Cost incurred in abandoned projects should allowed as revenue expenditure

In Red Chillies Entertainment Pvt. Ltd. Vs Asstt. Commissioner of Income Tax, ITAT Mumbai held that the very fact that the assessee abandoned the projects goes to prove that the projects were not found to be viable or workable. Therefore, keeping in view the business interest, the assessee decided to abandon the projects. In fact, in the CBDT circular no.16 of 6th October 2015, the Board has clearly stated that cost incurred in abandoned projects should be allowed as revenue expenditure under section 37 of the Act. In view of the aforesaid, we allow assessee’s claim of deduction.

Article referred: http://taxguru.in/income-tax/red-chillies-entertainment-pvt-asstt-commissioner-income-tax-itat-mumbai.html#sthash.Qlrad9gT.dpuf

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