|CORAM:||A.K. Sikri J., Rohinton Fali Nariman J.|
|CATCH WORDS:||deferred revenue expenditure, matching concept|
|DATE:||March 23, 2015 (Date of pronouncement)|
|DATE:||March 24, 2015 (Date of publication)|
|FILE:||Click here to view full post with file download link|
|S. 36(1)(iii)/ 37(1): Normally revenue expenditure incurred in a particular year has to be allowed in that year and if the assessee claims that expenditure in that year, the Department cannot deny the same. Fact that assessee has deferred the expenditure in the books of account is irrelevant. However, if the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of 'Matching Concept' is satisfied|
U/s 36(1)(iii) when the interest was actually incurred by the assessee, which follows the mercantile system of accounting, the assessee would be entitled to deduction of full amount in the assessment year in which it is paid. The High Court wrongly applied the “Matching Concept” to deny the deduction of the upfront interest payment in the first year.