SR&ED claims of the taxpayer for various projects had been denied. The Crown now sought to amend its Reply to allege that the work conducted was in the field of psychology rather than dermatology and make related submissions. Jorré J. referred (at para. 10) to the statement in Pomeroy Acquireco that “[t]he controlling principle is that an amendment should be allowed at any stage of an action if it assists in determining the real questions in controversy between the parties, provided it would not result in an injustice not compensable in costs and that it would serve the interests of justice.”
In rejecting the submission of the taxpayer that these amendments “would deprive [it] of its right to rely on the specific approach taken by the auditors and appeal officers” (para. 15), Jorré J stated (at paras. 19, 20):
[T]he ultimate issue on an appeal is: whether the amount of tax is too high, not the process or reasoning by which it was reached? …
[N]either party is bound by their approach prior to the court appeal.
Regarding the statement in Continental Bank ([1998] 2 SCR 298) that “[t]he Crown is not permitted to advance a new basis for reassessment after the limitation period has expired,” Jorré J found (without need to refer to s. 152(9)) that (para. 28):
In this case, based on the pleadings, the foundation or main constitution element of the assessment is that certain activities do not constitute scientific research or experimental development within the meaning of the Income Tax Act. The proposed amendments involve adding factual allegations in support of that. The proposed amendments do not constitute a new or additional basis of assessment.