Accrued development expense liability held deductible; contingent liability treatment rejected on the assessee's facts.

Estimated development expenses were treated as a liability in praesenti, not a contingent liability, because the obligation had accrued and was deductible. Applying the earlier ruling in the assessee's own case, the HC upheld the Tribunal's allowance of the development expenditure and rejected the revenue's disallowance. The legal position affirmed was that an accrued liability for development expenses can qualify as a deductible expense when the obligation is present and not merely contingent.

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Issues: Whether the development expenses claimed by the assessee represented a contingent liability or a liability in praesenti, and whether the amount disallowed by the revenue was allowable as a deduction.

Analysis: The reference was decided by following the earlier ruling on the same assessee's case, which had held that the estimated liability for development expenses was not contingent but had accrued as a present liability and was therefore deductible. On that basis, the Tribunal's view allowing the development expenses was upheld.

Conclusion: The question was answered in the affirmative and against the department; the disallowance was not sustained.

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