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TMI Blog2022 (1) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... identical issue the Hon ble Madras High Court in the case of CIT Vs. Sundaram Industries Ltd [ 1999 (4) TMI 50 - MADRAS HIGH COURT] wherein as held that assessee-company had incurred the expenditure wholly and exclusively for the purpose of its business and therefore the expenditure incurred by way of subscription to the club was an allowable expenditure. Also see UNITED GLASS MFG CO. LTD. [ 2012 (9) TMI 914 - SUPREME COURT] wherein held that club membership fees for employees incurred by the assessee is business expense under Section 37 - Decided in favour of assessee. - ITA No. 1455/Bang/2019 - - - Dated:- 27-12-2021 - SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Assessee by : Shri H. Anil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment can be made under Section 143(1)(a) when matter is debatable. For all of the above reasons, the intimation be set aside and addition of ₹ 94,017 directed to be made by CIT-A be cancelled. 2. During the course of assessment proceedings the Ld.AO noticed that in Column No. 21(a) of Form No. 3CD of the Tax Audit Report it has been mentioned that the assessee company had debited expenses of ₹ 94,071/- towards fees, subscription and payment of services for various clubs such as Karnataka Golf Association, Bangalore Club, the Karnataka Cricket Association Club House The Ld.AO confronted the assessee on this issue. In compliance, it was stated that those expenses were incurred for entertaining the guest of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor as well as other employees of the company. Considering the submissions of the assessee, since the expenditure has been incurred for business promotion and for the purposes of the business of the assessee company, the disallowance made is deleted. 5. The Ld.Sr.DR strongly supported the orders of the authorities below and reiterated the observation made therein. We have perused the submissions advanced by both sides in light of records placed before us. 6. In the present case also the assessee has incurred the expenses on account of club membership fees for the employees and to entertain customers. An identical issue the Hon ble Madras High Court in the case of CIT Vs. Sundaram Industries Ltd. reported in 240 ITR 335 held as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But the personal benefit that went to the director was incidental to the membership of the club. The question whether a particular expenditure is allowable or not has to be tested from the point of view of the person expending the same and the object with which he incurred the expenditure. The assessee had not spent the money with the object of providing a personal relaxation to the director, but it was incurred to promote its business. In the commercial world, the contact with the right person is vital for an efficient business organisation. The expenditure incurred could not be regarded as having been incurred for the personal benefit of the director. In each case, it has to be seen whether the object of the expenditure was to promote t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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