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TMI Blog2017 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... infirmity in the impugned order. Moreover, 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. Expenditure on compliance of Sarbans Oxley Act, 2002 (SOX) allowance - Held that:- 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 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 authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst assessment order dated 22/03/2013 passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (for short the Act ). 2. This appeal was filed 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 the assessee, we are convinced that sufficient opportunity has been given to the respondent/assessee to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses 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 AO has made the disallowances in accordance with the law laid down by the Hon ble Supreme Court in Brook Bond India Limited (225 ITR 798) therefore, the findings of the Ld. CIT(A) are liable to be set aside. 6. We notice that the Ld. CIT(A) has deleted the additions made by the AO observing as under:- Ground Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntum 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 routine works of recruitment of new staff, professional fees for compliance testing and by way of remuneration to employee director via ESOP award. The appellant has not been benefited from these expenditures for very long period, therefore, the same cannot be held as capital expenditure giving rise to benefit of enduring nature. The case law of M/s. Brooke Bond India Ltd. (supra) relied upon by the A.O is not applicable to the facts of this case as the expenses were not incurred in respect of expansion of capital base or creation of assets. Such expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed 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. Mahajan Aibara, who were appointed to conduct SOX compliance at the service provider site of its group companies. The Ld. DR did not produce any case law to substantiate its contention. Hence, we concur with the Ld. CIT (A) and hold that the expenditure on compliance of provisions of SOX does not fall within ambit of capital expenditure. This ground of appeal is accordingly dismissed. 8. Ground no. 3 of the appeal pertains to International Share Award Plan (ISAP). As per t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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