Club Expenditure allowability in the Income Tax Act


Club Expenditure allowability in the Income Tax Act

 Often, Taxpayers makes the payment of club expenses which is disallowed by the assessing officer/Commissioner (Appeals) on ground that these pertain to partners personal spend and not being in relation to business.

What is the option in such cases? Whether it is legal to disallow the expenses in such cases? Should assessee file an appeal in such cases.

In my view, disallowance is not always warranted and assesse may prefer an appeal in such cases.

In Otis Elevator Co.(India) Limited v. CIT (195 ITR 682) the Hon’ble Bombay High Court held that “membership to clubs would provide offices and executives better contract and association with persons in good position and would result publicity.

Payment of club fees was with a view to enable assessee to improve its business relations and prospects and hence an allowable business expenditure”.

The similar views/conclusions can be drawn from following cases as well:

  1. Coats of India Ltd v. DCIT [ITA 561/C/92] )Mum ITAT
  2. CIT v. Ashoka Marketing Ltd (181 ITR 493) (Kol-HC)
  3. Sterlite Industries (India) Ltd v. Addl CIT 6 SOT 497 (Mum ITAT)
  4. Gujarat State Export Corpn. Ltd v. CIT 209 ITR 649 (Guj)
  5. Hon’ble Apex Court in the case of CIT v. United Glass Mfg. Co. Ltd. reported in 2012-TIOL-102-SC-IT dated 12-9-2012.


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