2018 (5) TMI 943

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....bunal, we agree with the submission of the Ld. AR that ground Nos. 3 to 6 have remained to be adjudicated, while disposing of the appeal by the Tribunal. The same is rectified by directing to the Registry to fix the appeal for hearing only to the extent of adjudication and disposal of ground Nos. 3 to 6, after hearing the parties." 2. The ground Nos. 3 to 6 of appeal raised by the assessee are, reproduced as under: "3. Ld. DRP erred, both on facts and in law, in confirming the addition of relocation expenses amounting to Rs. 3,78,390/- to the income of the appellant holding that the expenditure incurred on relocation of two employees (Rs.1,53,283/-) and on relocation of assets like UPS, printers etc. (Rs.2,25,107) resulted in a capital advantage. 4. Ld. DRP erred, both on facts and in law, in confirming the addition of communication expenses amounting to Rs. 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 ....

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.... benefit in the hands of the assessee and accordingly, it cannot be considered as capital in nature. In this regard, he relied on the decision of the Hon'ble Supreme Court in the case of Empire Jute Company Limited (1980) 124 ITR 1. 4.1 On the contrary, the Ld. DR relied on the finding of the Assessing Officer and the Ld. DRP. 4.2 We have heard the rival submissions and perused the relevant material on record. The Assessing Officer relied on the decision of the Hon'ble Patna High Court in the case of CIT Vs. Jamshedpur Engineering and Machine Manufacturing 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 end....

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....ount of the shifting of the head office, therefore, cannot be held to be of revenue account. 7. Learned counsel for the assessee submitted that since the factory of the assessee-company remained static at Jamshedpur, the principles of the aforesaid Supreme Court case are not attracted in the instant case. In that case, the factory itself had been shifted and that was taken to be an enduring advantage. We regret, the ratio of the Supreme Court case is that where the expenditure enables a trader to prosper and secure advantage that could last for 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 t....

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....ly located. In the case of Jamshedpur Engineering and Machine Manufacturing Company Limited (supra), shifting expenses of the registered office of the company have been held as capital expenditure being of enduring benefit nature. In the instant case also, the expenses are for re-installing Compactors at the new place as well as shifting of old equipments to the new place, which has provided assessee benefit of a centrally located place and, thus, the expenditure of enduring nature. The shifting of office is not regular phenomena of 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 Rs. 1,03,316/- have been incurred towards octroi charges of car of the employee, transporting of goods of the employee, brokerage charge....