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The audited balance sheet of the appellant as at July 31, 1967 showed the following items: Investments at cost 12th Avenue Building Ltd Shares $ 6.00 Advances 27,872.00 Allied Development Corp Ltd Shares 60.00 Advances 24,047.04 The audited Statement of Net Gain on Sale of Shares for the year ended July 31, 1967 contains the following information: Allied Development 12th Avenue Corporation Ltd. ... The following words were spoken by counsel for the respondent: Now, there is one thing — I don’t know whether it is in order or not — but if you are in some doubt as to the taxability of the transaction involving the shares of Allied and Twelfth Avenue Building, there is nothing improper about holding your judgment open till the matter is finally settled since that appears to be one of the main issues. ... In the appeal at bar, the appellant’s investment in two equities is shown in its balance sheet as of July 31, 1966 as follows: 12th Avenue $ 6 a 25% interest Allied 60 a 3% interest Total, at cost $66 Assuming that all shares in 12th Avenue and Allied were issued at the same price to the other shareholders, we get the following equity picture: 12th Avenue $ 24 Allied (CN Tower) 2,000 $2,024 The total ownership equity in 12th Avenue, a large office building, is $24 and the equity ownership in the CN Tower, one of the largest buildings in Western Canada is $2,000. ...

Background The basic facts are not in dispute and can be briefly summarized as follows: —The appellant is a Canadian corporation incorporated in Canada to carry on business; —The chief shareholder of the appellant is F Califano; — In 1970 the appellant acquired two parcels of real estate in the Township of Markham for a total consideration of $52,500; — Both of the said two parcels of real property were forcibly taken by the Department of Public Works of the Government of Canada on January 30, 1973; — By way of total compensation (exclusive of interest), the appellant received for the said forcible taking the sum of $96,512.69, which sum was received by the appellant in the following amounts on the following dates: Date Amount received 24 April, 1973 $27,321.89 10 October, 1973 15,108.00 12 October, 1973 19,262.00 28 July, 1974 22,614.00 10 May, 1975 12,206.80 — During ownership, the appellant had incurred certain carrying costs associated with the property. ... Evidence The chief (and controlling) shareholder of Gianita Holdings Limited, Mr Califano, confirmed the general background facts and in examination and cross-examination, added that he had: — been in the building construction business in Italy; —come to Canada in 1967, acquired landed immigrant status and although he returned to Italy to wind up his business affairs there, he came back to Canada two or three times a year for the next few years to maintain that status, until he finally became a Canadian resident; —substantial cash from winding up his businesses in Italy, which he gradually transferred to Canada; — incorporated a company (not the appellant) in 1968 and through that company, in the same year (1968), purchased 31 acres of vacant agricultural land in the general vicinity of the Village of Markham, in the Province of Ontario. This property was subsequently sold in the year 1974; — incorporated the appellant company in 1969 and acquired through it the subject property consisting of two parcels of vacant agricultural, unserviced land, totalling some 23 acres about six or seven miles from the Village of Markham; — no prior knowledge of the expropriation of the subject property by the Government of Canada; — no particular purpose or intention in mind in either acquisition—specifically the one under appeal in this hearing—other than to safely invest the money he was bringing from Italy. ...

Page 11, which indicated a basis for the deposit, reads as follows: SCHEDULE A — DOUBLE DUTY SHORT PAID $316,670.36x2 $633,340.72 PLUS SALES TAX SHORT PAID 288,131.68 921,472.40 SCHEDULE B — DOUBLE DUTY SHORT PAID $2254.35 x 2 4,508.70 PLUS SALES TAX SHORT PAID 2,074.02 6,582.72 SCHEDULE C — DOUBLE SALES TAX SHORT PAID $2222.19 x 2 4,444.38 SCHEDULE D — DOUBLE DUTY SHORT PAID $6919.04 x 2 13,838.08 PLUS SALES TAX SHORT PAID 6,011.85 PLUS EXCISE TAX SHORT PAID 2,766.30 22,616.23 TOTAL 955,115.73 Following receipt of the document, the appellant, through its officers and solicitor, had two meetings in Ottawa with the then Deputy Minister of Customs and Excise and other officers of the Department. ... The first case was Olympia Floor & Wall Tile (Quebec) Ltd v MNR, [1970] Ex CR 274; [1970] CTC 99; 70 DTC 6085. ... It can readily be seen that the instant appeal is in no way similar to the Olympia Floor & Wall Tile (Quebec) Ltd case. ...

