The cost of yarn that the taxpayer expended in the course of an R&D project qualified under both s. 37(7)(c)(ii)(A) and Regulation 2900(2)(c), notwithstanding that the yarn subsequently was sold. Bowman TCJ. stated (at p. 736) that "the word 'expenditures' is a reasonably comprehensible English word ... . It is something one spends, an outlay. No meaning of which I am aware, either in ordinary parlance or in decided cases, would justify adding after it 'net of sales proceeds'".
He went on to note in light of former s. 4(4) that as the expenditures qualified under s. 37, they could not also be deducted as the cost of sales under s. 9.