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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 ..... in confirming action of the Deputy Commissioner of Income Tax CPC (the AO) in making addition u/s 143(1)(a) (iv) who is not authorised to make such adjustments under the Scheme notified by the Board. 3. The learned CIT-A has not appreciated that the proper opportunity was not afforded to appellant by the A.O. in providing response to the adjustment proposed by him hence proceedings was against the rules of justice and fairplay. 4. The learned CIT-A has erred in upholding the adjustment when no reason given by the A.O for holding appellant's response as not acceptable. 5. The learned CIT-A has failed to appreciate that the intimation now passed without calling for the documents required to accompany the return but dispensed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note above, it is clear that whether the club expenses are incurred in course of business or whether they are of personal nature should be ascertained and if they are personal in nature, then to be shown under clause 21(a). In this case as the club expenses are mentioned under clause 21(a) of Form 3CD by the auditor, it is evidently personal in nature. Hence, the adjustment in order u/s 143(1)(a) is found to be valid and inaccordance with law. Therefore, the contentions of the appellant are not sustainable." Aggrieved by the Ld.CIT(A), the assessee preferred appeal to this Tribunal. 4. It was contended that the assessee had paid only subscription to club membership fee to promote the business promotion which is allowable as per the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Tribunal that the expenditure by way of subscription to the clubs was incurred for the. purpose of promoting the business of the company and in view of the finding of the Tribunal, it must be held that the expenditure incurred was an allowable business expenditure. In the case of subscription to clubs, in so far as the assessee was concerned, the expenditure was incurred to promote and foster its business relationship. The object of the assessee was that its directors by remaining as members in some of the city clubs would give them certain social status, and it was obvious that by being members of the club, they would be able to meet various kinds of people in a calm and cool atmosphere of the club and because of the meeting they wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the assessee in the order passed today in civil appeal arising out S.L.P.(C) No. 20791 of 2009. As far as Question No. 2 is concerned, we find that a series of judgements have been passed by High Courts holding that club membership fees for employees incurred by the assessee is business expense under Section 37 of the Income Tax Act, 1961. We also find that none of the decisions have been challenged in this Court. Even otherwise, we are of the view that it is a pure business expense." 8. Respectfully following the above view, we direct the Ld.AO to delete the disallowance made under section 37(1) of the Act. As we have allowed the appeal of assessee on merits, all other legal issues raised in this appeal is left open. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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