TaxTMI 
TaxTMI 
2016 (2) TMI 631
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....red revenue expenditure?" Under similar circumstances, Revenue's appeal being Tax Appeal No.96/2007 came to be dismissed in the following manner : "1. The Revenue's tax appeal has been admitted for consideration of the following substantial question of law : "Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) directing to allow the expenditure claimed by the assessee against 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 co....
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....laim of the assessee which was in conflict with its own accounting treatment given to the expenditure, was not allowable. 3. CIT(Appeals) allowed the appeal of the assessee and reversed the decision of Assessing Officer on the issue upon which the Revenue filed appeal before the Tribunal. The Tribunal noted that the prime reason for the Assessing Officer to disallow the claim was the accounting treatment that the assessee had given to such 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 expenditu....
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....ssessee however, claimed the entire expenditure under section 36(1)(iii) of the Act during the year under consideration upon which the Revenue objected. The Supreme Court held that under section 36(1) (iii) of the Act any amount paid on account of interest becomes an admissible deduction if the same was paid on the capital borrowed by the assessee and the borrowing was for the purpose of business or profession. While examining the allowability of such deduction, the Assessing Officer is to consider the genuineness of the business borrowing and that the borrowing was for the purpose of business and not an illusionary and colourable transaction. It was further held that the amount would be said to have been paid even if same is not actually p....