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of <h1>Tribunal rules club membership expenses as business-related, denies Revenue's Rectification of Mistake.</h1> <h3>C.C.E., Mumbai-V Versus Pan Pharma & Allied Machinery Co. P. Ltd.</h3> C.C.E., Mumbai-V Versus Pan Pharma & Allied Machinery Co. P. Ltd. - 2016 (43) S.T.R. 371 (Tri. - Mumbai) Issues:Rectification of Mistake regarding expenses of club membership booked under 'Staff Welfare Expenses' and its nexus with business activities.Analysis:The Revenue filed an application for Rectification of Mistake against an order, arguing that expenses of club membership booked under 'Staff Welfare Expenses' should not be allowed as credit. The Revenue relied on a decision of the Bombay High Court stating that expenses must have a nexus with the business activity to qualify as an input service. The Revenue contended that the expenditure on club membership does not have a nexus with the manufacture of goods.The appellant's Counsel relied on the impugned order, and the Tribunal considered the rival submissions. The Tribunal found that the expenditure on Club Membership of the Director, booked under 'Staff Welfare Expenses,' is indirectly related to the promotion of the business of the appellant. The Tribunal held that there is a nexus between the services availed and the manufacture of goods, regardless of the head under which the expenses are booked in the balance sheet.Ultimately, the Tribunal dismissed the Rectification of Mistake application, emphasizing that the membership of the Business Club is related to the promotion of the appellant's business activities. The judgment was pronounced in court on 3-6-2016.
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