Linden J.A.:

Robertson J.A.:

The primary issue on appeal is whether Judge Sarchuk of the Tax Court of Canada erred in concluding that $2,516,690.00 of notional “rent” could not be deducted by Cudd Pressure Control Inc. in computing the net industrial and commercial profit attributable to its permanent establishment in Canada, as required by the Canada-Uni ted States Reciprocal Tax Convention [“the 1942 Convention”], for the taxation year ending June 30, 1985.