Meaning of “Incurred in any previous year”

Case Name : Belpahar Refractories Ltd. Vs. CIT

Citation :[1994] 207 ITR 114 (ORI.)

Court : Orissa High Court

Section : 35

Meaning : The words ‘incurred in any previous year’ in clause (ia) of section 35(2) categorically lay down that the entire capital expenditure incurred in any previous year can be deducted for that previous year only. These words exclude the possibility of any confusion as to whether the capital expenditure incurred in any preceding year can be deducted in the previous year or not. The word ‘incur’ means to become liable to, e.G., To incur debt, loss, etc. When an expenditure is said to have been incurred, it may connote actual payment or it could be that the person concerned has merely become liable for payment but has not actually made payment. When a person has made advance payment but has not become liable for the payment, he cannot be said to have incurred any expenditure.