The Income Tax Appellate Tribunal (ITAT) of Mumbai Bench held that payment made towards obtaining club membership should not be disallowed.
The assessee, Grasim Industries Ltd is engaged in the production and sales of Viscose Staple Fibre, Chemicals, Cement, and the production of Sponge Iron and Textile. After filing the return of the income assess case was selected for scrutiny.
After scrutiny, the AO passed an assessment order assessing the total income of the assessee and disallowed Club membership fees incurred for obtaining membership in various clubs.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who granted partial relief to assessee. Then, the assessee filed a second appeal before the tribunal.
J.D. Mistry, the assessee-representative before the tribunal argued the assessee paid the amount to various clubs for enrolling its senior officials as members for part of its business promotion.
Department representative Kishore Dhule argued that the “payments made for obtaining membership is not allowable expenditure and the payments made towards annual renewal fees and expenditure incurred at Clubs for the business purpose is allowable expenditure, but not the payment made for obtaining membership.”
After examining the facts and arguments presented by the both parties, the tribunal observed that the same issue was covered in favour of the assessee for the assessment year 2002–03.
Therefore, the bench, consisting of Amarjit Singh Accountant Member) and Sandeep Singh Karhail (Judicial Member) allowed the appeal filed by the assessee and allowed the Club Membership fees paid by the assessee company.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
