Phased amortisation of branch set-up cannot be accelerated on closure absent statutory authority.

Where branch-setting expenditure had been consistently amortised over ten years and accepted by the Department, closure of the branch did not create any legal basis to accelerate the remaining deduction. In the absence of a statutory provision permitting immediate write-off, the unabsorbed balance had to continue to be apportioned over the remaining years along with the other carried forward expenditure. The claim for full deduction in the year of closure was therefore rejected, and amortisation over the balance period was sustained in favour of the Revenue.

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Issues: Whether the unabsorbed expenditure incurred for setting up a branch could be claimed in full in the year of closure of that branch, instead of continuing to be amortised in equal instalments over the remaining years.

Analysis: The assessee had adopted a consistent accounting practice of spreading the initial branch and head-office expenditure over ten years. The closure of one branch did not create any legal basis for accelerating the deduction of the balance amount in the year of closure. No provision in the Act permitted the entire expenditure incurred for setting up the branch to be claimed at once merely because the branch had been closed. Since the assessee had already followed a phased write-off method accepted by the Department, the remaining unabsorbed expenditure was required to be apportioned over the balance period along with the other carried forward expenditure.

Conclusion: The claim for immediate deduction of the unabsorbed branch expenditure in the year of closure was rejected, and the Tribunal's view sustaining amortisation over the remaining years was upheld in favour of the Revenue.

Ratio Decidendi: Where a business expenditure for setting up a branch has been accepted as deductible by way of phased amortisation, closure of that branch does not entitle the assessee to claim the balance expenditure in full in the year of closure absent a statutory provision permitting such acceleration.

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