Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1990-91 - Whether revenue expenditure, which is incurred wholly and exclusively for purpose of business, must be allowed in its entirety in year in which it is incurred even if assessee has written it off in his books over a period of a number of years - Held, yes Section 254, read with section 250, of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Whether there is no prohibition on powers of Tribunal to entertain an additional ground which according to Tribunal arises in matter for just decision of case - Held, yes FACTS The assessee-company, engaged in the business of manufacture and marketing of springs and springs leaves required for the automobile industry, incurred certain expenditure on account of customer introduction charges which were debited as deferred revenue expenses in the balance-sheet. The expenditure was written-off over a period of five years starting from the relevant assessment year and, accordingly, the assessee claimed deduction of 1/5th of the said expenses. The claim was allowed by the Assessing Officer. However, in the appeal before the Commissioner (Appeals) against the assessment order, the assessee, by way of an additional ground, claimed entire deferred revenue expenses in the relevant assessment year. The Commissioner (Appeals) allowed the appeal. On the revenue's appeal, the Tribunal, however, restored the matter to the Assessing Officer to consider the issue after examining details. The Assessing Officer again disallowed the claim holding that same was not claimed in the return of income. The Commissioner (Appeals) allowed the assessee's appeal holding that the Assessing Officer had erred in disallowing the deduction on the sole ground that no claim for deduction of that amount was made in the return of income. The Tribunal upheld the order of the Commissioner (Appeals). On appeal, the revenue contended that the Tribunal was not right, in law, in allowing deduction in the assessment year under consideration when no such claim was made by the assessee in the return of income. On appeal : HELD The revenue expenditure,…

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