This case is a dispute over the deductibility of expenses paid. The Crown said these were either for the purchase of shares or excessive and prohibited by ITA ss. 18(1)(a) and 67. The Court did not find the Appellant’s witnesses credible.
The Crown had accepted, based on wrong information that it had from the Appellant, that the inter-company agreement that provided for the expensed payment had been signed on the date shown, at least a year before the evidence at the hearing showed it was in fact signed. The Appellant said the Court was bound to accept the admissions in the pleadings. The Court disagreed:
[42] Secondly, and more importantly, this Court is not bound by false facts pleaded by the Appellant. In Hammill v The Queen, 2005 FCA 252, 2005 DTC 5397, Noel J.A., in refuting the submission by the appellant’s counsel therein that the Court was bound by the facts as admitted, stated at paragraph 31:
31 In an appeal against an assessment under the Act, the outcome does not belong to the parties. Public funds are involved and the Tax Court is given, in the first instance, the statutory mandate to confirm or vary the assessment based on the facts, proven or admitted. In this respect, while the Court will not generally look behind a formal admission, the parties cannot by agreement dictate the outcome of a tax appeal. The Tax Court is not bound by an admission which is shown, through properly tendered evidence, to be contrary to the facts.
Edison Transportation, LLC v. The Queen 2016 TCC 80 (Pizzitelli J.)