NEW INDIAEXTRUSIONS P. LTD, MUMBAI v. ACIT RG 5(2), MUMBAI

ITA 429/MUM/2009 | 2004-2005
Pronouncement Date: 28-02-2011 | Result: Dismissed

Appeal Details

RSA Number 42919914 RSA 2009
Assessee PAN AAACN2283M
Bench Mumbai
Appeal Number ITA 429/MUM/2009
Duration Of Justice 2 year(s) 1 month(s) 7 day(s)
Appellant NEW INDIAEXTRUSIONS P. LTD, MUMBAI
Respondent ACIT RG 5(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Date Of Final Hearing 07-04-2010
Next Hearing Date 07-04-2010
Assessment Year 2004-2005
Appeal Filed On 20-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ITA. NO. 429/MUM/2009 ASSESSMENT YEAR 2004-2005 NEW INDIA EXTRUSIONS PVT. LTD. MUMBAI 400 004 PAN AAACN2283M VS. THE ACIT RANGE 5 (2) MUMBAI 400 020 (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI R.M. DOSHI FOR RESPONDENT : SHRI HARI GOVIND SINGH (DR) ORDER PER D. MANMOHAN V.P. 1. DISALLOWANCE OF CLAIM OF DEDUCTION OF RS.3 50 0 00/- REFERABLE TO THE AMOUNT PAID TOWARDS MEMBERSHIP FEE S OF GARWARE CLUB IN THE NAME OF ONE OF THE DIRECTORS OF THE ASS ESSEE-COMPANY IS THE SUBJECT MATTER OF DISPUTE BEFORE US. 2. FACTS OF THE CASE ARE STATED IN BRIEF. ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACT URE AND SALE OF NON-FERROUS METALS. IN RESPECT OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2004-2005 ASSESSEE DECLARED TOTAL I NCOME OF RS.95 31 818/-. WHEN THE CASE WAS TAKEN-UP FOR SCRU TINY THE ASSESSING OFFICER NOTICED THAT THE COMPANY DEBITED RS.3 50 000/- IN ITS P & L ACCOUNT REFERABLE TO THE ENTRANCE FEES P AID TO GARWARE CLUB FOR THE MEMBERSHIP OF SHRI VISHNUKUMAR AGARWAL DIR ECTOR OF THE ASSESSEE-COMPANY. ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN AS TO HOW THE SAME IS ALLOWABLE AS REVENUE EXPENDITURE IN THE HANDS OF THE ASSESSEE. IN RESPONSE THERETO IT WAS CONTENDED THAT GARWARE CLUB IS A VERY PRESTIGIOUS CLUB WHERE EXECU TIVES FROM CORPORATE WORLD MEET FREQUENTLY AND DO BUSINESS DEA LINGS SINCE CLUB PROVIDES FACILITIES FOR ARRANGING BUSINESS MEETINGS . OFFICE OF THE 2 COMPANY IS ALSO LOCATED AT GIRGAON WHICH IS CLOSE T O THE CLUB AND APPROPRIATE FOR ARRANGING MEETINGS WITH THE EXECUTI VES OF COMPANIES; MOREOVER EXECUTIVES VISIT CLUB REGULARLY. THE OBJE CT OF TAKING MEMBERSHIP WAS TO DEVELOP THE BUSINESS OF THE COMPA NY BY COMING IN CONTACT WITH VARIOUS BUSINESSMAN FROM VARIOUS INDUS TRIES. SINCE GARWARE CLUB HAS NO SYSTEM OF GRANTING MEMBERSHIP T O PRIVATE COMPANIES ASSESSEE APPLIED FOR MEMBERSHIP IN THE N AME OF ONE OF ITS DIRECTORS THOUGH THE OBJECT OF TAKING MEMBERSHIP W AS TO DEVELOP THE BUSINESS OF THE COMPANY. THEREFORE EXPENDITURE INC URRED TOWARDS PAYMENT OF ENTRANCE FEES IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS AND HENCE ALLOWABLE AS BUSINES S EXPENDITURE UNDER SECTION 37 (1) OF THE INCOME TAX ACT. RELIANC E WAS PLACED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF OTIS ELEVATORS 195 ITR 682 WHEREIN CLUB MEMBERSHIP FEES WAS ALLOWED AS BUSINESS EXPENDITURE. IT WAS ALSO CONTENDED THAT TH OUGH ENTRANCE FEES WAS ONE TIME PAYMENT IT CANNOT BE TREATED AS CAPIT AL EXPENDITURE AS IT MERELY GIVES ELIGIBILITY TO THE COMPANY TO USE T HE SERVICE OF THE CLUB AND FOR USING DAY-TO-DAY FACILITIES. THE COMPANY HA D TO PAY SUBSCRIPTION FEES ON YEARLY BASIS. IN OTHERWORDS B Y PAYING THE ENTRANCE FEES THE COMPANY HAS NOT ACQUIRED AN ASSE T OF ENDURING NATURE. 