Authorities Holding Public Auctions Must Disclose All Known Encumbrances and Related Litigation  ||  SC: Compensatory Allowances Must Be Included While Computing Overtime Wages U/S 59 of Factories Act  ||  SC: NGT Has No Jurisdiction to Decide Disputes Relating to Building Plan Violations  ||  SC: Evidence is Often Fabricated Using AI And False Allegations are Rampant in Matrimonial Cases  ||  SC: While Declining to Quash an FIR, A High Court Should Not Direct Police To Follow Section 41A CrPC  ||  Allahabad High Court: Recruitment Rules Cannot Override Compassionate Appointments  ||  Rajasthan HC: Single Blunt Blow Causing Grievous Injury is Not Attempt to Murder Without Intent  ||  Karnataka High Court Holds Mining Leases Granted in Violation of Rule 22-D are Void Ab Initio  ||  Supreme Court: Wait-Listed Candidates Have No Vested Right After List Expiry  ||  SC: Reserved Candidates Scoring Above General Cut-Off Must be Considered For Open Posts    

Klaxon Trading (P) Ltd., New Delhi vs. Deputy Commissioner of Income Tax - (Income Tax Appellate Tribunal) (19 Jan 2021)

Expenditure incurred towards membership fee paid by company is allowable as revenue expenditure

MANU/ID/0047/2021

Direct Taxation

Present appeal filed by the assessee is directed against the order passed by the Learned Commissioner of Income Tax [CIT(A)]. The only effective ground raised by the assessee is that, on the facts and in the circumstances of the case and in law, the Learned CIT(Appeals) erred in confirming the addition of Rs.1,23,375 made by the Assessing Officer treating the expenditure incurred on membership fees as personal in nature. The assessee is a Private Limited Company and is engaged in the business of trading of metal scrap.

The Assessing Officer (AO) in the instant case disallowed an amount of Rs. 1,23,375 being the expenditure debited in the profit and loss account towards membership fees of a club treating the same as personal in nature. The Learned CIT(A) sustained the addition made by the AO. It is the submission of the assessee that, since the business premises of the assessee is located at a crowded locality and dusty, the assessee, without incurring substantial expenditure in the establishment of a separate office, opted for membership of a club to provide a better environment to its customers. It is also his submission that, since the assessee is a Company, the membership fee has always been held to be an allowable expenditure.

The Hon'ble Delhi High Court in the case of CIT vs. Samtel Colour Ltd. has held that, corporate membership fees payable to a club is revenue expenditure. The coordinate benches of the Tribunal are consistently taking the view that, expenditure incurred towards membership fee paid by company is allowable as revenue expenditure. Since in the instant case, the genuineness of payment is not in dispute, therefore, in view of decision of Delhi High Court in the case of CIT vs. Samtel Colour Ltd. present Tribunal held that, the membership fee paid to the club is an allowable expenditure. The order of CIT(A) is set aside and the AO is directed to delete the addition. The ground raised by the assessee is accordingly allowed.

Tags : ASSESSMENT   ADDITIONS   LEGALITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved