The taxpayer purchased gems for an amount in excess of their worth, and then paid a total of $1,651,766 in charges purportedly made to secure a sale of the gems (which never occurred).
After finding that the expenses were not deductible because the gem operation of the taxpayer was not a business. Noël J.A. went on to indicate that section 67 could have been applied as well to deny the deduction of the expenses given that the Supreme Court in the Stewart case had indicated that s. 67 could be applied to eliminate an expense, as well as to limit the deductible quantum.