2016 (2) TMI 353

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..... wing was for the purpose of business or profession. While examining the allowability of such deduction, the Assessing Officer is to consider the genuineness of the business borrowing and that the borrowing was for the purpose of business and not an illusionary and colourable transaction. It was further held that the amount would be said to have been paid even if same is not actually paid but incurred on the basis of method of accounting. It was further held and observed that there is no concept of deferred revenue expenditure in the Act except under certain specified sections where amortisation is specifically provided. Normally, the ordinary rule would be that the revenue expenditure incurred in a particular year is to be allowed in th .....

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..... the assessee during the accounting period relevant to the assessment year in question. Such expenditures pertained to information and technology, sales promotion, purchase of software and market research expenses. Total of such expenditures came to ₹ 1.67 crores (rounded off). The assessee however, debited only a portion thereof of ₹ 32.10 crores (rounded off) in the profit and loss account for the said year and deferred debiting such expenditure to the subsequent years. In the return, however, the assessee had claimed entire expenditure of ₹ 1.67 crores by way of deduction under section 37 of the Income Tax Act, 1961 ( the Act for short). The Assessing Officer disputed such claim. The assessee contended that the expendit .....

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..... atment that this expenditure should receive. The Tribunal also recorded that expenditure not being in the nature of capital expenditure, the same would be treated as Revenue expenditure and cannot be disallowed on the ground that the same would give an enduring benefit to the assessee. Reference was made to the decision of the Supreme Court in case of Kedarnath Jute Mfg. Co. Ltd. v. Commissioner of Incometax (central) Calcutta reported in (1971) 82 ITR 363(SC) to hold that mere accounting entries would not be conclusive of the nature of expenditure. 4. It is against this judgement of the Tribunal that the Revenue has filed this appeal. 5. We notice, as correctly pointed out by the parties, that the issue is squarely covered by the dec .....

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