The original shareholders of the taxpayer had transferred raw land (which they had valued at $355,000, based on an estimated selling price for building lots minus a 45% discount for estimated expenses) to the taxpayer in consideration for the issue of shares having a par value of $200,000. The difference of $155,000 was credited to contributed surplus. Cameron J. held (p. 1108) that:
"The consideration paid by the appellant for the ... lots was the par value of the shares issued and nothing more. What it gave up was the right to call upon the allottees of the shares for payment of the par value of each share."
The cost of the lots was not affected by the contemporaneous transfer of additional land to the taxpayer in consideration for shares, with a view to donating such land to the University of Manitoba in order to enhance the value of the land retained by the taxpayer.