The Chairman:—This income tax appeal was disposed of at the finish of its hearing, at Toronto, and it only remains necessary to record the reasons for the decision then reached by me. A reassessment relating to 1966 was involved whereby the sum of $19,067.82 was added to the appellant’s declared income for that year by the respondent.
The material facts make up what has by now become a familiar story. Appellant and one Frederick A Litwin, who also entered an appeal, made an agreement with a prospector, Robert Rosenblat, in April, 1966, to look for mineral deposits in or near Hants County, Nova Scotia, and then to stake not more than 75 claims. At the same time, $500.00 was advanced to Rosenblat and it was agreed that he should be reimbursed for any cost incurred “plus $15.00 per claim upon delivery of title documents”. Rosenblat duly proceeded to the area mentioned and went over it on foot in order to examine its potentialities and diligently probed beneath the surface here and there. While in the locality, too, he perused relevant maps and reports at the appropriate government office, These documents served to supplement an old map that he already had. The said activities resulted in the obtaining by Rosenblat of six licenses, which he duly had recorded, and the making of a report as to his findings to the appellant and Litwin. Four of the licenses were transferred to the appellant and Litwin. On or about June 9, 1966, Rosenblat received the further sum of $800.00, in all, from the appellant and Litwin.
Early in June, 1966, the appellant and Litwin made an agreement with Field Explorations Limited whereby the former was to receive 375,000 shares of the stock of the said company, of which 337,500 shares were placed in escrow. Later, the appellant disposed of 37,500 of these shares and thereby realized a net profit of $19,067.82, the sum that has given rise to this appeal.
While the Income Tax Act purports to define “prospector”, it says little about what is meant by “prospecting”. I! am of the opinion, having regard to the evidence adduced, that Rosenblat who obviously was well qualified as a prospector, did what properly may be termed prospecting in his activities in Nova Scotia. I see no reason to doubt that what he did constituted a compliance with the pertinent requirements of section 83 and, as was stated at the conclusion of the argument by counsel, the appeal should succeed.
Reference may be had to Foster v MNR, [1971] CTC 335.
The result is that the appeal should be allowed and the relevant reassessment vacated accordingly.
Appeal allowed.