2016 (2) TMI 353

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....t the disallowance of Rs. 1,35,86,571/in respect of deferred revenue expenditure, though not debited to the profit and loss account ?" 2. Briefly stated, the facts are as under. The respondent assessee is a company registered under the Companies Act and is engaged in the business of manufacturing Air conditioner. For the assessment year 19961997, the assessee's return was taken in scrutiny by the Assessing Officer. One of the issues which came up during such scrutiny assessment was with respect to various expenditures incurred by the assessee during the accounting period relevant to the assessment year in question. Such expenditures pertained to information and technology, sales promotion, purchase of software and market research exp....

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....uch expenditure. The same being in consonance with the accounting principles and the method of accounting rightly employed by the assessee, the claim of expenditure contrary to such accounting entires was not valid. The Tribunal in this respect recorded that it was not the case of the Revenue that expenditure was in the nature of capital expenditure. Thus being an expenditure in the nature of revenue expenditure, was allowable during the year of expenditure and accounting entries would not be decisive of the nature of treatment that this expenditure should receive. The Tribunal also recorded that expenditure not being in the nature of capital expenditure, the same would be treated as Revenue expenditure and cannot be disallowed on the groun....