Date: 20020626
Docket: 95-2554-IT-I
BETWEEN:
ROMEO KRAKOWEC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Little, J.
FACTS
[1] The Appellant was a member of a limited partnership called Inter-Teck Oil Limited Partnership ("ITOLP"). The Appellant acquired seven units in ITOLP. The Appellant stated during the hearing that he paid a total of approximately $11,000.00 for the seven units of ITOLP.
[2] In 1982, a corporation by the name of International Resource Recovery Inc. ("Inc.") transferred equipment to ITOLP for the sum of $6,850,000.00.
[3] ITOLP included the equipment acquired from Inc. in Class 29 of Schedule II of the Income Tax Regulations and claimed maximum capital cost allowance. The claim by ITOLP of capital cost allowance created a loss. ITOLP allocated a loss to the Appellant of $44,814.00 for the fiscal period ending in 1982.
[4] The Appellant deducted the loss of $44,814.00 in computing his income for the 1982 taxation year.
[5] By Notice of Reassessment dated December 8, 1988 the Appellant's income for the 1982 taxation year was reassessed by the Minister of National Revenue (the "Minister"). In the said reassessment, the Minister determined that the Appellant was entitled to claim a loss from ITOLP of $1,834.00 rather than the loss of $44,814.00 that was claimed. The reduction of the loss occurred because the Minister concluded that the fair market value of the equipment acquired by ITOLP from Inc. was $422,000.00 instead of $6,850,000.00.
[6] The Appellant filed a Notice of Objection to the Notice of Reassessment. Counsel for the Crown indicated that consideration of the Appellant's Notice of Objection was held in abeyance with the Appellant's consent pending the outcome of appeals filed by other members of ITOLP. After the reassessment was confirmed the Appellant filed a Notice of Appeal to this Court.
ISSUE
[7] The Appellant maintains that he is entitled to deduct the loss of $44,814.00 that was allocated to him by ITOLP in determining his income for the 1982 taxation year.
ANALYSIS
[8] The facts and issues in this appeal are essentially the same as the facts and issues in Chutka et al. v. The Queen, 2001 DTC 5093 ("Chutka") (Note - Chutka was an appeal filed to the Federal Court of Appeal by Messrs. Chutka, Madsen and six other members of ITOLP. The original appeal filed by the investors was heard by Associate Chief Judge Christie of the Tax Court of Canada and was reported as Madsen et al. v. The Queen, 98 DTC 1668.
[9] In the Chutka case Mr. Justice Linden of the Federal Court of Appeal said at page 5099:
... paragraph 69(1)(a) [of the Act] was properly invoked by the Minister to deem the purchase price to be the fair market value of the processing equipment by virtue of the parties being "related persons" within the meaning of section 251. In the absence of expert evidence to rebut the Minister's assessment of the equipment's fair market value, the deemed acquisition price of $422,000 must stand and the capital cost allowance deducted accordingly.
The Chutka appeal was dismissed by the Federal Court of Appeal.
[10] I have also had the opportunity to review the Reasons for Judgment issued by the Honourable Judge Terrence O'Connor in Don Deptuck v. Her Majesty The Queen (unreported). In the Reasons for Judgment in Deptuck, O'Connor J. said "Subject to certain exceptions, discussed later the facts and issues in this appeal are essentially the same as those in Chutka and are succinctly analysed in the decision of the Federal Court of Appeal in that case." (Note: The 'exceptions' referred to by Judge O'Connor were not present in the Appellant's appeal.)
[11] Since the Appellant did not present any evidence as to the fair market value of the equipment and since there was no further evidence presented to distinguish the Appellant's appeal from the appeals of Chutka and Deptuck, I have concluded that the appeal should be dismissed for the reasons outlined by the Federal Court of Appeal in Chutka.
[12] During the hearing the Appellant said that he had been unable to determine the date when the Minister reassessed his 1981 taxation year. Counsel for the Respondent was unable to locate the information requested by the Appellant. I have reviewed the records of the Tax Court and I have discovered that in a hearing held in Victoria on April 17, 1990 in connection with an extension of time within which a Notice of Objection might be filed by the Appellant for the 1981 and 1982 taxation years, the Honourable Judge Rowe noted that the Appellant's 1981 taxation year had been reassessed in 1984. In other words the Appellant's 1981 taxation year was not statute barred when the Notice of Reassessment was issued by the Minister in 1984.
[13] The appeal is dismissed.
Signed at Ottawa, Canada, this 26th day of June 2002.
"L.M. Little"
J.T.C.C.
COURT FILE NO.: 95-2554(IT)I
STYLE OF CAUSE: Romeo Krakowec and
Her Majesty the Queen
PLACE OF HEARING: Victoria, British Columbia
DATE OF HEARING: April 11, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge L.M. Little
DATE OF JUDGMENT: June 26, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Margaret E.T. Clare
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
95-2554(IT)I
BETWEEN:
ROMEO KRAKOWEC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on April 11, 2002 at Victoria, British Columbia, by
the Honourable Judge L.M. Little
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Margaret E.T. Clare
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1982 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 26th day of June 2002.
|
"L.M. Little" |
J.T.C.C.