Balance-sheet reclassifications arising from capitalisation of...

Balance-sheet reclassifications arising from capitalisation of project expenditure and reversal of duplicate entries do not, by themselves, create taxable income. Transfer of Capital Work-in-Progress or pre-operative expenditure to fixed assets is characterised as a balance-sheet movement rather than revenue expenditure where no debit is made to the Profit and Loss Account and no deduction is claimed in computing income. A reduction in an asset account cannot support an addition merely from a numerical difference; taxability requires examination of corresponding ledger entries and a demonstrated charging or deeming basis, taxable benefit, remission, or inadmissible expenditure. The notes state that the Revenue's additions were deleted on these grounds.