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2022 (3) TMI 839 - ITAT CHENNAIDisallowance of subscription fee paid to club - Addition as permissible u/s. 143(1)(a)(iv) - HELD THAT:- As per Clause (iv) of Sec. 143(1)(a) AO can make adjustment towards expenditure indicated in the Audit Report, but not taken into account in computing the total income in the return. In this case, the Tax Auditor has quantified the expenses of personal in nature in his Audit Report issued in Form No. 3CD. AO has made adjustment on the basis of qualified report issued by the Tax Auditor - there is no merit in the arguments taken by the assessee, then adjustment made by the AO towards disallowance of subscription fee paid to club, is not permissible u/s. 143(1)(a)(iv) . Additions made towards car expenses and subscription fee paid to club, although assessee claims that in Form No. 3CD - HELD THAT:- Tax Auditor has reported expenses of personal in nature in respect of car expenses of Salem Branch instead of actual expenses being 10% of Salem Office car expenses we find that the assessee claims to have made disallowance being 10% of car expenses on Salem Branch, wherein, the Tax Auditor has reported ₹ 16,970/-. The difference between expenses reported by the assessee and the expenses disallowed by the Tax Auditor is at ₹ 4,316/- and the same has been added by the AO. The facts need to be verified with reference to statement of total income filed by the assessee and Tax Auditor Report issued by the Auditor. Therefore, we are of the considered view that this issue needs to go back to the file of the AO. Disallowance of club subscription and club expenses - HELD THAT:- We find that the assessee has made payments to various clubs in Chennai and other places, which are in the nature of personal expenditure incurred by the partners as members of various clubs. Therefore, we are of the considered view that expenditure incurred by the assessee towards payment to clubs, is in the nature of personal expenditure and unless, the assessee demonstrate that subscription fee paid to clubs is for development of business of the assessee deduction cannot be allowed. In this case, the claim of the assessee is that expenses incurred for subscription fee paid to clubs is for the purpose of business of the assessee. The AO has made adjustment without verifying the claim of the assessee that the expenses incurred for the purpose of business of the assessee. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in light of claim of the assessee that subscription fee paid to club and club expenses is for the purpose of business of the assessee - issue needs to be re-examined by the AO in light of claim of the assessee that subscription fee paid to club and club expenses is for the purpose of business of the assessee.
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