Zeal and Gold Ltd. v. MNR, 73 DTC 5116, [1973] CTC 129 (FCTD) -- summary under Subparagraph 251(2)(c)(i)

As part of a series of transactions wherein one company ("Mercantile") would become owned solely by two of its three shareholders ("Zeal" and "Gold") and the third shareholder ("Stearns") was to become the sole shareholder of the taxpayer, the taxpayer agreed to purchase equipment from Mercantile at a time when the taxpayer and Mercantile were owned equally by the three shareholders. This was a non-arm's length transaction. "It seems inconceivable to me, bearing in mind that all transactions were directed to achieving one desired result, that the relationship which prevailed among all necessary parties at the initiation of the overall plan could change during the intermediary steps to bring that plan to fruition."