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The ITAT upheld the assessee's consistent accounting method of claiming revenue expenditure deductions, rejecting the revenue's disallowance of 90% of such expenditure as ad-hoc. The Tribunal recognized that the expenditures were wholly and exclusively incurred for business purposes and linked to the project, which had not yet generated revenue. Consequently, these costs should be treated as part of project cost or inventory and not disallowed outright. The ITAT noted prior acceptance of this accounting approach by the revenue in earlier assessments, except for finance costs, and affirmed that the disputed deductions for the relevant years were allowable. The consistent application and recognition of these expenses as business expenditures entitled the assessee to the claimed deductions for the assessment year under appeal.
The ITAT upheld the assessee's consistent accounting method of claiming revenue expenditure deductions, rejecting the revenue's disallowance of 90% of such expenditure as ad-hoc. The Tribunal recognized that the expenditures were wholly and exclusively incurred for business purposes and linked to the project, which had not yet generated revenue. Consequently, these costs should be treated as part of project cost or inventory and not disallowed outright. The ITAT noted prior acceptance of this accounting approach by the revenue in earlier assessments, except for finance costs, and affirmed that the disputed deductions for the relevant years were allowable. The consistent application and recognition of these expenses as business expenditures entitled the assessee to the claimed deductions for the assessment year under appeal.
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