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CIT vs. Manganese Ore India Limited (Bombay High Court)

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DATE: February 11, 2016 (Date of pronouncement)
DATE: February 22, 2016 (Date of publication)
AY: -
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CITATION:
S. 37(1): Expenditure in respect of a project which did not materialize has to be treated as revenue expenditure as not capital asset comes into existence

On the question was to whether if the project does not materialize and an asset is not created, expenditure on steps in that direction must be treated as capital expenditure or revenue expenditure, the Supreme Court in Commissioner of Income Tax vs. Madras Auto Service (P) Ltd., reported at (1998) 233 ITR 468 clinches the controversy. There while considering the issue, the Court finds that the assessee could not have claimed it as capital expenditure, as there was no capital asset generated by spending said amount. The expenditure has been held rightly classified as revenue expenditure.

(Commissioner of Income Tax vs. Shri Digvijay Cement Co. Ltd 159 ITR 253, Triveni Engineering Works Ltd. vs. Commissioner of Income-tax 232 ITR 639 referred)

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