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2016 (2) TMI 631 - HC - Income TaxExpenses allowable as revenue expenditure u/s 37 - assessee has treated the same as deferred revenue expenditure - Held that:- The issue is squarely covered by the decision of Supreme Court in case of Taparia Tools Ltd. v. Joint Commissioner of Income tax reported in (2015 (3) TMI 853 - SUPREME COURT ) wherein held the assessee had issued non convertible debentures in which option was given to the subscribers to receive interest periodically over a period of debenture or one time lumpsum payment of lower amount payable immediately. The one time payment of interest was however, shown by the assessee in the books as deferred expenditure to be written off over the entire period of debentures. The assessee 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 paid but incurred on the basis of method of accounting. It was further held and observed that there is no concept of deferred revenue expenditure in the Act except under certain specified sections where amortisation is specifically provided. Normally, the ordinary rule would be that the revenue expenditure incurred in a particular year is to be allowed in that year. If the assessee claims the expenditure in the year when the same was made, the department cannot deny it. - Decided in favour of assessee
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