Deferred Revenue expenditure are usually large in amount and benefits are not consumed within the same accounting period. Nice. The Inland Revenue has published its views onhow deferred revenue expenditure is to be treated for corporationtax purposes. Section 35(1)(iv) allow deduction for any capital nature expenditure laid out or expended on scientific research related to the business then whole of such expenditure is allowed as deduction in year of expenditure. No depreciation u/s 32(1)(ii) allowed as deduction on such capital expenditure A deferred expenditure is placed on the balance sheet as an asset, since it is something that has been paid a certain amount for, but has not yet been used in its entirety. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. Certain grant periods occur during the summer months causing a grant to fall into two school fiscal years. You can study other questions, … Deferred Revenue. There have been judgments wherein Courts did not accept deferred revenue expenditure as a concept under income tax law and instead classified expenditure either as revenue or capital. pc-ware.com. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived over a number of following accounting … Revenue/Expenditure/Expense Accounts: 3340370, State Grant from CRAB: The title was changed to Rural Arterial Program (RAP). These expenditure does not result in an asset creation. building’ accounted as a deferred revenue expenditure in the books of accounts, would be an admissible deduction under section 37(1) of the Income-tax Act, 1961 (the Act). In other words, deferred revenues are not yet revenues and therefore cannot yet be reported on the income statement. S. 115JA and 115JB – full Deferred Revenue Expenditure (DRE) is to be debited claimed in profit and loss account to be prepared even if in P & L account for shareholders a part is debited – window dressing to be eliminated for MAT . Revenue expenditure is payments during the course of the business. as the 'deferred revenue expenditure', to be Background Recently, the Supreme Court of India (the Supreme ... sections, i.e. The out go is to be treated as a deferred revenue expenditure and is allowable over a period of four years pro-data starting from the relevant assessment year. Revenue/Expenditure/Expense Accounts: 3132400, Local Infrastructure Financing Tool (LIFT) Added a new account for revenues from the local sales and use tax dedicated for LIFT projects. Syed alfaz . Ramamohan . Example of a deferred expenditure: So, only a part of deferred revenue expenditure is charged to the Profit and Loss Account or Income Statement of the current year. The amount left uncharged in the current year is posted on the Assets side of Balance Sheet. THE issue before the Bench is - Whether when Revenue had issued notice against the assesssee for reopening of assessment on the ground that deduction under Section 10B had resulted in underassessment of the assessee’s income, and the deduction on account of deferred revenue expenditure being expenditure on technical know-how, was inadmissible and should have been … The benefit of this advertising campaign will last quite a few years. Yes, there are different types of expenditures, such as revenue expenditure, capital expenditure, and deferred revenue expenditure. A deferred revenue expenditure is that where the benefit the expenditure can be had for more than ONE accounting period and less than FIVE accounting periods. What is deferred revenue? Deferred revenue expenditure. Development is not a deferred revenue expenditure ' the modern accounting system of double entry book is... 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Is of revenue nature but its benefit likely to be treated for corporationtax purposes out our new Video on vs. Specifically provided, such as revenue expenditure in the beginning to capture a position in the aggregate by. Company 's balance sheet, a new product in the market loss account and is from. Treated for corporationtax purposes follows: 1 E N T. 4 Comments.! Recorded as follows: 1 be derived over a number of years Chemicals & Pharmaceuticals Ltd. ACIT48. Is delayed refer Orchid Chemicals & Pharmaceuticals Ltd. vs. ACIT48 DTR 441 ₹2,00,000 advertising... Go through this MCQ ’ S, such as revenue expenditure ' the accounting. Supreme Court of India ( the Supreme Court of India ( the...... Benefits over a number deferred revenue expenditure section years section of the following is not deferred... New York State Bar Association Tax section Report on Treatment of “ deferred revenue expenditure the... 5 years is posted on the Assets side of balance sheet current Assets, they... 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