Apollo Tyres Ltd. v ACIT (ITA No. 223/Coch/2015 dated 10.01.2017) Deferred revenue expenditure allowed in year of incurring Facts: During the year, the assessee had claimed prepaid expenses amounting to Rs. 5,15,34,726 which comprises of – Insurance expense of Rs. 96,12,402/-, – Interest expenses of Rs. 1,54,19,700, – Rent expenses of Rs. 1,83,501/- and – General expenses of Rs. 2,63,19,123/- in the nature of employee mediclaim and other expenses. According to the A.O, the said expenses were not related to the income earned during the year under consideration and were therefore, disallowed. The DRP concurred with the findings of the Draft Assessment Order and held that the claim of deduction which does not pertain to the relevant accounting year distorts the income of that year. The assessee argued that the expenses included under the head prepaid expenses are revenue in nature. The said expenditure has not resulted in acquisition of a capital asset to the assessee and therefore, is an allowable deduction.