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In his reply to the notice of appeal, the respondent submitted: 12. the assets acquired by the respondent for a consideration of $700,000 are such that by their very nature they could not be the basis for a capital expenditure within the meaning of section 14 of the Income Tax Act; 13. the respondent submits that the obligation to pay and actual payment of a part of the sum of $700,000 was not intended as an eligible capital expenditure, and could not be regarded as such, for that obligation and payment were for the purpose of paying, in whole or in part, any debt existing between the appellant and Messrs Michaud and Coutu; or 14. the appellant, a corporation, undertook to pay and allegedly paid part or the whole of the amount of $700,000 to Messrs Michaud and Coutu, in their capacities as shareholders of the appellant; 15. the obligation to pay and any partial payment of the sum of $700,000 does not constitute expenditure or an expense incurred for the purpose of earning income from the appellant’s property or business; 16. the obligation to pay and the partial payment of any sum of $700,000 constitutes a capital outlay within the meaning of paragraph 18(1)(b) of the Income Tax Act, but the said assets so acquired do not in any way fall within the classes of assets provided for the purposes of a capital cost allowance in Regulations 110 and 1100 of Schedule B of the Income Tax Act; 17. this obligation to pay the sum of $700,000, or any partial payment thereof, cannot therefore be a basis for any deduction as a current expense, as an eligible capital expense, or as a Capital outlay for which a certain percentage of capital cost allowance is possible as a deduction; it is accordingly impossible to allow a deduction pursuant to the provisions of paragraphs 18(1)(a), 18(1)(b) and 20(1)(b) of the Income Tax Act; 18. alternatively, the amount of the expenditure of $700,000, and hence a proportionate deduction, is clearly exaggerated having regard to all the facts, and has proven not to be based on the market value of the said property and/or debts for which the appellant wishes to compensate and/or reimburse its two shareholders, Messrs Michaud and Coutu; From the evidence which was presented in the case at bar, I do not see how, as the appellant suggested in its alternative submission, this sum of $700,000 paid by Services Farmico Inc could represent current operating expenses. ... Farmico expressly undertakes not to open, operate or grant any rights for the operation of pharmacies in the territory bounded by Bleury, Rachel and Delorimier Streets, and on the south, by the St-Lawrence River, so long as this agreement shall remain in effect; 6. in considertation hereof, J P Duquet agrees to pay Farmico a fee equal to five per cent (5%) of all his gross sales after October 1,1973, with the sole exception of tobacco and Loto-Québec tickets, but including gross sales made by the Centre Orthopédique, made on the premises occupied by the Pharmacy or from those premises, or by the staff of J P Duquet attached to those premises, whether for cash, credit or any other consideration, including all deposits not returned to customers, orders taken on the premises or from the premises, whether filled on the premises or elsewhere, sales of any sub-tenant, concessionnaire or other authorized person on the premises occupied by J P Duquet, all rights and commissions collected by the pharmacist for sales on these premises, without deducting for accounts not collected or unrecoverable, but after deducting for repayments In good faith to customers and for sales taxes and duties collected for any taxing authority. ... The financial statement prepared by Mr Wise reads as follows: SCHEDULE II SERVICES FARMICO INC VALUATION OF INTANGIBLE ASSET (RIGHT TO RECEIVE INCOME UNDER CONTRACTS) Results of 4 operating pharmacies Franchisable Pharmacies Total sales Franchisable Net Net 31/5/70 1 $1,302,519 $ 241,065 $1,061,454 31/5/71 1 Yr /smos 2,748,846 357,027 2,391,819 31/5/72 3 5,053,179 1,013,493 3,039,686 31/5/73 3 Yrs 1/9 mos 8,524,211 1,710,345 6,813,866 Sales for 4 pharmacies on 1973 basis each $1,817,031 @ 4% (4 pharmacies) 290,725 Advertising (See page 9) $125,000 Other expenses (See page 10) 100,000 225,000 Pre tax income 65,725 Tax 48% 31,548 After tax income $ 34,177 Multiple 3% 4 /2 Range (rounded) $119,600 $ 153,800 Having already concluded that the intangible assets acquired by Services Farmico Inc on June 26, 1973 constituted eligible capital property, I accept Mr Wise’s valuation, and I find that the market value of these assets on the date of their acquisition was $150,000; this also fixes the amount of the eligible capital expense which the appellant incurred to acquire these assets at this moment. the appeal is accordingly allowed in part and the matter referred back to the respondent for re-assessment, taking into consideration that the amount of the eligible capital expense is $150,000, and that paragraphs 14(5)(b) and 20(1)(b) of the Income Tax Act, SC 1970-71-72, c 63, as amended, must be applied. ...

