2009 (1) TMI 26

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....o as the 'Tribunal') in ITA No.4037/Del/1999 in respect of assessment year 1996-97 2. The Revenue's appeal to this Court pertains to two issues. The first issue is related to allowance of depreciation to the assessee on the enhanced cost of the asset on account of fluctuation in the rate of exchange on the last date of the accounting year. The second issue pertains to allowance of deduction in respect of money paid towards admission fee of clubs as revenue expenditure. 2.1 In our order dated 30.09.2008, we had concluded that insofar as the first issue was concerned it was covered by a judgment of a Division Bench of this Court in CIT vs. Woodward Governor India P. Ltd; (2007) 294 ITR 451 (Delhi). As regards the second issue we had fix....

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....they would have to incur extra expenditure out of their own pockets. Thus based on the material placed before him the CIT(A) concluded that while the membership of the clubs did provide assessee a benefit which fulfilled the business purpose test, it also resulted in benefits to the Directors and executives in their personal capacity. 3.4 Accordingly, the CIT(A) directed the Assessing Officer to disallow 20% of Rs 6 lakhs and allow the balance amount as revenue expenditure on the ground that the entire expenditure was not incurred for business purposes. 4. Since both the Revenue and the assessee were aggrieved by the order of the CIT(A) cross appeals were preferred against his order. The Tribunal after considering the submissions made....

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....avail the benefit of the corporate membership given to the assessee. 5.2 The other hurdle for qualification of the expenditure under Section 37 of the Act is that expenditure incurred should not be on capital account. The Assessing Officer came to the conclusion that the expenditure was of a capital nature based on a fallacious reasoning that the expenditure was of an enduring nature and hence on a capital account. It is well settled that an expenditure which gives enduring benefit is by itself not conclusive as regards the nature of the expenditure. We may add that even lump sum payment, which was the case in the instant matter, is not decisive as regards the nature of the payment. See observations in Empire Jute Co Ltd vs. CIT; (1980) ....