The term loan of Rs. 5,00,000 was received from IFCI. It was used as under:
I. Rs. 2,00,000 was advanced to suppliers for capital work-in-progress
II. Rs. 3,00,000 was used for financing the working capital
The interest payable would be treated:

A. on both I and II as capital expenditure

B. on I as capital expenditure and on II as revenue expenditure

C. on I as deferred expenditure and on II as revenue expenditure

D. on I as deferred revenue expenditure and on II as capital expenditure

Answer: Option B