Date: 20000828
Docket: 1999-4348-IT-I
BETWEEN:
HARJINDER SINGH BAINS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowman, A.C.J.
[1] These appeals are from assessments for the 1994, 1995 and 1996 taxation years. In each of those years the appellant claimed $5,380 in his return of income as a spousal amount. The applicable provision of the Income Tax Act was paragraph 118(1)(a) which, in the years in question, read as follows:
(1) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A X B
where
A is the appropriate percentage for the year, and
B is the total of,
(a) in the case of an individual who at any time in the year is a married person who supports the individual's spouse, an amount equal to the total of
(i) $6,000, and
(ii) an amount determined by the formula
$5,000 — (C - $500)
where
C is the greater of $500 and the income of the individual's spouse for the year or, where the individual and the individual's spouse are living separate and apart at the end of the year by reason of a breakdown of their marriage, the spouse's income for the year while married and not so separated.
[2] I am not concerned here with the arithmetic. The non-refundable tax credit is 17% of the $5,000 indexed upwards under section 117.1. The sole question is whether in the years in question the appellant supported his spouse.
[3] The facts are that in 1984 the appellant married Daljit Kaur in a village in India. In 1991 he moved to Canada where he has lived ever since. His wife and children remained in India, where they lived with the appellant's father, Gurbachan Singh Zaildar. The appellant's wife joined him in Canada in 1997.
[4] The appellant testified that in 1994 he sent, through a friend, Mr. Tarlok Singh Tiwana, $1,300 cash to his father for the support of his wife and $1,500 by way of India Foreign Exchange Centre Inc. No receipt was produced. He says that in 1995 he sent $6,100 (1,50,000 rupees) to his father by way of India Foreign Exchange Centre Inc. A receipt in this amount was produced. It shows the sender as Daljit Singh (the appellant's brother) and the name and address of the person to whom the money was sent as follows:
Gurbachan Singh Zaildar or Kuldeep Singh
VPO.Kot Fatuhi.Teh.Garhshankar.Dist.Hoshiarpur.
From:Daljit Singh*****VERY URGENT*****
[5] Kuldeep Singh was said to be the appellant's brother. The appellant testified that in 1996 he sent $7,547 (2,00,000 rupees) to his father in the same manner.
[6] The sender was again shown to be Daljit Singh and the address was the same as in the previous year, except that the notation VERY URGENT was omitted.
[7] The appellant, his spouse, his father, his brother Daljit Singh and his friend Tarlok Singh Tiwana, all testified. Mrs. Darling, the appeals officer, testified on behalf of the respondent.
[8] Before I review the evidence further, two points should be made. The entitlement to a tax credit under paragraph 118(1)(a) does not depend on how much money was spent to support the spouse. The only limiting factor is the spouse's income. Nor does the Act require proof by way of receipts that money was sent by the claimant to the spouse. Where the spouses live together, support may be presumed. Where, as here, they live apart it is incumbent on the spouse claiming the credit to show that he or she spent money for the spouse's support.
[9] Here the evidence was somewhat unsatisfactory.
[10] The witnesses testified that in a village in India it would have been unusual if not impossible for the money to be sent directly to a woman. Therefore the money was sent to the appellant's father who put it in the bank and gave it to the appellant's wife as she needed it.
[11] The 1995 and 1996 transfers were made in August or September. It seems a little strange that they would be made in one lump sum in the latter part of the year. Moreover, the appellant's father testified that the money would be delivered to him at his home in the village in cash from some larger city, sometimes by motorcycle and he would put it in his own bank account where it would be intermingled with his own funds. Since the evidence was that there were two banks in the village one wonders why it would not be safer and more efficient simply to transfer the funds electronically to the local bank.
[12] The appellant testified that since he could not read or write English the transactions were handled by his brother who knew the person at India Foreign Exchange Centre Inc., Mr. Sharma Sanjokt.
[13] The two receipts that I mentioned above from India Foreign Exchange Centre Inc. were first produced at trial, but were never given to the appeals section. In fact, when Mrs. Darling asked for receipts the only one she was given was a receipt for $10,384 sent by the appellant's brother to his father through India Foreign Exchange Centre Inc. The appellant testified that this was given to her "by mistake" and in fact it represented money that his brother was sending to his father to buy a parcel of land in India. This sort of thing does not enhance the appellant's credibility.
[14] There appears as well to be a certain intermingling of funds among the members of the family. There was allegedly some borrowing from the appellant's brother, at least in connection with $6,100 which the appellant said was sent in 1995, and no satisfactory evidence of repayment.
[15] The most solid piece of evidence that I have is the payment of $7,547 in 1996. The appellant's bankbook from the Royal Bank records a cheque withdrawal on September 18, 1996 of $7,547.04. A receipt from Canada Trust also dated September 18, 1996 shows a deposit of a cheque for $7,547.04 to the account of Sharma Sanjokt. Sharma Sanjokt is, it appears, the owner or an officer of India Foreign Exchange Centre Inc. Just why the money went into his account at Canada Trust rather than into that of the foreign exchange agency is a mystery. On September 23, 1996 a receipt was issued by India Foreign Exchange Centre Inc. for $7,547.
[16] I am faced in this case with an array of improbabilities and gaps in credibility. Among them are:
- cash being sent to India through a friend
- cash being delivered by motorbike to a remote Indian village
- moneys being received by a venerable patriarch and allegedly doled out as he saw fit for the benefit of the appellant's spouse
- a receipt for $10,384 put forward as evidence of support when in fact it was no such thing
- an alleged support payment of $6,100 when in fact there is no evidence that it was the appellant's money that was used
- a somewhat mysterious foreign exchange transfer agent where payments are made to an individual who controls it.
[17] What does all this add up to? It would be easy to dismiss the appeals for all three years. I do not however think that this would be a fair disposition of the appeals. The evidence for 1994 and 1995 is too problematical to permit me to allow the appeals for those years. For 1996, however, I think a prima facie care has been made out that the appellant took $7,547.04 from his own account and caused it to be transferred to his father in India for the support of his spouse. One might be careful in cases of this sort not be too quick to reject a case outright just because there are improbabilities and occasional gaps in credibility. All of the appellant's witnesses testified through an interpreter. There were throughout the trial and, I should imagine, in dealing with the Department of National Revenue, linguistic problems as well as significant cultural differences. These have to be taken into account before a court decides that an appellant's case must be rejected.
[18] I am therefore allowing the appeal from the assessment for 1996 and referring that assessment back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is entitled to the credit under paragraph 118(1)(a) of the Income Tax Act.
[19] The appeals from the assessments for 1994 and 1995 are dismissed.
[20] Success is divided and I make no order for costs.
Signed at Ottawa, Canada, this 28th day of August 2000.
"D.G.H. Bowman"
A.C.J.