TMI Blog2018 (5) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... s in question have been incurred on hotel stay, food charges, laundry charges etc. of two employees during their stay in Mumbai. Further, expenses of ₹ 1,03,316/- have been incurred towards octroi charges of car of the employee, transporting of goods of the employee, brokerage charges for taking new flat on rent etc. Since the expenses are related to relocation process of the office, following the decision of the Hon’ble Patna High Court in the case of Jamshedpur Engineering and Machine Manufacturing Company Limited (supra), the expenses are held to be in the nature of capital, and accordingly, we uphold the decision of the Ld. DRP on the issue in dispute. The ground of the appeal of the assessee is accordingly dismissed. Disallowance u/s 40(a)(ia) - non-deduction of tax at source on communication expenses and advertisement expenses - Held that:- The plea of the assessee of reversal of entry in respect of communication charges has been made first time before the Tribunal and need verification by the Assessing Officer in the light of books of account, financial statements of the assessee for the year under consideration. Similarly, the claim of deduction of tax at source an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both on facts and in law, in confirming the addition of communication expenses amounting to ₹ 98,720/- to the income of the appellant, which represented the reversal of a provision claimed as not chargeable to tax. The said provision was made in an earlier year and voluntarily disallowed in the return of income of that year. 5. The Ld. DRP erred, both in facts and in law, in confirming the addition of advertisement charges amounting to ₹ 2,79,243/- claimed allowable under Section(a)(ia) of the Act after deducting and depositing appropriate TDS thereon. 6. The Ld. AO erred on facts in levying interest under Section 234B of the Act at an excessive amount. 3. Briefly stated facts of the case are that the assessee filed return of income on 30/11/2006, declaring total income of ₹ 3,83,42,649/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short the Act ) was issued and complied with. During assessment proceeding, the Assessing Officer referred determination of arm s length price of the international transaction carried out by the assessee to the Transfer Pricing Officer (TPO), who proposed adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Company Limited, (1986) 157 ITR 730. In the said case, the issue of shifting expenses was held by the Assessing Officer as capital in nature as against revenue expenditure claimed by the assessee. The question of law raised in said case was as under: Whether, on the facts and in the circumstances of the case, the expenses incurred in shifting the headquarters of the company to West Bengal are capital expenditure or revenue expenditure? 4.3 The Hon ble High Court after considering the facts of the case and the various decisions of the Hon ble Supreme Court, held that shifting of the registered office was of enduring benefit to the assessee, and therefore the expenditure was in the nature of capital expenditure. The relevant finding of the Hon ble High Court is reproduced as under: 5. The instant reference has to be answered on the basis of the ratio for the Supreme Court in the case of Sitalpur Sugar Works Ltd. vs. CIT (1963) 49 ITR 160 (SC). In that case, the sugar factory at Sitalpur in the district of Chapra had been shifted to Garaul in the district of Muzaffarpur. A total expenditure of ₹ 3,19,766 was incurred on account of shifting of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ever, the expenditure would be capital in nature. In the instant case as well, the advantages of shifting were to last for ever. Whether there was shifting of the factory or shifting of the head office was inconsequential. The distinction attempted to be made is more ethereal than real. 8. Learned counsel for the assessee also submitted that shifting of the head office was incidental to the business of the factory and, therefore, the expenditure incurred on account of shifting must be treated to be of revenue nature. It is true that it is connected with the business of the factory but a distinction has been made in regard to the expenses which are of enduring nature and the activities which are of recurring nature. In the instant case, we have no doubt that the advantages from the shifting of the head office, for the reasons indicated in the order of the AAC, were of enduring nature. The Tribunal was, therefore, not justified in allowing legal expenses as they were not revenue expenditure in nature. 9. For the reasons stated above, in our view, the Tribunal was not justified in allowing the deduction of legal expenses over the shifting of the headquarters desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the business activity of the assessee and these one time expenses are towards creating a new office. Accordingly, we do not find any infirmity in finding of the Ld. DRP in upholding the same as capital expenditure and accordingly, we uphold the same. 4.6 As regards the relocation expenses on employees, on perusal of pages 30 to 55 of the Paper Book, we find that expenses in question have been incurred on hotel stay, food charges, laundry charges etc. of two employees during their stay in Mumbai. Further, expenses of ₹ 1,03,316/- have been incurred towards octroi charges of car of the employee, transporting of goods of the employee, brokerage charges for taking new flat on rent etc. Since the expenses are related to relocation process of the office, following the decision of the Hon ble Patna High Court in the case of Jamshedpur Engineering and Machine Manufacturing Company Limited (supra), the expenses are held to be in the nature of capital, and accordingly, we uphold the decision of the Ld. DRP on the issue in dispute. The ground of the appeal of the assessee is accordingly dismissed. 5. The ground Nos. 4 and 5 relate to disallowance of ₹ 98,720/- and ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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