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Tax Protestor Cases Exhibit
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BETWEEN:
DUSHYANTHINI RAMESHA, RAMESHA BHASKARAN
Appellants,
- and -
HER MAJESTY THE QUEEN,
Respondent.

1999-5085(IT)I
BETWEEN:
RAMESHA BHASKARAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.

Appeals heard together with the appeals of Dushyanthini Ramesha (1999 5084(IT)I) on January 16 and 17, 2001, at Toronto, Ontario, by the Honourable Judge Michael J. Bonner

APPEARANCES

For the Appellant: The Appellant himself Counsel for the Respondent: Andrea Jackett

JUDGMENT

The appeals from the assessments made under the Income Tax Act for the 1989, 1990, 1991, 1993, 1994 and 1995 taxation years are dismissed.

Signed at Ottawa, Canada, this 23rd day of January 2001.

"Michael J. Bonner"
J.T.C.C.

1999-5084(IT)I BETWEEN: DUSHYANTHINI RAMESHA, Appellant,
and HER MAJESTY THE QUEEN, Respondent.

Appeals heard together with the appeals of Ramesha Bhaskaran (1999-5085(IT)I) on January 16 and 17, 2001, at Toronto, Ontario, by the Honourable Judge Michael J. Bonner

APPEARANCES

Agent for the Appellant: Ramesha Bhaskaran Counsel for the Respondent: Andrea Jackett

JUDGMENT

The appeals from the assessments made under the Income Tax Act for the 1989, 1990, 1991, 1993, 1994 and 1995 taxation years are dismissed.

Signed at Ottawa, Canada, this 23rd day of January 2001.

"Michael J. Bonner"
J.T.C.C.

TAX COURT OF CANADA IN RE: The Income Tax Act

-- Held before Judge Bonner of The Tax Court of Canada, at the Federal Court of Canada, 330 University Avenue, Canada Life Building, Toronto, Ontario, on the 17th day of January, 2001.

ORAL REASONS FOR JUDGMENT (Delivered from the Bench orally at Toronto, Ontario on January 17, 2001)

COURT FILE NO.: 1999-5085(IT)I;
1999-5084(IT)I

STYLE OF CAUSE: Ramesha Bhaskaran and H.M.Q.;
Dushyanthini Ramesha and H.M.Q.

PLACE OF HEARING: Toronto, Ontario

DATE OF HEARING: January 16 and 17, 2001

REASONS FOR JUDGMENT BY: The Honorable Judge M.J. Bonner

DATE OF JUDGMENT: January 23, 2001

APPEARANCES:

Counsel for the Appellant: The Appellant himself Counsel for the Respondent: Andrea Jackett

COUNSEL OF RECORD:

For the Appellant:
Name:
Firm:

For the Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada

COLIN NETHERCUT - Registrar
Per: MARY JANE CORCORAN (Reporter)

-- Upon commencing at 11:10 a.m.

[1] HIS HONOUR: At the outset I have to deal with the credibility issue. The principal witness for both Appellants was Mr. Bhaskaran. His spouse gave evidence as well and her evidence wasn't particularly helpful. She simply indicated in virtually one sentence that what her husband said is true.

[2] Mr. Bhaskaran's evidence was, to put it as gently as I can, unpersuasive. There may have been and there probably were elements of truth in some of this testimony but, in my opinion, the evidence was from beginning to end interlaced with untruths, fabrications, half- truths and evasions.

[3] The difficulty in a situation like this is that it's impossible to find in that testimony what was true and what wasn't.

[4] I should say one thrust of the Appellant's case is that Revenue lost some of the documents that he had filed and some of the receipts or vouchers that he filed. In particular in 1989 it seems that some material may have been lost by Revenue but that doesn't explain the absence or the failure of the Appellant to produce any sort of documentary support for his case in subsequent years.

[5] In addition, still on the subject of credibility, I have to observe that the financial statements of the two supposed businesses carried on by the spouses, each as a proprietorship, seemed to me to be unworthy of belief. The explanations given by the Appellant for the apparent inconsistencies in the recording of stock in trade, I was simply unable to believe.

[6] The Appellant Mr. Bhaskaran tells a story that is inherently improbable. Basically he would have the court believe that in the case of each business the operations was carried on for years despite the absence of any sale at all.

[7] I cannot come to the conclusion that any business was carried on. In the case of Mrs. Bhaskaran, it is clear that there may have been some plants in the house. The business was supposed to have involved the acquisition for resale of tropical plants. Well, apart from the fact there were no resales and the plants seem to die at month end or year end for financial statement purposes, I simply cannot believe that the supposed business amounted to anything more than the keeping of plants in the Appellant's home in the hallway, on the balcony and even in a room.

[8] Mr. Bhaskaran's supposed arts and crafts business is said to have involved the purchase of goods for resale. Those purchases were supposed to have taken place in flea markets and bargain basements and like establishments. Again, this supposed business operation is supposed to have been carried on for years without a single sale.

[9] I find that the evidence with respect to both businesses is so contrived that I disbelieve much of it. I cannot concede that in either case anything approaching a commercial enterprise was carried on.

[10] The supposed losses of the supposed businesses were properly disallowed by Revenue, in my view.

[11] I turn next to the claims in the two cases for allowable business investment losses. Those losses seem to have been an attempt to deduct some amount relating to the stock and trade on hand at the time the supposed businesses were terminated.

[12] I cannot find that there was any disposition of either shares or debt which could fall within paragraph 39(1)(c) of the Income Tax Act and ultimately be treated as an allowable business investment loss so that branch of each of the two appeals must fail.

[13] It must be remembered that there were no shares because the businesses weren't incorporated.

[14] Next, rental losses. Again, the claims for rental losses must fail. There is no credible evidence that any rental operations were carried on by either Appellant with a reasonable expectation of profit. In neither case can I find that the supposed rental properties were sources of income. Even if there was anything approaching a source of income the rental operations seem to have involved relatives, non arm's length dealings. In at least one of the properties, claims to deduct capital amounts such as the legal fees on the purchase of the interest of the sister, even if there were some kind of apparent commercial rental operation the financial results of such operation are simply unproven. There is simply no credible evidence supporting any of the figures in either case.

[15] Mr. Bhaskaran is supposed to be a tax auditor. That's what he says. I cannot understand how a person with the training that Mr. Bhaskaran is supposed to have can either on his own behalf or his wife's come up with the sort of confused and uncertain picture painted by the evidence here.

[16] Carrying charges and interest expenses, again in both cases these expenses are deductible under paragraph 21(c) of the Income Tax Act. That provision requires, as a condition of the deductibility of interest, that the borrowed money be used for the purpose of gaining or producing income from business or a property. There is simply no credible evidence in this case as to the use of the supposed borrowed money. Again, relatives are involved as payees of some of the claimed carrying charges and interest expenses.

Who did what and for what purpose is a mystery in this case.

[17] The evidence is not credible. I repeat myself, it's appallingly unpersuasive. How airline tickets to Sri Lanka can have been charged in the case of Mr. Bhaskaran escapes me totally.

[18] Non refundable tax credits in the case of Ramesha Bhaskaran. In light of the fact that the net income of the Appellant's spouse exceeded the $5918 threshold level he isn't entitled to the credit in issue.

[19] For the foregoing reasons both appeals will be dismissed in their entirety.

-- Whereupon the hearing was concluded at 11: 19 a.m.

I HEREBY CERTIFY THE FOREGOING to be a true and accurate transcription of my shorthand notes to the best of my skill and ability.

M.J. CORCORAN, CSR
Computer-Aided Transcription

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