The Canadian distributors of Morris cars, including the taxpayer, were offered by their British supplier ("Nuffield") a rebate of $250 for each car in inventory on September 1, 1951 which rebate was received, at the time that payment was made to Nuffield for the cars, by way of set-off against trade indebtedness owing to Nuffield. Because the arrangement, in reality, was simply the granting of a discount of $250 upon the sales price of cars sold or upon the purchase price (or, viewed in another aspect, the provision of a subsidy of $250 on each car sold in Canada), the rebates, most of which were realized by the taxpayer in its taxation year ended September 30, 1952 were earned on income account. Abbott J. stated (pp. 1121-1122):
"The fact that the rebates took the form of credits against appellant's indebtedness to Nuffield, did not alter their true character, or make them merely the 'forgiveness' of a past due debt incurred in a preceding year, as that term was used in the British-Mexican Petroleum case ..."