Revenue Expenditure

Assessment made by Assessing Officer was found erroneous and prejudicial to the interest of revenue, on the ground that the mark-up claimed on borrowed capital for expansion of the plant, was capital expenditure, and could not be reduced from taxable income

Such assessment order was annulled by Appellate Authority below, and department had filed appeal before Appellate Tribunal

Contention of Departmental representative was, that as assessee company had itself declared the mark-up on the loan borrowed for expenditure in the capital account, as per audited accounts, company was not entitled to claim its direct deduction while computing the income as revenue expense

Contention was repelled, as in the audited accounts, the entries were recorded on the basis of "International Account Standards (IAS)", whereas in the income tax return, the entries were recorded in accordance with income tax law and procedure

Under International Account Standards, mark-up payable to the bank, could be capital expenditure, but under the Income Tax Law, that could be claimed as a revenue expenditure.