If project is abandoned them expenditure on product development is revenue expenditure

Last updated: 13 December 2022
Quick Summary
The Bombay High Court has ruled that if a company incurs expenditure developing a new product for its existing business, but later abandons the project, that expenditure can be treated as revenue expenditure. This means it can be deducted from taxable income in the year the project is abandoned. The court emphasised that the expenditure was part of the company's existing business operations and did not result in a new, enduring asset.

Court :
Bombay High Court

Brief :
THE BOMBAY HIGH COURT HAS RULED that the expenditure incurred on development of a new product, in respect of the same business already carried on by the assessee, which subsequently failed to come into existence and was abandoned, is eligible for deduction as revenue expenditure.

Citation :
Income Tax Appeal No. 640 of 2018

Daily Limit Reached

You have reached your daily limit of 2 Free Judgements

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?
  • No Ads
  • WhatsApp Broadcasts
  • Daily E-Newsletter
  • Unlimited Judgements Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
View all CCI PRO benfits

Already a PRO member? Login here for an ad-free experience.

 
Comments


Recent Judgments :

  1. Forest Development Tax Demand, Collection and Refund Subject to Final Outcome of Pending Cases
  2. SC : Extended Limitation Cannot Be Invoked Where Department Was Aware of Valuation Facts
  3. SC : Selling Shares While in Possession of UPSI Constitutes Insider Trading Even if No Profit Is Made
  4. SC : Laser Imagers Compatible with Machines Under Different Tariff Headings Classifiable Under CTH 9033
  5. Education Consultancy Services to Foreign Universities Not Intermediary Services; Refund of IGST on Export of Services Allowed
  6. Penalty Cannot Be Confirmed Beyond What is Specified in Statutory Form GST DRC-01
  7. Non-Supply of Field Visit Report Vitiates Rejection of Revocation Application
  8. Alternative Remedy before GSTAT to be Exhausted Despite Allegation that Adjudication Travelled Beyond SCN
  9. ITAT Jodhpur: AO Allows ₹2.61 Crore Deduction under Sections 54EC and 54F; Assessee's Appeal Dismissed as Infructuous
  10. CESTAT Revokes Suspension of Customs Broker Licence for Non-Compliance with Mandatory 15-Day Hearing Requirement

View More Judgments »


Trending Online Classes

view all classess

CCI Pro
Meet our CAclubindia PRO Members
Pro Member THUSHAR MURALI KRISHNATHUSHAR MURALI KRISHNAPro Member Somnath HegdeSomnath HegdePro Member HITESH PATELHITESH PATELPro Member DEEPAK BHARGAVADEEPAK BHARGAVAPro Member SANJAY GAIROLASANJAY GAIROLA
Subscribe to Pro
Join an elite circle of professionals

Browse by Category