Binani Cement Ltd vs. CIT (Calcutta High Court)

DATE: March 23, 2015 (Date of pronouncement)
DATE: March 26, 2015 (Date of publication)
AY: -
FILE: Click here to download the file in pdf format
S. 37(1): Expenditure on an aborted capital project is revenue in nature & can be claimed as deduction in year of abandoning the project

(i) Expenditure made for construction/acquisition of new facility subsequently abandoned at the work-in-progress stage is allowable as incurred wholly or exclusively for the purpose of assessee’s business. It is revenue expenditure as it does not result in the acquisition of an asset or an advantage of an enduring nature;

(ii) The expenditure has to be claimed in the year in which the decision is taken to abandon the project. There would have been no occasion to claim the deduction if the work-in-progress had completed its course. Because the project was abandoned the work-in-progress did not proceed any further. The decision to abandon the project was the cause for claiming the deduction. The decision was taken in the relevant year. It can therefore be safely concluded that the expenditure arose in the relevant year.

One comment on “Binani Cement Ltd vs. CIT (Calcutta High Court)
  1. sad, how come revenue does not understand what is revenue expenditure?

    indian taxation is going to dogs…great indian taxation…what UPSC selection is of the taxmen.. it shows UPSC is appearing to be incompetent in recruiting job…may be indian government need to appoint Mc Kinseys perhaps, as Modi Atomic energy dept hindi translation of nuclear agreement is replaced by USA government version of Hindi translation.

    All these show we need taxation work need be outsourced from advanced countries as present taxation work simply causing terrible wastage of tax payers moneys…very sad spectacle!

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