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TMI Blog2020 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of his business and it is brought on record by the assessee that the business has increased after taking membership in the club. Considering the turnover, the membership fees is very negligible and it can never be treated as capital assets having enduring benefit. It may give benefit of utilizing the club facilities, but cannot create any right of endurance /right of possession. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... l No. 6447 to 6449 of 2012, dated 12.09.2012] There is no specific provision in the Income Tax Act for allowing or disallowing the claim of an assessee for deduction of expenses. Hence, question of admissibility or inadmissibility of such expenditure in income tax assessment is to be judged in the context of section 37(1) of the Act. To be an allowable expenditure under section 37(1), the money paid out must be (a) paid out wholly and exclusively for the purpose of the business or profession and further (b) must not be (i). capital expenditure (ii) personal expense, or (in) an allowance of the character described in section 30 to 36. Only when both negative and positive conditions are satisfied that an expenditure can be considered and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of appeal at or before the time of hearing. 6. At the outset, Ld. AR appearing on behalf of the assessee submitted before us that the membership is very much relevant for the purpose carrying on the assessee's business and further he brought to our notice the turnover achieved by the assessee during the assessment year 2015-16 & 2016-17 and the turnover of the assessee increased substantially after taking the membership. In this regard, he relied on the following decisions which are in favour of the assessee:- i) CIT vrs. Groz Beckert Asia Ltd [2013] 351 ITR 196 (P & H) ii) Otis Elevator Co. (India) Ltd. vrs. CIT (1992) 195 ITR 682 (Bom) 7. On the other hand, Ld. DR opposed the submission of Ld. AR and supported the orders of lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered capital in nature, the expenditure should bring into existence an asset or an advantage for the enduring benefit of a trade. Membership fee paid to a club does not bring into existence an asset or an advantage for the enduring benefit of the business. It is an expenditure incurred for the period of membership and is not long lasting. By subscribing to the membership of a club, no capital asset is created or comes into existence. By such membership, a privilege to use facilities of a club alone, are conferred on the assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to the assessee. Consequently, it cannot be treated as capital asset. Held accordingly, dismissing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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