The taxpayer sought to deduct capital cost allowance for the cost of driving passageways into an ore body. The Court agreed with the decision of Jackett C.J., who had said that:
"The cost of such extraction operations is, in accordance with ordinary business principles, the costs of earning the profits made by selling the ore extracted from them. If that is right, there was no cost, and therefore no 'capital cost', of acquiring the haulageways."
The value of the ore extracted from the passageways exceeded the cost of opening them.