3. ASSESSING OFFICER REJECTED THE CONTENTION OF TH E ASSESSEE AND DISALLOWED THE CLAIM OF DEDUCTION BY OBSERVING AS UNDER : THE CLUB MEMBERSHIP FEES IS A ONE TIME PAYMENT AND AS THE ASSESSEE CORRECTLY POINTED OUT IN HIS SUBMISSIO NS IT WILL HELP HIM TO IMPROVE HIS BUSINESS RELATION WITH CLIENTS AND IS DEFINITELY HAVING AN ENDURING BENEFIT FOR SE VERAL YEARS. HENCE I HOLD THAT THE PAYMENT OF RS.3 50 00 0/- FOR THE LIFE MEMBERSHIP OF THE CLUB IS HAVING THE NATUR E OF CAPITAL EXPENDITURE AND THUS DISALLOWED. 3 4. AGGRIEVED ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE EXPENDITURE IS REVENUE IN NATURE AND OUGHT TO HAVE BEEN ALLOWED AS DEDUCTION. HOWEVER THE PLEA OF THE ASSESSEE WAS RE JECTED BY THE LEARNED CIT(A) AND IN THIS REGARD HE OBSERVED AS UN DER : I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT . THE EXPENDITURE HAS BEEN INCURRED FOR ACQUIRING THE MEM BERSHIP OF M/S. GARWARE CLUB IN THE NAME OF DIRECTOR OF THE AP PELLANT COMPANY SHRI VISHNUKUMAR AGARWAL. THE APPELLANT IS A SEPARATE LEGAL ENTITY. THE APPELLANT HAS CLAIMED TH AT IT COULD NOT OBTAIN THE MEMBERSHIP IN THE NAME OF THE COMPAN Y SINCE THERE IS NO PROVISION IN THE CLUB TO GIVE MEMBERSHI P IN THE NAME OF THE COMPANY. WHEN THE CLUB HAS NOT GRANTED MEMBERSHIP TO COMPANIES THIS MEANS THAT CLUB IS NO T MEANT FOR CORPORATE WORLD. IN SUCH A SITUATION THE CLAIM OF THE APPELLANT THAT CLUB PROVIDES INCENTIVE TO COMPANY F OR CONDUCTING BUSINESS MEETINGS CANNOT BE ACCEPTED. TH E EXPENDITURE INCURRED BY THE APPELLANT IS INCURRED O N BEHALF OF THE DIRECTOR OF THE COMPANY. THE APPELLANT FILED NO EVIDENCE AS TO HOW THIS MEMBERSHIP WAS ACTUALLY USED FOR THE BE NEFIT OF THE APPELLANT COMPANY. ACCORDINGLY THE ACTION OF T HE ASSESSING OFFICER IN DISALLOWING THESE EXPENSES IS UPHELD. AS A RESULT THIS GROUND OF APPEAL IS NOT ALLOWED. 5. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. LEA RNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMI TTED THAT MEMBERSHIP OF THE CLUB WAS TAKEN WITH AN OBJECT TO CONDUCT BUSINESS MEETINGS SMOOTHLY AND TO PROMOTE THE BUSINESS SINCE DIRECTOR OF THE COMPANY CAN MAKE USE OF THE FACILITY FOR INTERACTIN G WITH VARIOUS INDUSTRIALISTS AND EXECUTIVES OF THE CORPORATE WORL D. AS PER THE POLICY OF THE CLUB MEMBERSHIP OF THE CLUB IS RESTRICTED T O INDIVIDUALS AND CORPORATE MEMBERSHIP IS ONLY RESTRICTED TO PUBLIC L IMITED COMPANIES. ASSESSEE BEING A PRIVATE LIMITED COMPANY THERE WAS NO OPTION BUT TO TAKE MEMBERSHIP IN THE NAME OF THE DIRECTOR OF THE COMPANY. HOWEVER THE UNDERLYING OBJECT OR THE SOLE OBJECT W AS TO FACILITATE AND 4 PROMOTE BUSINESS OF THE COMPANY AND THUS