Expenditure incurred for construction of a new facility and subsequently abandoned at Work-in-progress stage is allowable as Revenue Expenditure

Last updated: 20 December 2022

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The Income Tax Appellate Tribunal (ITAT) has ruled that expenditure incurred on a new facility that was abandoned during the work-in-progress stage can be claimed as revenue expenditure. This decision overturned the Assessing Officer's addition to the company's income, confirming that such costs are allowable in the year they are written off.

Court :
ITAT Hyderabad

Brief :
The Income Tax Appellate Tribunal, Hyderabad ("the ITAT") in DCIT v. Omega Shelters Pvt Ltd [I.T.A. No. 612/Hyd/2017 dated October 31, 2022] held that expenditure incurred for construction of a new facility and subsequently abandoned at work-in-progress stage is allowable as Revenue Expenditure.

Citation :
I.T.A. No. 612/Hyd/2017 dated October 31, 2022

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1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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