Words and Phrases - "in respect of the year"

The taxpayer during its 1960 and 1961 taxation years borrowed $210,000 from its U.S. parent. The promissory notes stated "interest will be paid if requested, but not in excess of 6%." After the end of the 1966 taxation year, the parent requested, and was paid, interest for the period from 1962 on.

Sweet D.J. held that the phrase "in respect of the year" refers to the year during which the borrowed money was used and not to the year in which the lender chose to make the request for interest. The pre-1966 interest accordingly was not payable in respect of the taxpayer's 1967 taxation year, the year during which it sought to deduct it.