MAHANAGAR GAS LIMITED,MUMBAI vs. ASSISTANT DIRECTOR OF INCOME TAX, CPC

ITA 1694/MUM/2024Status: DisposedITAT Mumbai17 December 2024AY 2021-22Bench: JUSTICE (RETD.) SHRI C.V. BHADANG (President), SHRI B.R. BASKARAN (Accountant Member)1 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that expenditure incurred on abandoned projects, which represent an expansion of the existing business and do not result in the creation of a new asset of enduring benefit, is allowable as a revenue expenditure. The disallowance made by the revenue authorities was therefore incorrect.

What were the facts?

The assessee, engaged in gas distribution, incurred expenses on laying new pipelines, initially booked as 'work in progress'. Some projects were abandoned mid-way, and the assessee claimed the written-off expenditure as a business deduction. The revenue authorities disallowed this claim, treating it as capital expenditure.

What were the issues?

Whether expenditure incurred on abandoned projects for expansion of existing business is revenue or capital expenditure.

Which sections of the Income-tax Act were involved?

Section 37(1)

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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: JUSTICE (RETD.) SHRI C.V. BHADANG & SHRI B.R. BASKARAN

PER B.R. BASKARAN, A.M :

The assessee has filed both the appeals and both relate to the Assessment Year (AY.) 2021-22. The appeal numbered as ITA No.1694/Mum/2024 is directed against the order dated 28-02-2024 passed by the Ld.Addl/JCIT(A)-4, Bengaluru against the intimation issued u/s 143(1) of the Income Tax Act, 1961 („the Act‟). The appeal numbered as ITA No.505/Mum/2024 is directed against the order dated 08-12-2023 passed by the Ld.CIT(A)-NFAC, Delhi against the assessment order passed u/s.143(3) of the Act. The issue urged in both the appeals is identical in nature, viz., the disallo

The order continues below.

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