2003 (1) TMI 83 - BOMBAY HIGH COURT

"Whether, on the facts and circumstances of the case and in law, the Tribunal was right in holding that even though, the liability of payment of interest stood liquidated in the first year itself, such liability had to be allowed on a spread over basis over the life of the debentures?" - In this case, we are concerned with deferred revenue expenditure, which is a special type of asset. In this case, we are not concerned with the nature of profits. In this case, we are concerned with the ascertainment of true profits under the Income-tax Act and in order to ascertain such profits, we have to follow the true accounting principles and we have to apply those principles in the light of the method of accounting followed by the assessee. In cases involving special types of assets, where profits cannot be deduced by following the method adopted by the assessee, the Assessing Officer is free to make adjustments as done in this case. Lastly, as stated above, in this matter, we are concerned with computation of taxable income and, therefore, the true accounting principles will have to be taken into account.