CRA reassessed the taxpayer (ACI) on the basis that a receipt of $1.95 million which another company (AFT) had treated as a deductible management fee but which ACI had treated as a capital receipt from the disposition of a joint venture interest, was fee income to ACI. Following ACI's appeal of the reassessment, the Minister brought an application under s. 174 to determine which of the two characterizations was correct.
The s. 174 procedure was available. Pelletier JA found (contrary to Daruwala) that the posing of the s. 174 question "need not have arisen as a result of any doubt in the Minister's mind as to the position to be taken in assessing one or the other of the taxpayers" (para. 13) and that a sufficient motivation was to avoid "inconsistent decisions and inconsistent assessments between parties to a single transaction" (para. 16).