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2013 (8) TMI 837 - ITAT MUMBAIWhether the expenditure regarding club membership and entrance fee is revenue in nature or capital – Deduction u/s 37 of the Income Tax Act - Club membership has been taken for the purpose of the business of the assessee as the directors of the assessee company conduct meeting/conference with the clients, suppliers and business associates – Held that:- Relying upon the judgment in the case of Otis Elevator Co. (India) Ltd. Vs CIT [1991 (4) TMI 53 - BOMBAY High Court]; CIT Vs Samtel Color Ltd [2009 (1) TMI 26 - DELHI HIGH COURT], it was held that the nature of the expenditure was one for the benefit of the assessee. The “business purpose” basis adopted for eligibility of expenditure under section 37 of the Act was the correct approach. Qualification of the expenditure under section 37 of the Act is that expenditure incurred should not be on capital account - Expenditure which gives enduring benefit is by itself not conclusive as regards the nature of the expenditure - The true test for qualification of expenditure under section 37 of the Act is that it should be incurred wholly and exclusively for the purposes of business and the expenditure should not be towards capital account - In the instant case, the admission fee paid towards corporate membership is an expenditure incurred wholly and exclusively for the purposes of business and not towards capital account as it only facilitates smooth and efficient running of a business enterprise and does not add to the profitearning apparatus of a business enterprise. Expenditure made as donation for religious purposes – On souvenirs /booklets assessee name appeared on the religious occasion – Expenditure as advertisement expenditure – Held that:- These so called souvenirs/booklets are not the publication of any institution, industrial organisation or other association or institutions as permanent in nature and related to the business of the assessee. Accordingly, no merit in the assessee’s contention that the expenditure incurred for advertisement in souvenirs of all these parties is an allowable expenditure – Decided against the Assessee.
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