Mr Carlin also testified that he did not take into consideration the December 1972 transaction by which Mr E T Griffith sold shares to Mr G N Griffith at $8.63 per share because it was hindsight information subsequent to V-Day and represented control of the company. ... Mr Carlin disagreed with Mr Bowman’s report because the latter used the earning method to appraise a minority interest when he should have utilized the comparable sales method; he did not take into account the relationship between the shareholders who were in disagreement; he did not discount (to a fair degree) the minority shareholding nor did he take into consideration the fact that no one was in control of the company even if Mr E T Griffith had the de jure control with his 200 preferred voting shares. ... He did not approve the Price Waterhouse & Co report because it was the evaluation of a company instead of minority shares; it would not give enough weight on the non-marketability of the minority shares; it should have given a discount of 50% instead of 5% to 10% for the minority interest in the company and tax consideration should not have been considered to arrive at a value. ...

In order to determine the appropriate class, the Board must decide whether the internal structure of the building or its external covering should be considered, and also whether the relative quantity of the materials can be taken into consideration. ... Counsel for the respondent replied that on the one hand no account was taken of the fenestration and, on the other hand, if the galvanized iron roof is taken into consideration, the concrete floor, the surface area of which is—at 27.630 square feet—equal to that of the roof, must also be taken into consideration. ...

The settlement was reflected in an agreement dated December 20, 1971, and by it “In consideration of Wynn tendering his resignation as an employee of the Company (Sales) the Company (Sales) shall pay to Wynn the sum of $12,000...”. ... On his income tax return for the 1973 taxation year, the appellant showed the sale of his shares in both Western and Sales (375 shares of each) for a total consideration of $40,909.05, with outlays. or expenses of Sales of $133.33, and an adjusted cost base of $24,648.38, producing a gain of $16,127.34. ... It was pointed out that an asset which he excluded from this consideration (leased mobile units) could have been a current asset and, if it were so, that asset would virtually wipe out the working capital deficit. ...

Some 200,000 of Leliever’s shares were at a later date transferred by Leliever to five other associates for nominal consideration. ... In another matter (Arthur E Kruger, Elmer D Bassani and Pantel Holdings Ltd v MNR, [1977] CTC 2311; 77 DTC 208) I made the following observations at page 2321 [215]: In my opinion, to determine a question of the kind posed at this hearing, particularly dealing with the purchase and sale of land and considered against the background just described, requires the following: (a) an examination of the appellants’ personal and business circumstances at the time of acquisition, as such circumstances conflicted with, or complemented the probable fulfilment of their stated intention; (b) a review of the efforts made and the progress demonstrated toward such stated intention as an objective; (c) a critical consideration of the reasons advanced for the eventual abandonment or the frustration of the stated intention. ... Indeed, the pooling arrangement indicates that some serious consideration was given to the prospect of sale. ...

At the hearing no witness was called to testify and the Board was asked to render judgment from an agreed statement of facts after taking into consideration the written submissions to be filed by counsel for both the appellant and the respondent. ... When the substitution of creditor is effected the transaction, to be novation, must clearly show the intention to extinguish the original debt; otherwise the novation fails for want of consideration. 23. ... Although counsel for the respondent has alleged that the transactions under consideration were artificial, he did not refer to any section of the Act and apparently there is no section therein to prevent the appellant from acting as he did. ...

