Pan Ocean Oil Ltd. v. Canada
A-562-93
Hugessen J.A.
20/5/94
9 pp.
Appeal from Trial Division's decision (Pan Ocean Oil Ltd. v. Minister of National Revenue (1993), 68 F.T.R. 1) allowing respondent's appeal in respect of assessments for 1974, 1975 taxation years -- Present appeal requiring Court to reexamine precise scope and reach of provisions relating to amalgamation found in Income Tax Act, s. 87 and Guaranty Properties Ltd. v. Canada, [1990] 3 F.C. 337 (C.A.), thereby allowing respondent, oil and gas corporation formed in 1974 by amalgamation of two other Alberta corporations, to deduct those corporations' exploration and drilling expenses in period prior to 1972 for 1974 and 1975 taxation years -- Trial Judge's view as to reach of Income Tax Act, s. 87(2)(a) based on Court's obiter dicta in Guaranty Properties -- Court therein did not intend to establish general rule that presumption of s. 87(2)(a) limited solely to timing of new corporation's first taxation year; rather, intention to indicate presumption limited in scope and not applicable generally to whole of Income Tax Act -- Provisions of s. 87(2)(a) applicable only to amalgamated company's computation of income under Division B and where necessary as consequence thereof, to computations of taxable income (Division C) and of tax (Division E) -- Guaranty Properties should not be read as denying amalgamated corporation to be deemed to be new corporation for all purposes relating to computation of income -- Deemed "new" company, which, for tax purposes, came into being upon amalgamation, did not acquire property of amalgamating companies merged into it; rather, such property simply became property of new company upon amalgamation -- Respondent, for tax purposes, deemed to be new corporation whose first taxation year deemed to have commenced at time of amalgamation; no provision in Income Tax Act allowing respondent to deduct oil and gas exploration expenses incurred by other taxpayers -- Appeal allowed -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 87(2)(a).