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TMI Blog2022 (6) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... of allowability. AO is directed to ascertain under which bucket these expenses fall as referred in (i) (ii) of para 9 above. Based on his examination and verification and categorization of expenses in each of the two bucket referred above, the amount of expenses incurred in respect of club membership and subscription fees only shall be allowed as business expenditure u/s. 37(1) of the Act. Needless to say, the assessee be given reasonable opportunity of being heard and be at liberty to make all of its submissions to justify its claim. Accordingly, the appeal of the assessee is allowed for statistical purposes. - ITA No. 319/CHNY/2021 - - - Dated:- 8-6-2022 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT ME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act vide intimation dated 03.07.2019 by CPC, Bangalore. In the processing of return, an amount of Rs. 18,39,466/- was disallowed and an adjustment was made to the total income which is on account of membership and subscription expenses reported in Form 3CD i.e., tax audit report filed by the assessee. Aggrieved, the assessee went into appeal before the Ld. CIT(A) by raising the ground that AO has wrongly disallowed the club expenses on the ground that it is not a business expenses which in fact represents the sales promotion expenses incurred by the company for promotion of its business and ought to have been allowed as business expenses. 6. In the course of first appellate stage, assessee submitted that adjustment was made to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad disallowed the claim made by the assessee towards membership and subscription expenses for which the data was captured form the tax audit report filed in Form 3CD by the assessee itself. In Form 3CD, clause 21(a) contains the details of amount debited to the profit and loss account which are in the nature of capital/personal/advertisement expenditure, etc. He noted that the tax auditor himself had qualified the amount i.e., expenditure incurred at club as personal in nature at Rs. 18,39,466/-. Ld. CIT(A) also noted that the auditor has to categorize the expenditure incurred at clubs in clause 21(a) of the auditor report being entrance fees and subscription and expenditure incurred at clubs being cost for club services and facilities used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in profit and loss account, being in the nature of capital, personal, advertisement expenditure, etc. In respect of issue before us, there are two categories under which the details are to be furnished in terms of clause 21(a) of Form 3CD: (i) expenditure incurred at clubs being entrance fees and subscription (ii) expenditure incurred at clubs being cost for club services and facilities used. For the adjustments of Rs. 18,39,466/- made by DCIT, CPC, Bangalore to the total income of the assessee while processing the return u/s. 143(1) of the Act, the reasons given in the intimation is inconsistency in total amount of disallowance u/s. 37 for which the amount mentioned in Form 3CD is taken at Rs. 18,39,466/- and amount in incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of verification of these expenses of Rs. 18,39,466/- claimed by the assessee as club membership and subscription expenses for the purpose of allowability. The AO is directed to ascertain under which bucket these expenses fall as referred in (i) (ii) of para 9 above. Based on his examination and verification and categorization of expenses in each of the two bucket referred above, the amount of expenses incurred in respect of club membership and subscription fees only shall be allowed as business expenditure u/s. 37(1) of the Act. Needless to say, the assessee be given reasonable opportunity of being heard and be at liberty to make all of its submissions to justify its claim. Accordingly, the appeal of the assessee is allowed for sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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