TaxTMI 
TaxTMI 
2014 (8) TMI 1068
X X X X Extracts X X X X
X X X X Extracts X X X X
....al was right in law in holding that the appellant was not entitled to the deduction of Rs. 1,07,12,452/- being the deferred interest liability especially when the appellant had not claimed the deduction of the same in the previous year and when the same was attributable to the value of the stock of food grains not sold in the previous year but sold in the relevant assessment year? 2. Whether on the facts and circumstances of the case, the Tribunal was right in law in disallowing the claim of deduction of the deferred interest liability relating to the stock of food grains purchased, during the previous assessment year but sold during the relevant assessment year especially when this method of accounting was consistently been followed?" 2.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue expenditure. Such deferred revenue expenditure was, however, being claimed in the next year along with the interest as actually debited to the Profit and Loss Account for the said next year. From the Assessment Year 1985-86, however, the assessee discontinued the above practice and no deferred revenue expenditure was being carried forward in the balance sheet. So far as assessment year 1985-86 is concerned, the assessee claimed the entire expenditure for the said year as well as the deferred revenue expenditure which was brought forward from the earlier year. The Appellate Commissioner was of the view that as the deferred revenue expenditure was not claimed in the assessment for the assessment year 1984-85, the same should not be allowed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....system in which the claim of interest deduction was made only in respect of the goods sold. The claim in respect of unsold goods was carried forward. But from 1985-86, they have changed the accounting pattern and adopted mercantile accounting in which year the entire claim of interest whether goods were sold or not was claimed during as the deferred claim of interest of the previous year. When an assessee changed over to the new system, for one year, there is no double benefit which has accrued to the assessee. All the three authorities have not considered this aspect of the matter and committed a serious error in not allowing the deductions. 4. Per contra, learned Counsel appearing for the revenue submitted that when once the assessee swi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctually paid out. It covers a liability which has accrued or which has been incurred although it may have to be discharged at a future date. However, a contingent liability which may have to be discharged in future cannot be considered as expenditure." 7. The Gujarat High Court in the case of COMMISSIONER OF INCOME TAX VS. STANDARD RADIATORS (P) LTD., reported in (2006) 286 ITR 207 (GUJ) at para 8 held as under:- "8. During the year under consideration, because the assessee switched over from cash system of accounting to mercantile system of accounting, it appeared that the assessee had claimed double deduction: one on the basis of cash payment, and another on the basis of mercantile system of accounting, namely, provision made. However, ....