2023 (6) TMI 1064

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....efore, there was a delay of around six hundred (600) days. According to Ld. AR, if the period of Covid-19 is excluded, then the total number of days to be condoned would come to around ninety (90) days. After perusing the application of the assessee, it is found that due to the Covid-19 as well as the omission on the part of earlier Ld. AR of the assessee to promptly inform the assessee about the outcome of the order of Ld. CIT(A), the delay happened, which cannot be termed as deliberate on the part of assessee. Therefore, the delay caused after excluding Covid-19 Pandemic period comes to ninety (90) days only, the delay caused in filing of appeal is condoned. 3. The main grievance of the assessee is against the action of the Ld. CIT(A) confirming the action of the Ld. CIT(A) disallowing an amount of Rs.22,60,000/- being club membership fees paid to Cricket Club of India as non-genuine and for non-business related expense. 4. Brief facts are that the assessee had filed the return of income declaring total loss of Rs.5,87,677/- on 25.09.2014 for AY. 2014-15. The case was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter "the Act"). Later, the case was selected under CA....

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....question of law raised in the appeal are as under: - "(i) Whether advance customs duty paid by the assessee can be deducted under section 43-B of the Income Tax Act, 1961? (ii) Whether club membership fee for employees incurred by the assessee is a business expense and liable to be deducted under section 37(1) of the Income Tax Act, 1961? As far as Question no. 1 is concerned, the issue is answered in favour of the assessee in the order passed today in civil appeal arising out S.L.P (C) No. 20791 of 2009. As far as question no. 2 is concerned, we find that a series of judgements have been passed by High Courts holding that club membership fees for employees incurred by the assessee is business expense under section 37 of the Income Tax Act, 1961. We also find that none of the decisions have been challenged in this court. Even otherwise, we are of the view that is a pure business expense." 6. The assessee also brought to my notice similar order of the Kolkata Tribunal in the case of M/s. MKJ Tradex Ltd. Vs. DCIT dated 14.02.2018 as under: - "12. We have heard the rival contentions and perused the material available on record. We find that in the instant case the AO disallow....

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.... or obtaining benefit in capital field. Therefore such expenses will be of revenue nature. In this regard we find support & guidance from the judgment of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Groz Beckert Asia Limited reported in 351 ITR 196 wherein it was held as under : "The corporate membership 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." We also find support & guidance from the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Samtel Color Limited reported in 326 ITR 425 wherein it was held as under : "The expenditure incurred towards admission fee wa....

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....and change of nominee fees was Rs.50,000/- plus taxes. Thus, according to Ld AR, it can be seen that the assessee company was not eligible for corporate membership and if compared with the membership obtained by the director of assessee company it was cost effectives as well as the present membership is for life, where as corporate membership was for limited period i.e. ten (10) year only; and the recurring cost i.e. yearly subscription was also exorbitant in the case of corporate membership. Therefore, according to the Ld. AR, the assessee company when had an opportunity to avail the same facilities through its director Shri Anand Didwania took prudent decision to let him get the membership for the ultimate benefit of assessee company, since, its common knowledge that company is an artificial entity and function through its directors and share-holders. And according to assessee company, even though it has become an LLP from 9.4.2013, the assessee's director becoming partner in the LLP would be able to garner the benefits by becoming a member of the Cricket Club of India. Therefore, the expenses incurred to the tune of Rs.22,60,000/- was allowable expenditure in the light of the ju....