Idea Cellular Ltd. v Addln CIT (ITA No 3260 & 3493 (MUM.) OF 2008 dated13.05.2014) – Mumbai ITAT Background: The assessee has incurred expenses on abandoned project of Rs. 3,94,75,619. The assessee was required to put up cell-sites for enabling its business. In certain cases the assessee had incurred expenses for putting up cellsites but this could not be completed and were therefore, abandoned. The assessee claimed that the expenses were incurred for the purpose of its business and, therefore, is allowable as business expenditure. The AO disallowed the claim of the assessee on the ground that the expenditure has been spent by the assessee on sites to bring into existence the new asset and new source of income. Accordingly the AO held that the loss incurred due to abandonment of project, is capital in nature and accordingly disallowed the deduction claimed by the assessee. On appeal, the CIT(A) has concurred with the view of the AO and held that the expenses incurred on cell sites were definitely capital expenses, when such a project is abandoned, the entire expenditure incurred is a capital loss.