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2010 (9) TMI 1084 - AT - Income TaxDisallowance of club membership fee - capital or revenue expenditure - The ld. CIT(A) while relying on the decision of the HC in the case of Gujarat State Export Corpn. Ltd. vs. CIT [1993 (9) TMI 52 - GUJARAT HIGH COURT] that the expenditure incurred in payment of entrance fee for becoming member of sports club is in the nature of an advantage in the commercial sense but not an advantage in the capital field, therefore, revenue expenditure. deleted the addition of ₹ 16.00 lacs made by the AO being entrance fee and allowed the appeal. HELD THAT:- Respectfully following the decisions of the High Court in the case of Samtel Colour Ltd. [2009 (1) TMI 26 - DELHI HIGH COURT] and the Tribunal in the assessee's own case, we are of the view that admission fees paid towards corporate membership of the club is an expenditure incurred wholly and exclusively for the purpose 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 profit earning apparatus of a business enterprise and accordingly we are inclined to uphold the finding of the ld. CIT(A) in deleting the disallowance of ₹ 16.00 lacs made by the AO. The grounds taken by the revenue are, therefore, rejected. In the result, revenue’s appeal stands dismissed.
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