The primary object for which the appellant was established reads as follows: To purchase or otherwise acquire as a going concern, Alberta Game Farm, and all the equipment, lands, stock in trade, goodwill, cash on hand, book accounts, furniture, fixtures, effects, animals, birds and assets of every kind and description, and all interest therein, and to pay for same such consideration as may be agreed upon, and to carry on the business so acquired. ... According to the pleadings herein, the taxpayer, admittedly, incurred expenses of $40,532.24 in the said taxation year covering the printing of 50,729 guide books of which it distributed free of charge approximately 16,280 copies to schools, libraries, travel and tourist bureaus and various other institutions (it has, apparently, also followed the practice of sending free copies to students writing in from distant lands), and sold approximately 8,199 copies for a consideration of $20,498.33 (at $2 per copy this amount appears to be high) leaving on hand as of June 30, 1967 approximately 26,250 copies of the guide book. ... While there is no question in my mind that the operation of the Alberta Game Farm in its 1967 taxation year can properly be characterized as farming within the meaning of paragraph 139(1)(p) of the Act, I should like to make it perfectly clear that, in reaching my decision herein, all aspects of the present matter have been taken into consideration and weighed in the balance; that the decision in this appeal has, accordingly, been based on its own very special and peculiar facts in their entirety; that, in upholding the taxpayer’s position herein, it has been far from my intention to open the door, so to speak, to private zoos and animal parks generally to allege that their particular activities should be regarded as constituting farming under paragraph 139(1)(p) of the Act, and that it would seem to be highly unlikely that the decision herein could have any possible application to any other taxpayer in Canada in the foreseeable future. ...

By the agreement of July 13, 1965, a total consideration of $60,000.00 payable by the Appellant was allocated equally between the depreciable property and the contracts referred to above. 6. ... In re-assessing the Appellant for its 1966 taxation year, he assumed, inter alia: (a) that with respect to the depreciable property described in Schedule “A” of the agreement of July 13, 1965, an amount of $30,000.00 can reasonably be regarded as being the consideration for the disposition of that property by the Bohuns and as the proceeds of disposition of that property in their hands; (b) that pursuant to the provisions of Section. 20(6)(g) of the Income Tax Act, the Apppellant is deemed to have acquired the depreciable property described in Schedule “A” of the agreement of July 13, 1965, at a capital cost to it of $30,000.00. 9. ... Paragraph 20(6)(g) is a rule — quoting from page 20-610 of the Canada Tax Service — “designed to cover the situation where a lump sum consideration is received in respect of the disposition of depreciable property of a prescribed class and for other assets such as depreciable property of some other class, or for goodwill or land.... ...

On April 1, 1965, Lagueux leased a GMC truck from Corporate Plan Leasing Limited for a period of thirty-six months for a consideration of $3,425.76, of which $95.16 was payable in advance and the balance in consecutive monthly instalments of $95.16 each. ... The normal form of such an agreement today provides for (i) an advance payment, often described as consideration for the ultimate option to purchase, (ii) a series of monthly payments for hire of the article, which determine should the hirer return the article, and (iii) an option to the hirer, if and when he has paid all the monthly payments, to acquire the article for a nominal sum. ... Section 18 read in part as follows: 18. (1) A lease-option agreement, a hire-purchase agreement or other contract or arrangement for the leasing or hiring of property, except immovable property used in carrying on the business of farming, by which it is agreed that the property may, on the satisfaction of a condition, vest in the lessee or other person to whom the property is leased or hired (hereinafter in this section referred to as “lessee”) or in a person with whom the lessee does not deal at arm’s length shall, for the purpose of computing the income of the lessee, be deemed to be an agreement for the sale of the property to him and rent or other consideration paid or given thereunder shall be deemed to be on account of the price of the property and not for its use; and the lessee shall, for the purpose of a deduction under paragraph (a) of subsection (1) of section 11 and for the purpose of section 20, be deemed to have acquired the property, under the contract or arrangement on account of the rent or other consider ation. ...

The assignment of receivables from a financially sound company to which receivables the borrowers gave up their rights and which were indeed transferred to the lender as legal consideration for the loans, is not only legal and in accordance with accepted accounting practices but can, in my opinion, be considered as a repayment of the loans within the meaning of section 8 of the Act. 22 The fact that the companies involved are interrelated and are controlled by Oswald New does not make them any less distinct legal entities, and since counsel for the respondent himself admitted that there was no evidence of sham or fraud in the transaction, there is no call to look behind the corporate veil and, in my opinion, the transaction should be accepted on its face value. ... The fact is that Coastal Towing did accept, in consideration for and in repayment of the loans, the legal right to the amount assigned to it. ... Each step of the transaction is based on legal consideration being given for value received. ...