Allowing the appeal of the assessee the Court held that ;assessee which is engaged in business of manufacture of PVC, caustic soda and business of shipping , started a textile business. As the project did not materialize abandoned the project and expenditure incurred on abandoned project is held to be as revenue expenditure ,since new venture was managed from common funds, control over all business units was in hands of assessee and there was unity of control, it could not be said that pre-operative expenditure was incurred by assessee on a new line of business. (AY. 2000-01)
Chemplast Sanmar Ltd. v. ACIT (2018) 258 Taxman 297/ ( 2019) 412 ITR 323 (Mad.)(HC)
S. 37(1) : Business expenditure –Capital or revenue- Manufacture of PVC and caustic soda and business of shipping , starting textile business- Abandoned project – Manufacture of New venture was managed from common funds, control over all business units and there was unity of control, it could not be said that pre-operative expenditure was incurred on a new line of business- Held to be allowable as revenue expenditure.