“Club expenses” incurred for subscription and club facilities are allowed as business expenses:

AO made disallowance in respect of “Club expenses” incurred for subscription and club services since he was of the view that there was no nexus of such expenditure with the business of the assessee. Hon’ble ITAT found force in the argument of the assessee that it was necessity of the business to allow membership of the senior Managers who entertained various persons for business purposes and that there was no element of any personal nature in such expenses. Hon’ble ITAT further observed that identical expenses were allowed as business expenses by the Hon’ble ITAT in assessee’s own case in earlier year by considering decision in the case of “CIT vs. Sundaram Industries Ltd. – 240 ITR 335 (Mad)”. Further, Revenue had not brought on any evidence on record that such expenses were not incurred for business purposes. In light of the above, such club expenses were allowed as business expenses and the impugned addition was deleted.

[MUNJAL AUTO INDUSTRIES LTD. Vs. ACIT – ITA No.2123/Ahd/2010]