the
Company.
In
Wallace
Realty
Co.
Limited
v.
Corporation
of
the
City
of
Ottawa
[1930]
S.C.R.
387,
the
main
question
involved
was
whether
or
not
the
appellant
company
was
entitled
to
claim
exemption,
by
way
of
deduction
from
its
gross
revenue
derived
from
stocks
and
bonds,
of
an
item
of
$8,004.83,
which
might
be
described
as
a
u
carrying
charge.
‘
‘
Although
the
question
there
under
discussion
was
not
the
point
here
involved,
a
reading
of
the
judgment
of
the
Court
delivered
by
Anglin
C.J.C.
is
helpful
in
considering
the
definition
of
‘‘income.’’
After
referring
to
the
statutory
definition
and
discussing
various
English
cases,
he
says
:
‘
‘
Of
course,
in
construing
English
Income
Tax
decisions,
one
must
always
bear
in
mind
that
they
depend
largely
upon
the
phraseology
of
the
statutes
under
consideration;
but
I
find
it
impossible
to
understand
how,
where
the
word
‘income’
is
defined,
as
it
is
here,
to
be
‘profit
or
gain,’
not
from
any
particular
transaction,
but
from
the
whole
business
of
an
entire
year
carried
on
by
the
‘person’
upon
whom
the
tax,
in
respect
to
it,
is
to
be
imposed,
such
‘income’
can
be
arrived
at
otherwise
than
by
taking
account
of
the
receipts
for
the
year
and
deducting
therefrom
at
least
all
expenditure
made
in,
and
properly
attributable
to,
the
earning
of
such
receipts
as
a
whole,
including
therein
expenditure
made
in
the
hope
of
earning
receipts
for
the
business
or
undertaking,
although
such
hope
has
been
disappointed.”
The
definition
of
‘‘income’’
in
the
Income
War
Tax
Act,
R.S.C.
1927,
chapter
37,
sec.
3,
is
somewhat
different
in
form,
but
for
the
purposes
of
this
case,
to
the
same
effect.
In
both
Acts
“income”
is
stated
to
mean
.
.
.
profit
or
gain
.
.
.
and
shall
include
interest
.
.
.
from
moneys
at
interest,
and
so
forth,
or
from
any
other
investment,
and
also
profit
or
gain
from
any
other
source.
I
have
been
unable
to
find
any
cases
arising
under
the
Income
War
Tax
Act
which
would
give
support
to
the
respondent’s
contention
here,
but
on
the
other
hand
they
seem
to
indicate
that
what
is
intended
to
be
taxed
is
profit
or
gain
which
can
only
be
ascertained
by
setting
against
the
receipts
the
expenditures
or
obligations
to
which
they
have
given
rise.
In
construing
the
section,
if
income
means
the
profit
or
gain
received
by
a
corporation
from
its
business
or
undertaking,
then
we
may
substitute
for
the
word
“income”
its
meaning,
that
is
“profit
or
gain
directly
or
indirectly
received
by
a
corporation
from
its
business
or
undertaking,’’
and
the
section
goes
on
to
provide
that
this
shall
include
interest
such
as
is
here
in
question.
Furthermore,
I
think
the
moneys
on
deposit
with
the
Trust
Company
were,
under
the
circumstances
here,
employed
in
the
business
of
the
Company.
Before
setting
out
on
the
Company
s
programme
of
development,
it
was
necessary
to
raise
funds
which
was
done
by
the
sale
of
shares.
It
was
prudent
and
proper
to
have
the
receipts
deposited
with
the
Trust
Company
pending
expenditure.
There
is
no
suggestion
that
the
deposit
was
of
a
permanent
nature
or
that
the
Company
thereby
intended
to
divert
this
money
from
the
development
of
its
mining
properties,
but
on
the
other
hand
it
is
said
the
money
was
raised
to
obtain
finances
for
the
completion
of
its
development
work,
and
under
the
circumstances
I
think
that
the
moneys
were,
considering
the
position
of
the
Company,
part
of
the
business
and
undertaking
of
the
Company,
and
that
in
determining
the
Company’s
taxable
income,
if
any,
there
should
be
set
off
against
the
interest
received
from
such
moneys,
the
expenses
properly
allowable
for
operating
the
Company
during
the
tax
period
in
question.
In
this
case,
without
discussing
the
items
claimed
in
detail,
it
would
seem,
after
allowing
the
statutory
deduction
and
proper
expense
of
operation,
that
the
Company
would
have
no
taxable
income.
For
the
reasons
given
I
would
so
advise
the
learned
County
Court
Judge.
The
appellant
Company
should
have
its
costs
from
the
City
Corporation.
MACTAGUE
J.
A.,
agreed
with
GILLANDERS
J.A.
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