SHRI. AKSHAY DUGAR, CHENNAI V. ITO NON CORP WARD 3 (1), CHENNAI

ITA 488/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7910 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 12-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: D ANAND
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

, ( ) , IN THE INCOME TAX APPELLATE TRIBUNAL , A (SMC) BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.488/CHNY/2018 ( / ASSESSMENT YEAR: 2013-14) SHRI AKSHAY DUGAR, N NO-17, O NO.9, ROUND HOUSE, SPUR TANK ROAD, CHETPET, CHENNAI 600 031. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD 3(1), CHENNAI. PAN:AGOPD6309H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 17.07.2018 /DATE OF PRONOUNCEMENT : 19.09.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-4, CHENNAI, DATED 20.10.2017 IN ITA NO.23/2016-17/A.Y.2013- 14/CIT(A)-4 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S. 250(6) R.W.S. 143(3) OF THE ACT. 2 ITA NO.488/CHNY/2018 2. THE ASSESSEE HAS RAISED THREE GROUNDS IN HIS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.90,445/- TOWARDS DISALLOWANCE OF CLUB MEMBERSHIP SUBSCRIPTION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN BUSINESS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 13.08.2013 DECLARING TOTAL INCOME OF RS.3,29,370/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 02.09.2014. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 02.03.2016 WHEREIN THE LD.AO MADE SEVERAL ADDITIONS AMONGST WHICH ONE OF THE ADDITION WAS TOWARDS DISALLOWANCE OF CLUB MEMBERSHIP SUBSCRIPTION FOR RS.90,445/-. THE LD.AO HAD ARRIVED AT SUCH CONCLUSION BECAUSE THE ASSESSEE COULD NOT PRODUCE ANY PROOF TO PROVE THE RELEVANCE OF SUCH EXPENDITURE WITH RESPECT TO THE BUSINESS OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONCURRED WITH THE VIEW OF THE LD.AO BECAUSE THE PAYMENTS WERE MADE TO RAJASTHANI ASSOCIATION TAMILNADU, RYA METRO AND MADRAS CRICKET CLUB. 3 ITA NO.488/CHNY/2018 4. BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE IS ENGAGED IN BUSINESS AND IT WAS NECESSARY FOR HIM TO MAINTAIN RELATIONSHIP WITH THE OTHER MEMBERS OF THE CLUBS TO PURSUE HIS BUSINESS ACTIVITIES, HENCE IT WAS ESSENTIAL FOR HIM TO RETAIN THE MEMBERSHIP BY PAYING THE SUBSCRIPTION FEE. IT WAS THEREFORE PLEADED THAT THE MEMBERSHIP SUBSCRIPTION PAID TO THE CLUBS SHOULD BE TREATED AS BUSINESS EXPENDITURE AND ALLOWED AS DEDUCTION. THE LD.DR ON THE OTHER HAND RELIED IN THE ORDERS OF THE LD.REVENUE AUTHORITIES AND PLEADED FOR SUSTAINING THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. IT IS A KNOWN FACT THAT VARIOUS HIGHER JUDICIARIES HAVE HELD THAT THE SUBSCRIPTION FEE PAID TO CLUB IS ALLOWABLE AS DEDUCTION TREATING IT AS BUSINESS EXPENDITURE. WE ALSO FIND THAT HONBLE APEX COURT IN THE CASE CIT VS. UNITED GLASS MANUFACTURING COMPANY PVT. LTD., VIDE ITS ORDER DATED 11 TH SEPT, 2012 HAS HELD THAT THE SUBSCRIPTION FEE PAID TO CLUB IS ALLOWABLE AS DEDUCTION. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE IS EARNING INCOME FROM HIS BUSINESS. THEREFORE WE HEREBY HOLD THAT IN THE CASE OF THE ASSESSEE, THE SUBSCRIPTION FEES PAID TO THE ASSOCIATIONS FOR RETAINING HIS MEMBERSHIP AMOUNTING TO RS.90,445/- SHOULD BE TREATED AS BUSINESS 4 ITA NO.488/CHNY/2018 EXPENDITURE AND ALLOWED AS DEDUCTION. ACCORDINGLY WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION OF RS.90,445/-. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 19 TH SEPTEMBER, 2018 AT CHENNAI. SD/- SD/- ( . ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, /DATED 19 TH SEPTEMBER, 2018 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF