Disallowance of Vehicle Running and Club Expenses under Income Tax Act: ITAT upholds Assessee’s Claims as Allowable Expenditure [Read Order]

The Income Tax Appellate Tribunal (ITAT) Bench at Delhi, allowed the claims of assessee with respect to vehicle running and club expenses, as opposed to the order of CIT (A).

The appellant assessee, Dalmia (Bros) Pvt. Ltd. filed an appeal against the order of the Addl./JCIT, Kolkata, dated January 19, 2024 for the Assessment Year 2015-16 on the grounds of erroneous disallowance by the CIT (A) of vehicle running expenses amounting to Rs.4,00,204/- and club expenses amounting to Rs.6,04,196/- respectively. They claimed to have presented the due evidence on record.

The assessee also furnished records of similar disallowances made by the Assessing Officer in the earlier assessment years and brought to notice order of CIT (A), New Delhi wherein CIT (A) has considered the submissions of the assessee and allowed both the expenditure. The Revenue, represented by Shri Rajesh Kumar Dhanesta, relied on the findings of the lower authorities.

The Bench, headed by Satbeer Singh Godara (Judicial Member), and S. Rifaur Rahman (Accountant Member) considered the rival submissions and material available on record. The bench observed that the assessee has submitted details before lower authorities that vehicle maintenance and club expenditures were allowed to the employees of the assessee as prerequisites. Adhering to the erstwhile decision of CIT (A) in AY 2013-14, the bench was inclined to allow the above claim of the assessee as “incurred for the purposes of business and these were incurred as a matter of commercial expediency and exigency to the business of the assessee.”

As a result, the appeal filed by assessee was allowed.

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