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The DCIT 5 (1) (2) , Mumbai Versus M/s C.S. Business Services P. Ltd.,

2017 (2) TMI 677 - ITAT MUMBAI

Addition 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 expend .....

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liated/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. Mahaj .....

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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. - ITA No. 184/MUM/2015 - Dated:- 31-1-2017 - SHRI JASON P. BOAZ (AM) AN .....

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d on 08/01/2015 and fixed for hearing on 17/08/2016, notice was sent to the assessee/respondent on 22/07/2016 to appear on 17/08/2016. However, none appeared on behalf of the assessee and fresh notice was accordingly issued for 18/10/2016. On 18/10/2016 none appeared on behalf of the assessee and notice through departmental representative was issued for 08/12/2016. On 08/12/2016 again notice by RPAD was issued for 16/01/2017, however, none appeared on behalf of the assessee. From the conduct of .....

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the case are that the assessee company engaged in the business of Management Consultants, filed its return of income declaring the total income of ₹ 57,66,655/-. The return was processed u/s 142(1) and after scrutiny assessment order u/s 143(3) of the Act, was passed determining the total income of the assessee at ₹ 98,50,330/- after making additions of ₹ 1,96,133/- i.e. 50% of the expenses on recruitment claimed by the assessee, making disallowance of ₹ 7,82,474/- and &# .....

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ecting the Assessing Officer to delete the addition made on account of (1) Recruitment expenses amounting to ₹ 1,96,133/- (2) SOX compliance testing expenses amounting to ₹ 7,82,474/- (3) ISAP award expenses amounting to ₹ 28,09,009/- treating the same as revenue expenses whereas the same is enduring in nature and is capital expenditure. 5. Before us, the Ld. DR relying on the assessment order submitted that the Ld. CIT(A) has wrongly deleted the additions made by the AO. The A .....

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hese expenses are capital in nature because they have created benefit of enduring nature, accordingly, by applying the ration of the case of M/s. Brooke Bond India Ltd.(Supra) the A.O has disallowed 50% of recruitment expenses and 100% of SOX compliance testing expenses and ISAP awards to the director. On the other hand, it is the claim of the appellant that the expenses of all the three heads are regular routine expenditure which are revenue in nature. The appellant has submitted that the recru .....

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isclosed by the said director as income from salary. Therefore, it was contended that none of the expenditures in question qualifies for the test laid down by the Apex Court for holding an expenditure as capital expenditure. After considering the rival submissions as well as the nature, frequency and quantum of the expenditures in question, I agree with the contention of the appellant that none of the expenditure appears to be of capital in nature because they have been incurred on regular routi .....

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ion of capital base or creation of assets. Such expenses are routine expenses of revenue nature which deserves to be allowed. The additions on this account are directed to be deleted. 7. The first ground of appeal relates to addition of recruitment expenses to the income of the assessee. After having gone through the material on record including the contention of the assessee, we find merit in the contention of the assessee, made before the authorities below that the recruitment expenses is the .....

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over, 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. Ground No 2 relates to expenditure on compliance of Sarbans Oxley Act, 2002 (SOX). 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 un .....

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