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And it should also be noted that such ‘‘discounts’’ received under mortgage contracts have been also the subject of consideration in many cases as to whether they were “interest” within the meaning of Section 6(1) (b) of the Act. ... Relating this to the economist’s concepts, and beginning the consideration of such concepts as I understand them, relevant to this matter, it should first be noted that when economists speak of ‘‘income’’, they refer to ‘‘net income’’ in the same sense as it is used in that case. ... Yield, therefore, in his view, takes into consideration any-discount or premium involved in the price of any security. ...

K&D argues that the sought deductions should be allowed per that provision, which reads in relevant part: 20(21) [Deduction on disposition of] Debt obligation If a taxpayer has in a particular taxation year disposed of a property that is an interest in, or for civil law a right in, a debt obligation for consideration equal to its fair market value at the time of disposition, there may be deducted in computing the taxpayer’s income for the particular year the amount, if any, by which (a) the total of all amounts each of which is an amount that was included in computing the taxpayer’s income for the particular year or a preceding taxation year as interest in respect of that property exceeds the total of all amounts each of which is (b) the portion of an amount that was received or became receivable by the taxpayer in the particular year or a preceding taxation year that can reasonably be considered to be in respect of an amount described in paragraph 20(21) (a) and that was not repaid by the taxpayer to the issuer of the debt obligation because of an adjustment in respect of interest received before the time of disposition by the taxpayer, or (c) an amount in respect of that property that was deductible by the taxpayer by virtue of paragraph 20(14)(b) in computing the taxpayer’s income for the particular year of a preceding taxation year. [50] Subsection 20(21) permits a lender taxpayer to deduct for interest to the extent a debt obligation is subsequently disposed of at fair market value without recovery of interest that the taxpayer has previously reported (e.g., accrued, received, receivable) as income. [51] K&D states that it remains entitled to the claimed deductions because per the language of paragraph 20(21)(a), the claimed deductions are constituted of “amounts each of which is an amount that was included in computing the taxpayer’s income for the particular year or a preceding taxation year as interest in respect of that property [i.e., debt obligation]”. [52] K&D says it does not matter that in reality there was no “interest in respect of that property”, such that the annual income inclusions based on supposed “receivable interest” were wrong. [53] I consider that subsection 20(21) has no application. ... Baum, “Section 17: Interpretive Considerations”, Canadian Tax Journal (2010) Vol. 58, No. 3, 653-673, at 660. [9] Bain Wagon Co. ... Baum, “Section 17: Interpretive Considerations”, Canadian Tax Journal (1999) Vol. 47, No. 3, 653-673 at 660-661. [11] Ibid., at 656-7. [12] Neither party raised any issue concerning the phrase “in lieu of”. ...

It will be noted that the lease between Hilson and Alberta Mack Truck is executed under date of October 15, 1959, but the option is in a separate document executed by the parties under date of October 26, 1959. 41 The lease was forwarded to Alberta Mack Truck for its consideration by Hilson in which document the option to purchase was deliberately omitted in the hope that the omission would be overlooked by Alberta Mack Truck. ... I have no doubt that, if the guiding mind of the appellant were to have frankly answered questions at the time of acquisition, he would have agreed that the appellant might itself, at an appropriate time, erect on the land buildings suitable for the developing neighbourhood, with a view to renting them or selling them; he would also have agreed that, if the right opportunity or opportunities arose, the appellant might sell some or all of the property, and he would also have agreed that a really attractive bare land leasing proposal would receive careful consideration by the appellant. ... That was the effect of the option to purchase which was exercised by the tenant at a time advantageous to it. 57 Accordingly, the profit so realized was, in my opinion and for the reasons indicated, an accretion to capital. 58 It therefore follows that the appeal by the Minister with respect to the Edmonton Property must be dismissed. 59 There now remains for consideration the third transaction, that is the sale of property in the City of Calgary conveniently referred to as the 3rd St Property. ...

(Exhibit A-2), which describes the consideration given for the redemption of the shares: [TRANSLATION] 4. THAT the consideration for the redemption of the 59 class E shares consist of a sum of money in the amount of SEVENTY-FIVE THOUSAND DOLLARS ($75,000) and of 100 preferred shares of the capital stock of the company “2635-5164 QUÉBEC INC.”, having a market value of ONE HUNDRED THOUSAND DOLLARS ($100,000), as well as 775,000 class B preferred shares of the capital stock of the company “AVANTAGE PONTIAC BUICK INC.”, having a market value of SEVEN HUNDRED AND SEVENTY-FIVE THOUSAND DOLLARS ($775,000). 18 It should be noted that the witnesses were not cross-examined as, in the view of counsel for the respondent, the taxpayers' intentions were of no importance. ... Minister of National Revenue, a decision rendered orally from the bench, Judge St-Onge held as follows, at page 6 of that judgment: In the present case, the Appellant company filed its return without taking into consideration paragraph 55(5)(f) and there is nothing in the Act that gives the Tax Court the jurisdiction to allow a late filing except in the case of a Notice of Objection or a Notice of Appeal. ...

