Deferred Revenue Expenditure – Kopran case- Madras Industrial Investment Decision of SC completely misconstrued
The Supreme Court in Madras Industrial Investment Corpn. Ltd. v. Commissioner of Income-tax (1997) 225ITR802 held that ordinarily, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred and it cannot be spread over a number of years even if the assessee has written it off in his books over a period of years. However, the facts may justify an assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year.
The scheme of s. 35 of the Income tax Act, 1961 provide for deduction upto 200% for research and development expenditure irrespective of whether capital or revenue in nature. However market research and promotional expenditure fall outside the ambit of R&D deductions so that these have to be claimed u/s 37. Unlike research and