International Nickel Co. of Canada Ltd. v. Minister of National Revenue, (1974) 4 N.R. 451 (FCA)

• Judge: Jackett, C.J., MacKay, D.J.
• Court: Federal Court of Appeal (Canada)
• Case Date: June 20, 1974
• Jurisdiction: Canada (Federal)
• Citations: (1974), 4 N.R. 451 (FCA)

Intl. Nickel Co. of Can. v. MNR (1974), 4 N.R. 451 (FCA)

MLB headnote and full text

International Nickel Company of Canada Ltd. v. Minister of National Revenue

Indexed As: International Nickel Co. of Canada Ltd. v. Minister of National Revenue

Federal Court of Appeal

Jackett, C.J., MacKay, D.J.

and Bastin, D.J.

June 20, 1974.

Summary:

This case arose out of an assessment of income tax against the taxpayer and the method of calculation of the depletion allowance deducted by the taxpayer in computing its income. During the taxation year in question the taxpayer spent $4,363,282. on scientific research. The Minister in calculating the base figure for depletion allowance deducted the $4,363,282. S. 1201(2) of the Income Tax Act Regulations stated that the base figure for depletion allowance includes "profits for the taxation year reasonably attributable to the production of oil, gas, prime metal ...". The taxpayer appealed the assessment to the Trial Division of the Federal Court. The taxpayer's appeal was allowed. The Trial Division held that the taxpayer did not have to deduct the $4,363,282. from the base figure on which the depletion allowance was calculated.

On appeal to the Federal Court of Appeal the appeal was dismissed and the judgment of the Trial Division was affirmed. The Federal Court of Appeal held that scientific research expenses were not "attributable to the production of ... prime metal".

Income Tax - Topic 2782

Deductions in computing income - Depletion allowances - Computation of base figure on which depletion allowance was calculated - Whether scientific research expenses incurred by the taxpayer were "reasonably attributable to the production of ... prime metal" - The Federal Court of Appeal held that the taxpayer did not have to deduct $4,363,282. from the base figure on which the depletion allowance was calculated - The Federal Court of Appeal held that scientific research expenses were not "attributable to the production of ... prime metal".

Words and Phrases

Reasonably attributable to the production of ... Prime metal - The Federal Court of Appeal discussed the meaning of the phrase "reasonably attributable to the production of ... prime metal" as found in s. 1201(2) of the Income Tax Act Regulations.

Cases Noticed:

Minister of National Revenue v. Imperial Oil Ltd., [1960] S.C.R. 735, folld. [para. 5].

Home Oil v. Minister of National Revenue, [1955] S.C.R. 733, folld. [para. 10].

Statutes Noticed:

Income Tax Act Regulations, sect. 1201(2) [para. 3].

Counsel:

N.A. Chalmers, Q.C., for the appellant;

Stuart Thom, Q.C., for the respondent.

This appeal was heard by the Federal Court of Appeal at Ottawa, Ontario on June 19 and 20, 1974. Judgment was delivered by the Federal Court of Appeal on June 20, 1974.

The judgment of the Federal Court of Appeal was delivered by JACKETT, C.J.