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Issues Involved:
1. Jurisdiction of the Court of King's Bench to determine the figure of net profit or gain for tax assessment. 2. Allowance for "manufacturing profit" in the assessment of income tax for a corporation operating in multiple provinces. 3. The procedural propriety of raising new grounds of appeal before the Privy Council that were not presented in lower courts. Issue-wise Detailed Analysis: 1. Jurisdiction of the Court of King's Bench to Determine the Figure of Net Profit or Gain for Tax Assessment: The appellant contended that the Court of King's Bench overstepped its jurisdiction by determining the actual figure of net profit or gain for each year in question and directing the appellant to assess the respondent on that basis. The appellant argued that this action invaded the administrative function of the appellant, who is the responsible Minister. The Court of King's Bench had allowed the respondent's appeal, set aside the assessments, and adjudged the net profit or gain figures, directing the appellant to adopt them. The appellant's counsel asserted that the Court had no jurisdiction to arrive at an actual figure of assessable income or to direct the appellant to adopt it. However, the Privy Council disagreed with this argument, stating that the Judge's order decided the matter within his jurisdiction. The Judge was entitled to decide both the question of law regarding the allowance for "manufacturing profit" and the question of fact concerning the net profit or gain in Manitoba. 2. Allowance for "Manufacturing Profit" in the Assessment of Income Tax for a Corporation Operating in Multiple Provinces: The core issue was whether the respondent was entitled to an allowance for "manufacturing profit" in Ontario when assessing its profits in Manitoba. The appellant had consistently maintained that no such allowance should be made, arguing that the net profits arising from sales in Manitoba were taxable in Manitoba. The respondent challenged this, asserting that an allowance for "manufacturing profit" should be made. The Privy Council noted that this issue was substantially the same as that decided in the International Harvester Co. case (1949 A.C. 36), where it was held that the net taxable profit should be ascertained after making an allowance for "manufacturing profit" attributed to activities outside the province. Consequently, the Privy Council concluded that the respondent was entitled to such an allowance, aligning with the decision in the International Harvester Co. case. 3. The Procedural Propriety of Raising New Grounds of Appeal Before the Privy Council: The appellant introduced a new argument before the Privy Council, which was not relied upon in any of the lower courts. The respondent objected to this, highlighting that the argument was not presented in the Courts below, and thus, should not be entertained. The Privy Council acknowledged that the appellant's new ground of appeal was not mentioned in the Notice of Appeal to the Court of Appeal for Manitoba, the appellant's Factum for the Supreme Court, or the petition to the Privy Council for special leave to appeal. Despite this, the Privy Council decided to entertain the argument, noting that the respondent was not taken by surprise and that the point had been fully argued before their Lordships. However, they emphasized that this decision should not set a precedent for allowing appeals on new grounds in comparable circumstances. Ultimately, the Privy Council found the appellant's new argument unpersuasive and upheld the decision of the lower courts. Conclusion: The Privy Council dismissed the appeal, affirming the jurisdiction of the Court of King's Bench to determine the net profit or gain for tax assessment and recognizing the respondent's entitlement to an allowance for "manufacturing profit." The appellant was ordered to pay the respondent's costs of the appeal.
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