Case Law Details
CIT Vs M/s. Oberon Edifices & Estates (P) Ltd (Kerala High Court)
Hon’ble High Court of Kerala which held that an expenditure to be incurred in future in respect of a liability that accrued during the related accounting would be eligible for a deduction.
in order to claim deduction of business expenditure, it is not necessary that the amount has been actually paid or expended during the relevant accounting year itself. It is sufficient that the liability for payment had incurred or accrued during the relevant accounting year. The actual payment of amount or discharge of liability may occur in future. What is crucial is the accrual of liability for payment or expenditure during the relevant accounting year. But, a contingent liability that may arise in future, cannot be treated as expenditure.
In the instant case, the revenue has no case that the sale deed executed in respect of the building did not provide that the assessee was liable to complete the construction of the building. The Tribunal was right in confirming the finding of the appellate authority that, the expenditure incurred by the assessee company during the financial years subsequent to the sale of the building, is eligible for deduction in computation of taxable income.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
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