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2017 (2) TMI 677 - AT - Income TaxAddition of recruitment expenses to the income of the assessee - Held that:- We find merit in the contention of the assessee, made before the authorities below that the recruitment expenses is the one time professional fees paid to the Recruitment Agency. Such expenditure is incurred in the normal course for running the business more professionally and efficiently. Therefore, the same does not fall within ambit of capital expenditure. Hence, there is no justification in disallowing 50% of expenditure incurred on payment of recruitment agency. The Ld. CIT (A) has accordingly, held that the expenditure is revenue in nature. Thus no infirmity in the impugned order. Moreover, it is not the case of the revenue that the assessee has claimed more than the actual expenses incurred. Hence, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Expenditure on compliance of Sarbans Oxley Act, 2002 (SOX) allowance - Held that:- As per the assessee the affiliated/associate enterprises of the appellant/assessee were based in United States and therefore, the provisions of SOX were applicable to the assessee during the assessment year under consideration. The assessee accordingly appointed M/s Mahajan & Aibara, Chartered Accountants, Mumbai to carry out SOX compliance audit. In view of the submissions of the assessee made before the authorities below, the Ld. CIT(A) has rightly held that the payment relates to the professional fees paid to M/s. Mahajan & Aibara, who were appointed to conduct SOX compliance at the service provider site of its group companies. The Ld. DR did not produce any case law to substantiate its contention. Hence, we concur with the Ld. CIT (A) and hold that the expenditure on compliance of provisions of SOX does not fall within ambit of capital expenditure. International Share Award Plan (ISAP) expenditure allowance - Held that:- The expenditure on ISAP awards incurred by the assessee is akin to salary paid to the employees for their services which cannot be treated as enduring benefit to the assessee. Moreover, the ISPA award is taxed in the hands of the director concerned. Therefore, the ISAP Award paid to Mr. Anupam Kashiv under the head ‘remuneration to directors’ cannot be treated as capital expenditure. In our opinion the Ld. CIT(A) has rightly held that ISPA award expenditure/expenses are routine expenses of revenue nature.
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