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2022 (3) TMI 963 - AT - Income TaxDisallowance of gratuity paid u/s. 43B - HELD THAT:- AO while processing the return filed by the assessee u/s. 143(1) has made additions towards gratuity payment on the ground that the assessee has claimed deduction towards provision for gratuity. Assessee claims that deduction towards gratuity expenses is on payment basis, for which, necessary evidence has been filed before the CIT(A). We find that the assessee has paid gratuity to employee's through cheque drawn on ICICI Bank and the same has been debited to gratuity expenses account. From the details filed by the assessee, we find that deduction claimed towards gratuity expenses is on actual payment basis, but not on provision made for gratuity expenses - AO as well as the CIT(A) were erred in disallowing gratuity expenses u/s. 43B of the Act. Hence, we direct the AO to delete the additions made towards gratuity expenses. Denial of MAT credit u/s. 115JB - AO denied the MAT credit, because of additions towards gratuity expenses and employees' contribution to PF & ESI, the income declared by the assessee turned to be positive and hence, computed tax under normal provision of the Act and denied MAT credit - HELD THAT:- As assessee contended that since additions made by the AO towards employees' contribution to PF & ESI has been deleted by the Ld. CIT(A) and further MAT credit relates to disallowance of gratuity is consequential and hence suitable directions may be given to AO to verify and allow MAT credit in accordance with law. We find that MAT credit entitlement of the assessee is consequential and hence, we direct the AO to verify the entitlement of the assessee towards credit and allow credit, if any, after computing income as per provisions of Sec. 115JB of the Act and also under normal provisions of the Act. Disallowance of membership fee paid to club u/s. 37 - HELD THAT:- There is no merit in the arguments taken by the assessee, then the adjustment made by the AO towards disallowance of subscription fee paid to club is not permissible u/s.143(1)(a)(iv) - As regards, the contention of the assessee that subscription fee paid to club is for overall development of the business and thus, it partakes nature of expenses incurred wholly and exclusively for the purpose of business, we find that unless assessee demonstrate with relevant evidences that subscription fee paid to club, is for the purpose of business of the assessee and said expenditure is aided for overall development of the assessee, it cannot be held that expenses, at personal in nature, is in the nature of business expenditure incurred wholly and exclusively for the purpose of business, since the assessee has not demonstrated with any evidences and proved that subscription fee paid to club is for the purpose of business. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make disallowance towards subscription fee paid to club. We are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the assessee.
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