The assessee, engaged in providing digital and telecommunication services, had commenced commercial operations in F.Y. 2016-17 and during the relevant year had approximately 306.7 million subscribers and operational revenue of about ₹38,838 crore. It had capitalised operational and indirect expenditure of ₹1,10,03,17,60,701 under CWIP in its books pursuant to its accounting policy relating to achievement of prescribed Quality of Service parameters, but claimed the expenditure as revenue expenditure for income-tax purposes. The Assessing Officer disallowed the entire expenditure, treating it as capital expenditure on the ground that it was capitalised in the books and related to improvement/upgradation of network infrastructure. The Tribunal held that accounting treatment could not determine the character of expenditure under the Income-tax Act. The expenditure was incurred in the course of an already established and revenue-generating business, and the Assessing Officer had not identified any specific capital asset brought into existence or demonstrated that the expenditure resulted in enlargement of the fixed profit-making apparatus. Following the Tribunal’s decision in the assessee’s own case for A.Y. 2018-19 and the decisions in Reliance Footprint Ltd. and Reliance Fresh Ltd., the Tribunal held that recurring operational expenditure remained revenue expenditure notwithstanding its capitalisation in the books and upheld the deletion of the disallowance. (AY. 2019-20) (ITA No. 3540/Mum/2026 dt. 21-08-2026)