MacGuigan, J.A. (orally):—We do not need to hear you, Ms. Brown.
Despite the cogent and able argument of Mr. Harris, we have not been persuaded that the Associate Chief Justice made any relevant error of law. Admittedly, he was obscure in his statement that "the vehicles were not in inventory”, and in his reference to the purpose of the statutory provision, but he had an unerring instinct for the notion of "held for sale”, the key concept in paragraph 20(1)(gg) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"), which read as follows:
20(1) Notwithstanding paragraphs 18(1)(a), (b) and (h), in computing a taxpayer's income for a taxation year from a business or property, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:. . .
(gg) an amount in respect of any business carried on by the taxpayer in the year, equal to that portion of three per cent of the cost amount to the taxpayer, at the commencement of the year, of the tangible property (other than real property or an interest therein) that was
(i) described in the taxpayer's inventory in respect of the business, and
(ii) held by him for sale or for the purposes of being processed, fabricated, manufactured, incorporated into, attached to, or otherwise converted into or used in the packaging of, property for sale in the ordinary course of the business
that the number of days in the year is of 365;
The appellant contended that" held for sale" must be taken in an expanded sense so that it was not related to any given point of time in the two-to three- year period during which the automobiles were leased to customers. However, in our view, in order for the taxpayer to qualify for a deduction under the provisions, they had to be held for sale at every point of time during this period, which was clearly not the case, since they were leased to customers and were never repossessed for sale during this period. Their status could not be taken as mere use for leasing purposes; it was a contrary use, contrary to the notion of“ "held for sale”.
The appellant's alternative argument, that the phrase "otherwise converted" should be taken in the sense of changed “in function” rather than "in form", does not appear to us to be a tenable construction. The whole list of alternatives ("processed, fabricated, manufactured, incorporated into, attached to. . .or used in the packaging of") has reference to a physical change in form.
We see no reason to come to any different conclusion on the basis of any part of the French text of the provision. It represents an alternative conceptualization rather than a literal translation of the English, but we have been unable to detect any other meaning than we have already defined for the English version.
Since the phrase" held for sale” was not employed elsewhere in the Income Tax Act at the relevant time, and since there are no other cases on point, we have not found any assistance in either other provisions of the Act or the jurisprudence.
The appeal must therefore be dismissed with costs.
Appeal dismissed.