TASCHEREAU, J.:—In February, 1948, the appellant duly filed an Income and Excess Profits Tax return for the 1947 taxation year, but failed to show any excess profits tax payable. The con- tention is based on Section 3 of the Excess Profits Tax Act, which is to the effect that a company is exempt from tax during its first year of operation, provided (a) it carried on a substantially new business with substantially new assets, (b) has started business after June 26th, 1944, unless it continued a previous business, and (c) some person or persons had a ‘‘substantial interest” both in the previous and in the new business.
It is common ground that the appellant first began business in 1947, year of its incorporation, that it continued a previous business, and it is also conceded that the Mannings who owned nearly all the shares of the previous business, held 49% of the shares of the new company. The only point in issue is therefore whether a 49% interest is a ‘‘substantial interest’’, within the meaning of the Excess Profits Tax Act.
The appellant was assessed in the sum of $29,458.78 and his appeals to the Minister as well as to the Exchequer Court were dismissed. The Honourable Sydney Smith, Deputy Judge, declined to accept the argument that ‘‘substantial interest’’ meant “majority” or ‘‘controlling interest’’.
I think that this judgment is clearly right. The word “substantial” has a number of quite different senses, all depending on the context in which it is used. In the present case, I agree with the submission of the respondent, that the only possible meaning that it can be given is “large quantity’’, ‘‘considerable amount of shares’’. When Parliament intended to deal with the standard profits of certain controlled companies, it used the words ‘‘a controlling interest’’, as it did in section 15a. Moreover, in the French version of Section 3, which must be read with the English one (Authors & Publishers v. Western Fair, [1951] S.C.R. 596), the translation for ‘‘substantial’’ is ‘‘important’’.
The appeal fails and should be dismissed with costs.
CARTWRIGHT, J.:—The appellant contends that in the phrase ‘‘a person or persons who has or have a substantial interest in the business either by ownership of shares in the corporation or Joint stock company that operates the business or otherwise,’’ used in Section 3 of the Excess Profits Tax Act as amended, the words ‘‘a substantial interest” mean ‘‘a controlling interest’’, and therefore in the case of a joint stock company, which the appellant is, ‘more than half of the issued shares’’. I am unable to accept this contention. I do not think that in their ordinary meaning the words ‘‘substantial interest’’ are synonymous with the words “controlling interest’’, and that Parliament did not intend so to use them is indicated by the fact that the latter words are used elsewhere in the same statute.
I agree with the view of the learned Deputy Judge that in this case the ownership of 49% of the shares of the appellant constituted a substantial interest within the meaning of the words in section 3 quoted above.
I would dismiss the appeal with costs.
Appeal dismissed.