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2016 (10) TMI 534
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....n upholding the action of the Assessing Officer in disallowing Club Membership Fees. 3. Brief facts are that the Assessing Officer while completing assessments for these two Assessment Years disallowed Club Membership fees on the ground that there is no business expediency in incurring the expenses, the club itself is not functional and assessee has not even been admitted as a member, the club is also situated far away from Mumbai and the frequent meetings in the club is also a remote possibility. The assessee is also not in a position to establish a single instance of using the club facility for enrichment of his business therefore he concluded that the entire payments made by the assessee in the name of club membership is not for busin....
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....y and it is only for personal purpose and no part of it can be allowed as business expenditure. 7. We have heard the rival submissions and perused the orders of the authorities below. In the first round of appeal, the Tribunal set aside this issue to the file of the Ld. CIT(A) observing as under : "10. Having heard the rival contentions and having perused the material on record, we see no reasons to interfere in the findings of the authorities below. The assessee has not been able to even demonstrate that the entire amount of Rs. 12,00,000 is for club membership and the business expediency, if any, in spending money to become member of an Aurangabad based club which is far away from assessee's normal place of work. No doubt mere....
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.... Rs. 12,00,000/- has not been expended wholly and exclusively for the purposes of the business of the assessee. Out of the Rs. 12,00,000/-, the Assessing Officer has given a finding that an amount of Rs. 1,25,000/ - has been paid towards contribution for others. This is based on the submissions made by the assessee himself in the course of the assessment proceedings. The assessee has not given details of this amount of Rs. 1,25,000/- and has not shown that this was expended wholly and exclusively for the purposes of the business. The Assessing Officer's finding in the assessment order that this amount of Rs. 1 ,25,000/ - was not related to the business of the assessee and, hence, not allowable has not been controverted by the assessee i....
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....its in the nature of awarding contracts to the assessee, the payments made by the assessee cannot be said to have been incurred wholly and exclusively for the purposes of the business of the assessee. The expenditure which can be allowed in relation to any activity is only such which is linked to the earnings of the income from such activity. The assessee has not shown that the above payments have been made and are in the nature of expenses incurred wholly and exclusively for the purpose of the business. 3.3.1 Another important aspect which is noticeable is that the assessee could not produce the club membership card or any other evidence relating to the allotment of club membership. It is worthwhile to note that the club is situat....
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....se of obtaining membership of the club, the expenditure would be in the nature of personal expenditure. 3.3.2 In view of the aforesaid reasons, I am of the opinion that the assessee has not been able to prove the business expediency of expenditure and the facts on record clearly establish that the payments in question which have been claimed as an expenditure have not been incurred wholly and exclusively for the purposes of business of the assessee. The deduction of Rs. 12,00,000/- claimed by the assessee on account of club expenses cannot, therefore, be allowed. The action of the Assessing Officer of disallowing the club expenses of Rs. 12,00,000/- is, therefore, upheld. This ground of appeal filed by the assessee is dismissed." ....