TaxTMI 
TaxTMI 
2024 (9) TMI 1063
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....he circumstances of the case, and in the law the Income Tax Appellate Tribunal was justified in disallowing the amount of expenditure incurred towards professional and consultancy charges totaling to Rs.75,70,000 by incorrectly treating the same as directly related to the expansion of capital base of the Company and hence capital in nature. b. Whether on the facts and in the circumstances of the case, and in the law the Income Tax Appellate Tribunal has erred in treating the amount incurred towards professional and consultancy charges as capital expenditure without considering the fact that the consultancy charges paid by the Appellant does not result into any long term enduring benefit to the Appellant as the expenses were purely operational in nature and intended for the furtherance of the appellant's business and were incurred in the revenue field to identify suitable investors. c. Whether on the facts and in the circumstances of the case, and in law the Income Tax Appellate Tribunal was justified in confirming the disallowance of payments towards employees' contribution to PF and ESI before the due date of filing of the Return of Income without conside....
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....s (e) and (f) pertaining to the disallowance of prior period expenses, have been remanded to the assessing authority by the Appellate Tribunal, and in the proceedings that ensued, the assessing authority has allowed the claim of the appellant. Taking note of the said development, we find that the Questions (e) and (f) do not now arise for consideration in this appeal. What remains for consideration are Questions (a), (b), and (d) listed above, which pertain to (i) disallowance of revenue expenditure incurred in relation to professional and consultancy charges totaling to an amount of Rs.75,70,000/- in relation to identifying suitable private equity investors, and (ii) disallowance of expenditure incurred in relation to initial public offer of shares amounting to Rs.23,55,499/- claimed as deduction during the financial year 2007-2008 such as advertising, traveling, postage, market research, etc. 3. With regard to the disallowance of expenditure incurred in relation to professional and consultancy charges, it was the finding of the assessing authority as also the First Appellate Authority and the Appellate Tribunal that the appellant assessee had entered into an agreement with M/s....
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....irectly incurred in connection with the acquisition of an asset of capital nature, the other expenses that were incurred in that connection, namely, the indirect expenses, could not be separately claimed as revenue expense. According to the authority below, there was no justification or warrant for creating an artificial distinction between direct and indirect expenses in relation to expenses that were admittedly capital in nature, solely for the purposes of claiming a deduction under the Income Tax Act. 6. Before us, it is the submission of Sri. Jose Jacob, the learned counsel for the appellant relying on the decisions in Brooke Bond India Ltd. v. Commissioner of Income-tax [(1997) 225 ITR 798 (SC)], Principal Commissioner of Income-tax v. Sintex Industries Ltd. [(2017) 82 taxmann.com 428 (Gujarat), Principal Commissioner of Income-tax v. Rajasthan State Beverages Corporation Ltd. [(2017) 84 taxmann.com 185 (SC)] arising out of the order of the High Court of Rajasthan in case of Principal Commissioner of Income-tax v. Rajasthan State Beverages Corporation Ltd. [(2017) 84 taxmann.com 173 (Rajasthan)], Commissioner of Income-tax v. Ashok Leyland Ltd. [(2012) 23 taxmann.com 50 (Ma....
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....sofar as the appellant assessee was concerned. It is his submission that nothing more needed to be established for holding that the expenses incurred by the appellant were in fact capital in nature, and therefore, to be disallowed as a revenue expenditure. 9. We have considered the rival submissions, and after perusing the pleadings before us and the decisions cited by the learned counsel, we are of the view that Question Nos. (a), (b), and (d) have to be answered against the assessee and in favour of the revenue. In so far as the claim for deduction of consultancy fee is concerned, we find from the nature of the services that were provided by the consultant that the expenses were incurred in connection with obtaining benefits that were of an enduring nature. The findings of the Assessing Authority, the First Appellate Authority, and the Appellate Tribunal, relying, inter alia, on the decision of the Supreme Court in Brooke Bond India Ltd. (Supra) and Punjab State Industrial Development Corporation Ltd v. Commissioner of Income-tax [(1997) 225 ITR 792 (SC)], therefore do not require any intervention. Similarly, the claim for deduction of IPO related expenses, also cannot be lega....