Assistant Commr.Of I.T.Vadadara vs M/S Elecon Engineering Co.Ltd

The Supreme Court addressed the treatment of roll over premium charges under the Income Tax Act, 1961, specifically analyzing Section 36(1)(iii) and Section 43A. The Court held that roll over premium charges incurred by the assessee for foreign currency forward contracts are to be treated as revenue expenditure and thus allowable as a deduction, overturning the Tribunal's decision which mandated capitalization under Section 43A. The Court affirmed the Gujarat High Court's ruling that such charges are akin to interest or committal charges, allowing them under Section 36(1)(iii).