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TMI Blog1948 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and from oil and gas wells and timber limits may make such an allowance for the exhaustion of the mines, wells and timber limits as he may deem just and fair, and in the case of leases of mines, oil and gas wells and timber limits the lessor and lessee shall be entitled to deduct a part of the allowance for exhaustion as they agree, and in case the lessor and lessee do not agree the Minister shall have full power to apportion the deduction between them and his determination shall be conclusive. 2. In the assessment subsequently made upon the appellant company the deduction which they claimed was disallowed. They thereupon served a notice of appeal upon the respondent, the Minister of National Revenue, in which they set out as the ground of their appeal that under the above quoted provision of the Income War Tax Act they had a statutory right and were entitled to an allowance for the exhaustion of the said timber limits being the areas included in their licences; and that the Minister had a duty of a quasi-judicial character, to be exercised on proper legal principles, to fix a just, fair and reasonable amount as an allowance to the appellant for the exhaustion of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny timber licences or permits held by it, and in making the said allowances the Minister has exercised the discretionary power vested in him by the provisions of S. 5 (11 (a), Income War Tax Act. No evidence was led at the trial on behalf; of the Minister but each party put in evidence extracts from testimony given on examination for discovery by Mr. G. Fraser Elliott, the Deputy Minister, who, as the duly authorised delegate of the Minister, had made the decision impugned. Several witnesses were called and gave evidence on behalf of the appellant company. 5. In the extract from the evidence of Mr. Elliott on discovery put in by the appellant company the following passage occurs in his examination on behalf of the company : Q. Mr. Elliott, in exercising your discretion here you have taken the petition that the appellant is not entitled to an allowance under the provisions of S. 5 (a) for the exhaustion of timber limits, I take it because the timber limits are owned by the Crown and the appellant has only been licensed to cut the timber? A. Because he has only a licence. Q. And that is your sole objection to the allowance, I take it? A. That is right. In anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an allowance for exhaustion of timber limits as he may deem just and fair, plainly confers on the Minister a discretion to determine whether the case before him is one for making any allowance at all and does not limit his discretion to determining the extent of the allowance to be made. He has a double discretion, first, to determine whether the case is one for an allowance and second, if so, to determine how much shall be allowed. The Minister may not shall make an allowance. The language is permissive not obligatory. The Dominion Interpretation Act, R. S, C. 1927, c. 97, S. 37, provides that in every Act unless the context otherwise requires.... (24) ' shall' is to be construed as imperative and 'may' as permissive , It was suggested that the opening words of S. 5, Income War Tax Act - Income.... shall for the purposes of this Act be subject to the following exemptions and deductions supplied a context which required may in head (a) to be read in an obligatory sense. But these opening words merely require the Minister to make a deduction under head (a) if he has decided that the case is one for a deduction. They cover a whole series of heads from (a) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made deliberately. In tax legislation it is far from uncommon to find amendments introduced at the instance of the Revenue Department to obviate judicial decisions which the Department considers to be attended with undesirable results. The Minister in their Lordships' opinion was accordingly not under any legal obligation to make a depletion allowance in the case of the appellant company. 12. (2) There remains the question whether the Minister, in exercising his discretion as to whether he should or should not make a depletion allowance in the present case and deciding not to do so proceeded on just, reasonable and admissible grounds. In order to deal with this question it is necessary to explain in some detail the facts which were before the Minister, Of the three licences operated by the appellant company two had been granted originally by the Dominion Government while the third had been granted by the Provincial Government after the transfer of certain natural resources from the Dominion Government to the Government of Alberta. The first two had been renewed successively by the Dominion and by the Provincial Governments from year to year and the third had been annuall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exercise of his discretion by adducing reasons not present to his mind when he gave his decision. But in his decision the Minister relied on other related grounds and Mr. Elliott in later passages of his evidence qualified and explained what he had said in the quoted passage, while in the amendment of his statement of defence allowed by the Court the Minister amplified and made clear his grounds for the disallowance. Moreover, in a letter to the legal advisers of the appellant company before the decision was given, Mr. Elliott had taken the point that their clients had already received allowances or deductions to the extent of the capital sum which they had paid for their licences. 14. It was thus made abundantly clear in the course of the proceedings that the Minister in exercising his discretion proceeded on the view that what was being exhausted was the timber belonging to the Crown which the appellant company were licensed to cut and acquire and that the only allowance for depletion which ought properly to be made in favour of the appellant company was in respect of the sum which they had paid for the privilege of cutting and acquiring the timber; this was the only capi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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