Gibson, J. :—For about forty years before October 1, 1961, the decedent W. J. Fraleigh carried on a construction business in the City of Hamilton, Ontario, as an individual proprietorship. On October 1, 1961, he transferred certain of the assets of this business to a newly incorporated Ontario company by the name of W. J. Fraleigh Construction Limited, a private company controlled by him. This company also assumed the liabilities of that business.
The liabilities assumed exceeded the assets by $40,642.08, which difference was characterized on the opening balance sheet of this company, as at October 1, 1961, as goodwill. In fact, it is agreed by the parties, there was no value that could be attributed to goodwill at that time.
The decedent then personally advanced $97,000 cash to this company in 1961, which was put in the company bank account. In 1964, on instructions of the decedent, about $83,000 of this loan was transferred from a loan account in his name on this company’s books to the contributed surplus account of the company. In 1963 one of the assets assumed by the company as of October 1, 1961, referred to on the balance sheet as Queenston Apartments, was written off for a net loss of about $25,000.
Financially, therefore, the decedent on balance was in arrears in excess of $17,000 in respect to these transactions with W. J. Fraleigh Construction Limited.
The decedent died on September 12, 1965.
The respondent submits that on October 1, 1961, on the assumption of the assets and liabilities of the decedent’s business by W. J. Fraleigh Construction Limited, when those liabilities exceeded the assets by $40,642.08, that W. J. Fraleigh Construction Limited conferred a benefit of that amount on the decedent within the meaning of Section 8(1)(c) of the Income Tax Act.
The appellant, among other things, submits that as at October 1, 1961, at worst, W. J. Fraleigh Construction Limited, by the said transaction, promised to confer a benefit on the decedent in the sum of $40,642.08, but that it never did actually confer such a benefit; and, therefore, no "‘benefit” was “conferred” by W. J. Fraleigh Construction Limited on the decedent in 1961 within the meaning of those words in Section 8(1) (c) of the Income Tax Act.
In my view, whether or not in the circumstances of this case a ‘‘benefit’’ was “conferred” on the decedent within the meaning of those words in Section 8(1) (c) of the Income Tax Act is a question of fact to be determined.
The evidence in respect of the basic fact upon which this re-assessment rests is overwhelming and unequivocal, and it nullifies it. Clearly on this evidence no “benefit” was “conferred” on the decedent by W. J. Fraleigh Construction Limited in 1961, or, for that matter, at any time. Instead, the reverse is the situation.
In the result, therefore, the appeal is allowed with costs and the re-assessment is referred back for re-assessment not inconsistent with these Reasons.