Asstt. Commissioner of Income Tax v. Intercontinental Hotels Group Pvt. Ltd.

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The Tax PublishersITA NO. 3586/Del/2012 & ITA No. 3586/Del/2012 2013 TaxPub(DT) 1153 (Del-Trib) Income Tax Act, 1961 -- Capital expenditure or revenue expenditure-- Amount incurred on due deligence and risk analysis Taxability of--Held: In the course of rendering services to its parent company which is in the hotel business, the assessee has availed the services of Control Risk Group, Singapore in order to carryout the due diligence and risk analysis with the target hotels. These expenses are incurred in the normal course of the business of the assessee and accordingly are revenue in nature. Assessing officer decision that the due diligence exercise undertaken by M/s Control Risk Group, Singapore would create reliable data base for use in future, thereby providing enduring benefit to the assessee was not sustainable. [Para 6] Income Tax Act, 1961 Section 37(1) Income Tax Act, 1961 --Capital expenditure or Revenue expenditure--Brokerage paid for arranging office space on rent Taxability of--Held: Brokerage was paid for arranging office space. It was not the case that the premises is purchased during the year. It was only a case of rental of office space for a limited period. Hence, it cannot be said that the same created enduring benefit. Hence, the expenditure was not in capital nature. [Para 7] Income Tax Act, 1961 Section 37(1) Income Tax Act, 1961 --Capital expenditure or revenue expenditure--Advertisement expenses for hosting/sponsoring conventions and conference Allowability of --Held: Expenditure on advertisement was in print and electronic media and for hosting /sponsoring certain conventions and conferences and similar other expenditure on calendar printing, posters etc. The total expenditure works out approximately 1.9 per cent of the total expenditure. There was no element of brand building or acquisition of brand by incurring such expenses. The concerned brands were not owned by the assessee, but it belongs to the assessees overseas group entity. Assessee has been reimbursed the entire advertisement and sale promotion expenses by the overseas group entity on cost plus basis. Therefore, the expenditure was rightly held of revenue nature (Para 11) Income Tax Act, 1961 Section 37(1) In The ITAT, Delhi 'C' Bench Rajpal Yadav, J.M. & Shamim Yahya, A.M. Asstt. CIT v. Intercontinental Hotels Group Pvt. Ltd. ITA No. 3586/Del/2012 & ITA No. 3586/Del/2012 A.Y. 2007-08 8 February, 2013 Assessee by : S. K. Agarwal, CA Department by : Satpal Singh, Sr. D.R. ORDER SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA NO. 3586/Del/2012 & ITA No. 3586/Del/2012
2013 TaxPub(DT) 1153 (Del-Trib)

Income Tax Act, 1961

-- Capital expenditure or revenue expenditure-- Amount incurred on due deligence and risk analysis Taxability of--Held: In the course of rendering services to its parent company which is in the hotel business, the assessee has availed the services of Control Risk Group, Singapore in order to carryout the due diligence and risk analysis with the target hotels. These expenses are incurred in the normal course of the business of the assessee and accordingly are revenue in nature. Assessing officer decision that the due diligence exercise undertaken by M/s Control Risk Group, Singapore would create reliable data base for use in future, thereby providing enduring benefit to the assessee was not sustainable. [Para 6]

Income Tax Act, 1961 Section 37(1)

Income Tax Act, 1961

--Capital expenditure or Revenue expenditure--Brokerage paid for arranging office space on rent Taxability of--Held: Brokerage was paid for arranging office space. It was not the case that the premises is purchased during the year. It was only a case of rental of office space for a limited period. Hence, it cannot be said that the same created enduring benefit. Hence, the expenditure was not in capital nature. [Para 7]

Income Tax Act, 1961 Section 37(1)

Income Tax Act, 1961

--Capital expenditure or revenue expenditure--Advertisement expenses for hosting/sponsoring conventions and conference Allowability of --Held: Expenditure on advertisement was in print and electronic media and for hosting /sponsoring certain conventions and conferences and similar other expenditure on calendar printing, posters etc. The total expenditure works out approximately 1.9 per cent of the total expenditure. There was no element of brand building or acquisition of brand by incurring such expenses. The concerned brands were not owned by the assessee, but it belongs to the assessees overseas group entity. Assessee has been reimbursed the entire advertisement and sale promotion expenses by the overseas group entity on cost plus basis. Therefore, the expenditure was rightly held of revenue nature (Para 11)

Income Tax Act, 1961 Section 37(1)

In The ITAT, Delhi 'C' Bench

Rajpal Yadav, J.M. & Shamim Yahya, A.M.

Asstt. CIT v. Intercontinental Hotels Group Pvt. Ltd.

ITA No. 3586/Del/2012 & ITA No. 3586/Del/2012

A.Y. 2007-08

8 February, 2013

Assessee by : S. K. Agarwal, CA

Department by : Satpal Singh, Sr. D.R.

ORDER