Canada v. Lomex, Inc.
T-1324-92
Joyal J.
26/8/98
22 pp.
Appeal from decision of Tax Court of Canada allowing appeals of defendant against reassessments for 1982, 1983, 1984 and 1985 taxation years-Defendant operating company which collects and processes animal waste and by-products by dehydration-Defendant having own fleet of 102 vehicles to collect and transport raw materials from approximately 1500 recovery points (butcher shops, restaurants, supermarkets, farms, slaughterhouses)-Issue concerning deductions claimed by defendant under Act, s. 125.1 for collection and transport, presented as "manufacturing and processing" within meaning of Regulations, ss. 5200, 5202-T.C.C. agreeing with defendant, concluding collection and transport constituting "qualified activities" within meaning of Regulations as included in "all other activities", s. 5202(b)-Appeal dismissed-Elements of manufacturing or processing exist as soon as raw materials acquired-In order to interpret s. 5202(a)(ii), Court should not be required to subject each act of handling, transporting and processing raw materials, from loading to unloading, minute by minute, to examination under microscope-It must also be recognized that various provisions of Regulations, s. 5202, not mutually exclusive-According to evidence, by collecting, examining and loading raw materials into specialized vehicles and transporting them to plant where they are unloaded within a few hours, defendant's business involves host of individual steps which could be classified under one item or another-This could well be an "integrated" manufacturing and processing business, beginning when raw materials acquired and not complete until end of process, namely at stage when finished products sold to third parties-As a whole, defendant's activities highly unusual, or at least not contemplated by Parliament when Regulations at issue drafted-It must also be recognized that provisions not models of drafting, especially when not only exceptions to general rule but even exceptions to exceptions have to be listed-In such cases, Court can only exercise better judgment-Income Tax Act, S.C. 1970-7172, c. 63, s. 125.1 (as am. by S.C. 1976-77, c. 4, s. 50; 1984, c. 1, s. 7; c. 45, s. 41)-Income Tax Regulations, C.R.C., c. 945, ss. 5200, 5202.