2007 (11) TMI 619 - HC - Income Tax

Summary

Issues involved: Tax case appeals against the order of the Tribunal regarding pre-project expenses for assessment years 1994-95 and 1999-2000.

For assessment year 1994-95: The assessee, Tamilnadu Industrial Investment Corporation Ltd., claimed to write off pre-project expenses for 13 projects in joint venture. The assessing officer disallowed the claim as premature since the projects were yet to come up. Commissioner (Appeals) confirmed the disallowance. The Tribunal, following a previous court decision, held in favor of the assessee, stating that the expenses were allowable as revenue expenditure as they were incidental to the business of promoting new ventures.

For assessment year 1999-2000: The assessee made a similar claim for pre-project expenses, which was allowed by the assessing officer. The Commissioner (Appeals) considered an expenditure on an unsuccessful project written off, but concluded that the issue did not survive as the assessing officer had not made a disallowance as represented by the assessee. The Tribunal, again following the previous court decision, held in favor of the assessee.

Conclusion: The High Court dismissed the appeals, stating that the case was squarely covered by the previous court decision, which held that such expenses were allowable as revenue expenditure. No costs were awarded, and the connected miscellaneous petition was also dismissed.