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2022 (8) TMI 793 - AT - Income TaxDisallowance of club expenditure - being incorrect claim u/s 143(1)(a)(ii) & u/s 143(l)(a)(iv) on the alleged contention that the same has been mentioned in clause 21(a) of Form 3CD but not disallowed u/s 37 of the Act in the return - Assessee claims that the same was reported in clause 21(a) of Form 3CD for disclosure purposes only and same is in accordance with the Guidance Note on Tax Audit under section 44AB of the Income tax Act 1961 issued by the Institute of Chartered Accountants of India - HELD THAT:- CIT(A) has confirmed the disallowance with the very summary observations without going on the facts of the case. The copy of Form 3CD available at page no. 105 of the paper book shows that in clause 21(a) of the particulars of expenditures incurred, under head of club entrance fees and subscription has been shown with regard to Gymkhana Club at Rs. 14,407/- , Holiday Club Rs.3,263/- and Panchshila Club rs. 22,610/-, totaling to Rs. 42,280/-. The auditors have not shown these expenditure to be disallowable as required to be disclosed in Annexure available at page no. 73 of the paper book. When admittedly the assessment was completed with intimation u/s 143(1) of the Act then the disallowance based upon comments of auditor in audit report could not have been made as none of the specific circumstances mentioned u/s 143(1)(a)(ii) or 143(1)(a)(iv) of the Act are met out. If at all a disallowance was to be made an opportunity of hearing by issuance of notice u/s 142(1) was therefore required. Assessee infact had had claim on merits also on the basis of judgment of Hon’ble Supreme Court of India in CIT v. United Glass Mfg. Co. Ltd. [2012 (9) TMI 914 - SUPREME COURT] has considered the question of club expenses and held that the Club Membership Fees for subscription is allowable as a business expenditures and had it been given opportunity under law to explain same would have been allowed. - Decided in favour of assessee.
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