Under an amended transportation contract with its shippers, a gas transmission company became entitled, at its option in the event that its construction of the pipe line was financed through U.S. dollar borrowings (as in fact occurred), to have 2/3 of the number of dollars which it charged the shippers in its monthly invoices paid in U.S. dollars rather than Canadian dollars. The U.S. dollars so received by the company were used by it to pay principal and interest on its U.S. dollar borrowings.
Martland, J. was unable to construe the transportation contract in the manner contended by the taxpayer, namely, as providing for payment for the company's services in Canadian dollars coupled with a forward exchange contract for the purchase by the Company from the shippers of U.S. dollars. (The company further contended that under GAAP the U.S. dollars should be valued at their cost to the company.) The full value of the U.S. dollars received by the company formed part of its income.