Appeal partly allowed, relocation expenses disallowed as capital expenditure. Communication, advertisement expenses remanded for verification. Decision on 25th April 2018.

The Tribunal partly allowed the appeal, upholding the disallowance of relocation expenses as capital expenditure. The issues concerning communication and advertisement expenses were remanded to the Assessing Officer for further verification. The decision was rendered on 25th April 2018.

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Issues Involved:
1. Disallowance of relocation expenses.
2. Disallowance of communication expenses.
3. Disallowance of advertisement expenses.
4. Levying of interest under Section 234B of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Disallowance of Relocation Expenses:

The assessee contested the disallowance of Rs. 3,78,390/- as capital expenditure. The expenses included Rs. 1,53,283/- for relocating two employees and Rs. 2,25,107/- for relocating fixed assets like UPS and printers. The assessee argued that these were normal business expenses without enduring benefits, referencing the Supreme Court decision in Empire Jute Company Limited (1980) 124 ITR 1. However, the Assessing Officer and the Dispute Resolution Panel (DRP) treated these expenses as capital expenditure, citing the Patna High Court decision in CIT Vs. Jamshedpur Engineering and Machine Manufacturing Company Limited (1986) 157 ITR 730, which held that shifting expenses of enduring nature are capital expenses. The Tribunal upheld this view, noting that the expenses provided a benefit of a centrally located office, thus of enduring nature.

2. Disallowance of Communication Expenses:

The assessee claimed a deduction of Rs. 98,720/- for communication expenses, which was disallowed in the previous year under Section 40(a)(ia) for non-deduction of TDS. The assessee argued that the entry was reversed in the current year, thus eligible for deduction. However, the Assessing Officer and DRP found no evidence of TDS deduction and payment. The Tribunal remanded this issue to the Assessing Officer for verification of the reversal entry and related documents.

3. Disallowance of Advertisement Expenses:

The assessee claimed a deduction of Rs. 2,79,243/- for advertisement expenses, asserting that TDS was deducted and paid in the current year. The Assessing Officer and DRP found no evidence supporting this claim. The Tribunal remanded this issue to the Assessing Officer for verification of TDS deduction and payment from the TDS returns and enclosures filed by the assessee.

4. Levying of Interest under Section 234B:

This issue was not detailed in the judgment text provided, so no specific analysis is available.

Conclusion:

The appeal was partly allowed for statistical purposes. The Tribunal upheld the disallowance of relocation expenses as capital expenditure. The issues regarding communication and advertisement expenses were remanded to the Assessing Officer for verification. The decision was pronounced in the open court on 25th April 2018.

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