2014 (8) TMI 728

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....8. The appeal was admitted vide order dated 9.10.2006 for determination of the following substantial questions of law:- "i) Whether on the facts and the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in reversing the action of the CIT(A) by ignoring the fact that one time expenditure incurred for the Club Membership Fee is of a capital nature? ii) Whether on the facts and the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in reversing the order of the CIT by ignoring the facts that expenses incurred on ISO 9002 Certificate is a 'capital expenditure' having its characteristics enduring in nature and its benefits are for the years to come? iii) Whether ....

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....capital in nature as the same was enduring in nature and its benefit was to accrue for the years to come and the Tribunal had wrongly allowed the same to the assessee. According to the learned counsel for the revenue, the assessee had not made any claim with regard to the bad debts while filing the revised return under Section 139(5) of the Act and, therefore, the Tribunal had wrongly remanded the case to the Assessing Officer. 4. On the other hand, learned counsel for the assessee besides supporting the order passed by the Tribunal pleaded that question No. (i) stands concluded against the revenue by this Court in a Full Bench judgment dated 24.1.2013 passed in ITA No. 366 of 2008 (The Commissioner of Income Tax, Patiala v. M/s Groz Becke....

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....rship was obtained for running the business with a view to produce profit. Such membership does not bring into existence an asset or an advantage for the enduring benefit of the business. It is an expenditure incurred for the period of membership and is not long lasting. By subscribing to the membership of a club, no capital asset is created or comes into existence. By such membership, a privilege to use facilities of a club alone, are conferred on the assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to the assessee. Consequently, it cannot be treated as capital asset. Therefore, the reasoning given by Delhi, Bombay and Gujarat High Courts in respect of members of Clu....