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TMI Blog2010 (2) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... as legally justified in allow- ing the assessee's claim for deduction to the extent of Rs. 6,84,520 on account of rent paid to the hotel close to the factory at Rampur and transit house in contravention of the provisions of section 37(4) read with section 37(5) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally correct in deleting the addition of Rs. 1,47,831 towards payment of membership of club even though there is no material on record to substantiate that the expenditure is commercially expedient for the business of the assessee as required by the provisions of section 37(1) of the Income-tax Act ? &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of the Act. 6. Respectfully, following the aforesaid decision of this court, question No. (1) is answered in favour of the Revenue and against the assessee. The order of the Tribunal is accordingly set aside to this extent. So far question No. 2 is concerned, this court held as follows : 7. "Coming to the question as to whether the payment made by the assessee towards the membership of the club is an allowable deduc- tion, we find that the expenditure was incurred in order to procure business. Whether the assessee was successful in getting any business or not is not the question. The intention has to be seen as the amount was spent towards advancement of business. It is a business expendi- ture and, therefore, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der these cir- cumstances that the Commissioner of Income-tax (Appeals) allowed relief. His finding is in accordance with the provisions of law and accordingly no interference is called for. We, therefore, uphold his order and dismiss the ground of appeal raised by the Revenue." 10. The apex court in Civil Appeal No. 5293 of 2003 (T. R. F. Ltd. v. CIT) decided on February 9, 2010, reported in [2010] 323 ITR 397 (SC) has con- sidered the question of deduction for bad debts with reference to section 36(1)(vii) of the Act. The apex court held that after April 1, 1989, the posi- tion has been altered by deleting the word "established" which existed ear- lier in section 36(1)(vii) of the Act and after April 1, 1989, it is not necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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