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2023 (7) TMI 463 - AT - Income TaxDisallowance of expenses u/s 37(1) by the CPC - Associateship fees paid to Mumbai Cricket Association - Membership of the employees of the company including Chairman and Managing Director. - Wholly and exclusively for the purposes of his business or not - CPC invoking section 143(1)(a)(iv) made disallowance for the reason that amount disallowed by the Tax Auditor in the audit report i.e. form No. 3CD, has not been taken into account by the assessee while computing the total income in the return - Whether allowable expenditure u/s 37? - HELD THAT:- Membership entries fee to club could be business expenditure in case of “corporate membership”, but not in case of individual club membership. In the case of Bayer Vapi P Ltd [2019 (5) TMI 1208 - GUJARAT HIGH COURT] also the issue was related to membership of the employees of the company including Chairman and Managing Director. Assessee has submitted that club membership was used by his employees and customers of business, but as per the normal rules of the club, such individual membership can’t be allowed by other than individual except as a guest accompanied with the said individual. Thus, as far as individual assessee, is concerned, disallowance of club membership for one time entry fee is not debatable and correctly disallowed by the CPC invoking section 143(1)(a) of the Act. On merit also, the claim of club membership one time entry fee is disallowable on the ground of personal expenditure. Even if the assessee uses its club facility for soliciting customers, the recurring expenditure may be allowed as business expenditure subject to verification but not the one-time entry fee. As in the case of L Jairam Parwani vs DCIT [2018 (5) TMI 635 - MADRAS HIGH COURT] held that payment made for acquiring membership in a social club could not be allowed as business expenditure , more so, when there was no evidence to prove that membership of Social club was acquired for entertaining customers by the assessee. Therefore, the Ld. CPC is justified in making adjustment u/s 143(1)(a) the Act. Decided against assessee.
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