Case Law Details
Vipul Ltd. Vs ACIT (ITAT Delhi)
it can be observed that as far as the subscription fee to Clubs is concerned the nature of business activity of the assessee company is such that for procurement of business the Managing Director may have to attend the clients and entertain them occasionally at clubs. However, the four clubs to which the payments have been made are all ‘Golf Clubs’ and how only their membership would benefit the company is not ascertainable. Thus, there is every possibility that the expenditure incurred on subscription or food and beverage, with these Golf Clubs, have traits of personal benefits to the Managing Director, as well. Thus, there is justification to restrict, the disallowance proportionally to Rs. 50,000/-on total disallowance of Rs. 1,90,529/-. Accordingly the ground is decided partly in favour of the assessee/appellant.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal has been filed by the assessee against order dated 22.09.2020 in appeal no. 10433/2019-20 in assessment year 2017-18 passed by Commissioner of Income Tax (Appeals)-9, New Delhi (hereinafter referred to as the First Appellate Authority in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 26.12.2019 u/s 143(3) of the Income Tax Act, 1961 passed by ACIT, New Delhi (hereinafter referred to as the Assessing Officer ‘AO’).
2. The facts in brief are that the assessee had filed a return declaring income of Rs. 2,33,94,820/- and the case was taken up for scrutiny. The assessee company is engaged in the business of real estate development and related activities and is following the percentage completion method. Ld. AO observed that a sum of Rs. 1,90,529/- was incurred at club being cost for club services and facilities. The Ld. AO considered the same to be in the nature of personal expenses and the amount was disallowed.
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