Query - Deferred Advertisement Expenditure

Query:

A Pvt Ltd company made a huge advertisement exp to promote its new branch. it treated it as deferred revenue expenditure in books of accounts for a period of three years. but for the purpose of Income Tax it treated it as revenue exp in one year.. is this allowable in INCOME TAX ACT as we as COMPANY ACT.

Best Answer:

In income tax there are only two types of expense either revenue or capital. As such there is no concept of deferred revenue in income tax. The entire advt. expense would be allowable if it is incurred for business purpose & incurred during the year.