The Minister’s position in the matter, in general terms (taken from the Reply to Notice of Appeal) can be summarized in this way: The financial affairs of the appellant — and where I say appellant it may well be appellants — were audited for the years under appeal. ... For the Minister the witnesses were two — Mr Lawless and Mr Barnett, who were involved at the relevant times with the audit and the investigation for the Minister. ...

But that is not the question posed to the Board by the appellant — that question is whether it is illegal'. ... The amount at issue is “recaptured depreciation” — simply depreciation charged incorrecty but not illegally as a deductible expense in prior years. ... The amount of depreciation charged annually is left to the discretion of the taxpayer — up to the maximum limits in each year. ...

Notice of Appeal: The notice of appeal was filed by the firm of Johnson Cross Yandsik, public accountants, on behalf of the appellant and reads as follows: I have been asked by the above taxpayer to appeal to the Board this reassessment on the following grounds: — the condominium in question was purchased in 1975 as an investment. — at the time of purchase the taxpayer was in the process of a marital separation and the purchase of the condominium was an attempt to shelter his capital from legal attack by his wife’s lawyer and also to provide a vehicle for financial improvement which would be required upon his retirement at the end of 1976. — the condominium was purchased in an area of the city that was particularly stable and consequently it appeared that property values would substantially appreciate. — the purchase agreement prohibited any rental or resale for a period of one year and consequently upon the expiration of that period, the property was listed with Gale Agencies on June 3, 1976 for an asking price of $48,900. — The property was subsequently sold in 1977 for $40,000 resulting in a capital loss of $14,385. ...

. • During the relevant years together with Mr Beghin, Mr Wyrzykowski sought to acquire and did acquire some lands in and around the town of Lorette, Province of Manitoba. ... In each case the farm land acquired and subsequently sold (Glass, Sarrasin and Rosewood specifically) was exactly that — serviceable and operative for the purpose of farming. ... The sole motive (certainly the prima facie purpose) at acquisition was for the purpose outlined by the appellants — investments for immediate farming. ...

. — an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property; Property is defined in subsection 248(1) of the Act as: “Property” — “property” means property of any kind whatever whether real or personal or corporeal or incorporeal and, without restricting the generality of the foregoing, includes (a) a right of any kind whatever, a share or a chose in action, (b) unless a contrary intention is evident, money, and (c) a timber resource property. ... The legal fees paid by the taxpayer to have that right confirmed by the courts and recognized by the trustee did not create the right — it merely enforced it upon the trustee. ... Evans’ legal right to the / share income existed prior to the payment of legal fees; the expense was incurred so as to receive the income to which she was already entitled. ...

Contentions The appellant asserted: — I was divorced in 1972 in UK and under the terms of the divorce, I was obliged to pay a small weekly maintenance payment for each of my three children and school fees for the two oldest. This was in lieu of alimony. — In 1974 and 1975 Canada Revenue Taxation allowed me to use the school fees and maintenance payments as tax deductions but in 1976 changed their minds when I inquired about claiming for 1973. — I have paid every cent under the divorce agreements. ... —The appellant’s allegations with respect to his 1974,1975 and 1976 taxation years are admitted but they do not determine the issue. — In his returns for those years, the appellant claimed the deductions from income set out below: 1974 Maintenance $1,382.00 School fees 3,923.65 $5,305.65 1975 Maintenance $1,382.00 School fees 5,118.00 $6,500.00 1976 Maintenance $ 839.80 School fees 4,075.50 $4,915.30 —The assessment for 1974 disallowed the deduction of school fees claimed allowing only maintenance payments required under the Court Order of May 8, 1972 in the amount of $1,382. ...

The reason advanced by Mr Mirotta for the delay was the difficulty his new accountant (Bryon H Bates of Frank J Jaglowitz, chartered accountant, Cambridge, Ontario) had experienced in obtaining information from the former accountants (MacGillivray & Co, chartered accountants, Port Colborne, Ontario) in order to file the objection. Mr Mirotta’s application to the Tax Review Board reads as follows: APPLICATION TO REVIEW BOARD FOR THE EXTENSION FOR FILING NOTICE OF OBJECTION Domenic Mirotta — SIN 436-251-185 The notice of objection was not filed for the above taxpayer within the prescribed 90 day period for the following reasons: 1. ... Application allowed. 1 (Board’s note — Exhibits not reproduced) ...