Massey-Ferguson Ltd. v. The Queen, 77 DTC 5013, [1977] CTC 6 (FCA) -- summary under Subsection 17(3)

It was found that the taxpayer had loaned funds on a non-interest-bearing basis to a wholly-owned Canadian subsidiary ("Verity") whose business included the making of loans to affiliates, and that Verity as a part of that business on-lent the funds to a U.S. operating subsidiary ("Perkins"), notwithstanding that the funds in question were transferred directly from the taxpayer to Perkins and notwithstanding that Verity had no bank account or employees. The Crown's contention, that the loan should be regarded as having been made directly by the taxpayer to Perkins, and that the supposed routing of the loan "via" Verity was a sham, accordingly failed.