This conclusion has been reached after giving careful consideration to the proposal. ’ ’ To this the syndicate answered on February 18: “We are sorry to hear of the view expressed by your Corporation. ... The question for consideration is whether, on the facts as disclosed by the evidence, the profits realized from the sale of the lands in question are profits from a business or property within the meaning of Sections 3 and 4 of the Income Tax Act and the extended meaning of ‘‘business’’ as defined in Section 139(1) (e) or, as submitted by the respondent, these Mainshep lands were acquired by the syndicate and its members as an investment for the purpose of erecting thereon multiple residential units with a guaranteed rental plan and that it was only because this purpose was frustrated that the lands were sold, realizing therefrom a for tint ousprofit by way of capital gain. ... Was there any consideration given to the possibility of re-sale either of the land or of the completed buildings? ...

After the incorporation the appellant turned the block of 60 acres, covered by the plan of June 9, 1956, over to Miller Holdings Limited for the consideration of $40,000. ... At about the same time the appellant turned 142 acres out of the Barker quarter over to Miller Holdings Limited for the consideration of $142,000, or $1,000 per acre. ... All that happened was that the consideration was set up in the books of Miller Holdings Limited as an account receivable by the appellant from the company and paid off as moneys were available. ...

It reads: “This AGREEMENT made in duplicate the 15th day of March, 1957: BETWEEN: SHULMAN, TUPPER, SOUTHIN, GRAY & WORRALL, Barristers & Solicitors, Suite 404-510 West Hastings Street, Vancouver, British Columbia, (hereinafter referred to as ‘‘the Solicitor’’) OF THE FIRST PART AND: SHULTUP Management & INVESTMENTS Ltd. a body corporate, incorporated under the laws of the Province of British Columbia and having its registered office at Suite 404- 510 West Hastings Street, Vancouver, British Columbia, (hereinafter referred to as ‘‘the Company”) OF THE SECOND PART WHEREAS the Solicitor carries on business as Barristers and Solicitors at Suite 404-510 West Hastings Street, Vancouver, British Columbia; AND WHEREAS the Company has agreed with the Solicitor to perform certain non-professional services as hereinafter set forth; NOW THEREFORE in CONSIDERATION of the premises and the terms and conditions hereinafter set forth, it IS AGREED AS FOLLOWS: 1. ... In consideration of the performance by the Company of the non-professional services agreed to be performed, the Solicitor agrees to pay to the Company a fee (hereinafter referred to as ‘‘the management fee’’) in the sum of One Thousand ($1,000.00) Dollars per month commencing the 15th day of March, 1957, until the end of the first fiscal period of the Company and thereafter a rate to be agreed upon by the parties hereto and in the event the parties shall fail to agree on such rate, the question of determination of the amount of the management fee shall be referred to the Company’s Auditor, whose decision shall be binding upon both parties. ... Notwithstanding the separate entities of the appellant and Shultup, the uncontradicted testimony of the appellant and the fact his credibility has not been attacked, I, after most careful consideration, have reached the conclusion that, having regard to the primary object of creating Shultup to assume the functions of office management being, in my view, to reduce tax, the manner in which the management agreement was implemented and the non-payment of any salary to Mr. ...

From them the following considerations, among others, emerge. A joint stock company, having modern powers and, in the absence of special provisions, bound to the preservation in its capital asset structure of property representing its share capital, is in absolute control of the profits which its business produces. ... Other considerations arise when a limited company with power to increase its capital and possessing a fund of undivided profits, so deals with it that no part of it leaves the possession of the company, but the whole is applied in paying up new shares which are issued and allotted proportionately to the shareholders, who would have been entitled to receive the fund had it been, in fact, divided and paid away as dividend.’’ and at page 735: “Their Lordships desire to adopt the language used by Eve, J., and to say in regard to the fund out of which the sums of £19,380 and £8360 were paid by the Buttabone Company to the trustee company: ‘ Unless and until the fund was in fact capitalised it retained its characteristics of a distributable property... no change in the character of the fund was brought about by the company’s expressed intention to distribute it as capital. ... Other considerations arise when a limited company with power to increase its capital and possessing a fund of undivided profits, so deals with it that no part of it leaves the possession of the company, but the whole is applied in paying up new shares which are issued and allotted proportionately to the shareholders, who would have been entitled to receive the fund had it been, in fact, divided and paid away as dividend.”’ ...

After giving the most careful consideration to the very able argument submitted by Mr. ... In my view, that comment is of equal application to the section now under consideration. ... In view of the entirely different provisions of Section 52 now under consideration, that it does not authorize the refunding of overpayments until after the assessment has been made, and that it contains a definition of overpayment, I am of the opinion that the Davidson case on this point is not of assistance in its interpretation. ...

The question for consideration, therefore, is whether in the light of the circumstances as a whole and the findings which I have made, the transaction in question is ‘‘an adventure in the nature of trade’’ and the profit therefrom is income from a business under Section 4 (supra). ... The considerations prompting the transaction may be of such a business nature as to invest it with the character of an adventure in the nature of trade even without any intention of making a profit on the sale of the purchased commodity. ... It is what he did that must be considered and his declaration that he did not intend to make a profit may be overborne by other considerations of a business or trading nature motivating the transaction.” ...