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TMI Blog2022 (3) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... ake of convenient, these appeals were heard together and are being disposed off, by this consolidated order. 2. The brief facts of the case extracted from ITA No. 781/Chny/2020 for the assessment year 2017-18 are that the assessee filed its return of income for the AY 2017-18 declaring 'NIL' total income. The return filed by the assessee has been processed u/s. 143(1) of the Act by making certain adjustments including disallowance of delayed remittances of employees' PF & ESI and gratuity paid. The assessee carried the matter before the First Appellate Authority. The Ld. CIT(A), for the reasons stated in his appellate order dated 31.08.2020, deleted the additions made towards disallowance of employees' contribution to PF & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which, necessary evidence has been filed before the Ld. 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. Therefore, we are of the view that the AO as well as the Ld. 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. 5. The next issue that came up for our consideration from Ground No. 10 of assessee's appeal is denial of MAT credit u/s. 115JB of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub u/s. 37 of the Act. The assessee has paid membership fee to Cosmopolitan Club, Chennai and apportioned expenses for a period of membership and has claimed a sum of Rs. 1,66,667/- as expenditure incurred for the purpose of business of the assessee. The AO has disallowed the membership fee paid to clubs on the basis of Tax Audit Report issued by the Auditor in Form No. 3CD, wherein, the Auditor has reported expenses of personal nature to be disallowed. The assessee claimed that the adjustment made by the AO towards disallowance of subscription paid to club is not permissible adjustment as provided u/s. 143(1) of the Act. The assessee further claimed that subscription fee paid to clubs to become member of the Club, is for the overall busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Audit Report issued in Form No. 3CD. The AO has made adjustment on the basis of qualified report issued by the Tax Auditor. Therefore, we are of the considered view 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) of the Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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