Project expenditure deductible when uncertainty is removed and accounts are properly adjusted in the relevant year.

Project expenditure could be claimed in the accounting year 1975-76 where uncertainty initially existed as to whether the cost was incurred for the benefit of the Indian Dairy Corporation or the assessee, and that doubt was removed only on receipt of clarification. The expenditure was therefore properly brought into the accounts in that year, rather than being confined to the years in which it was originally incurred. On those facts, the Tribunal was justified in directing modification of the assessments in line with the assessee's accounts, and the Revenue's objection based on earlier-year incurrence failed.

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Issues: Whether the assessee was entitled to claim the project expenditure in the accounting year 1975-76 on receipt of clarification from the Indian Dairy Corporation, instead of being confined to the years in which the expenditure was originally incurred.

Analysis: The expenditure related to a scheme commenced earlier, but there was uncertainty as to whether it was incurred for the benefit of the Indian Dairy Corporation or the assessee until the clarification was received. On those facts, the claim could validly be made in the year in which the doubt was removed and the expenditure was brought into the accounts. The Tribunal was therefore justified in directing modification of the assessments in accordance with the assessee's accounts and in rejecting the Revenue's objection based on the earlier years of incurrence.

Conclusion: The assessee was entitled to claim the expenditure in the accounting year 1975-76, and the question was answered in favour of the assessee and against the Revenue.

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