R. v. Mara Properties Ltd., [1996] 2 S.C.R. 161

Mara Properties Limited Appellant

v.

Her Majesty The Queen Respondent

Indexed as: R. v. Mara Properties Ltd.

File No.: 24684.

1996: May 21.

Present: La Forest, L’Heureux‑Dubé, Sopinka, Cory, McLachlin, Iacobucci and Major JJ.

on appeal from the federal court of appeal

Income Tax -- Non-capital loss -- Company disposing of trading asset acquired from subsidiary -- Whether property retained character as inventory.

APPEAL from a judgment of the Federal Court of Appeal, 1995 3578 (FCA), [1995] 2 F.C. 433, 95 D.T.C. 5168, [1995] 2 C.T.C. 86, 179 N.R. 363, allowing an appeal from a judgment of Kempo J.T.C.C., 1993 17191 (TCC), 93 D.T.C. 1449, [1993] 2 C.T.C. 3189. Appeal allowed.

Warren J. A. Mitchell, Q.C., and Karen Sharlow, for the appellant.

Roger Taylor and Brent Paris, for the respondent.

The judgment of the Court was delivered orally by

[1] La Forest J. -- We agree with the conclusion reached by the Tax Court and McDonald J.A., the dissenting judge in the Court of Appeal, 1995 3578 (FCA), [1995] 2 F.C. 433, 95 D.T.C. 5168, [1995] 2 C.T.C. 86, 179 N.R. 363. In our view, in the circumstances of this case, the property retained its character as inventory in the hands of the appellant.

[2] Accordingly, the appeal is allowed with costs throughout, the judgment of the Court of Appeal is set aside, and the judgment of the Tax Court, 1993 17191 (TCC), 93 D.T.C. 1449, [1993] 2 C.T.C. 3189, is restored.

Judgment accordingly.

Solicitors for the appellant: Thorsteinssons, Vancouver.

Solicitor for the respondent: The Department of Justice, Vancouver.