IN THE HAN DS OF ASSESSEE- COMPANY IT HAS TO BE TREATED AS REVENUE EXPENDITURE . IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER HAS NOT DISPUT ED THE BUSINESS PURPOSE OF THE EXPENDITURE BUT MERELY DISALLOWED ON THE GROUND THAT IT HAS TO BE TREATED AS A CAPITAL EXPENDITURE OVERL OOKING TO THE FACT THAT UNDER SIMILAR CIRCUMSTANCES COURTS HAVE TIME A ND AGAIN HELD THAT EXPENDITURE INCURRED ON ONE TIME ENTRANCE FEES IS ALLOWABLE AS DEDUCTION UNDER SECTION 37 (1) OF THE INCOME TAX AC T. LEARNED COUNSEL RELIED UPON THE FOLLOWING DECISIONS : (I) CIT VS. SAMTEL COLOUR LTD. (2009) 180 TAXMAN 82 (DE L.) (II) CIT VS. ENGINEERS INDIA LTD. (1999) 239 ITR 237 (DE L.) (III) CIT VS. SUDARAM INDUSTRIES LTD. (1999) 240 ITR 335 (MAD) (IV) OTIS ELEVATORS CO. (INDIA) LTD. VS. CIT (1992) 60 T AXMAN 215 (BOM.) WRITTEN SUBMISSIONS WERE ALSO FILED ENCLOSING THE C OPIES OF THE AFOREMENTIONED JUDGMENTS. 6. ON THE OTHER HAND LEARNED DR SUBMITTED THAT TH ERE WAS A CATEGORICAL FINDING BY THE LEARNED CIT(A) THAT TH ERE IS NO EVIDENCE ON RECORD THAT THE MEMBERSHIP WAS ACTUALLY USED FOR TH E PURPOSE OF BUSINESS OF THE ASSESSEE-COMPANY AND ON THIS ASPECT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE. IT WAS FURTHER CONT ENDED THAT THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF OTIS ELEVATORS (SUPRA) IS DISTINGUISHABLE ON FACTS INASM UCH AS THE COURT WAS CONCERNED THEREIN WITH THE TAXABILITY OF THE RE GULAR DAY-TO-DAY CLUB EXPENSES REIMBURSED TO EMPLOYEES I.E. WHETHER CLUB FEES PAID TO EMPLOYEES IS A PERQUISITE FOR THE PURPOSE OF SECTI ON 40(A)(V) OF THE ACT WAS THE SUBJECT MATTER OF CONSIDERATION BY THE COUR T AND NOT AS TO WHETHER SUCH EXPENDITURE WAS A BUSINESS EXPENDITURE ALLOWABLE AS DEDUCTION UNDER SECTION 37 (1) OF THE ACT. AT ANY R ATE THE COURT WAS NOT CONCERNED WITH THE PAYMENT OF ENTRANCE FEES AND ALLOWABILITY OF DEDUCTION THEREOF UNDER SECTION 37 (1) OF THE ACT. 5 7. IN HIS WRITTEN SUBMISSIONS LEARNED DR STRONGLY RELIED UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF FRAMATONE CONNECTORS OEN LTD. 294 ITR 559 WHEREIN T HE HONBLE COURT CATEGORICALLY HELD THAT ENTRANCE FEES PAID T O BECOME A MEMBER OF A CLUB HAS TO BE TREATED AS CAPITAL EXPENDITURE AND THEREFORE REJECTED THE CLAIM OF DEDUCTION UNDER SECTION 37 (1 ) OF THE ACT. IT WAS STRONGLY CONTENDED THAT ONE TIME EXPENDITURE TOWARD S ENTRANCE FEES GIVES AN ENDURING ADVANTAGE TO A PARTY AND HENCE IT HAS TO BE TREATED AS A CAPITAL ASSET SINCE IT DOES NOT BECOME OBSOLET E OR PERISHABLE. LAST BUT NOT THE LEAST IT WAS CONTENDED THAT THE BENEFI CIARY IN THE INSTANT CASE IS THE DIRECTOR AND AS PER THE NORMAL TERMS O F THE MEMBERSHIP OF ANY CLUB THE LIFE MEMBERSHIP BENEFIT PERPETUALL Y GOES TO THE INDIVIDUAL AND HIS FAMILY MEMBERS EVEN IF HE DOES N OT CONTINUE AS A DIRECTOR OR IN ANY OTHER CAPACITY CONNECTED TO THE COMPANY FOR A LONGER PERIOD. THUS IN THE ABSENCE OF ANY PROOF TO SHOW THAT THE ASSESSEE HAD TAKEN SOME BENEFIT OUT OF THE EXPENDIT URE INCURRED ON THE MEMBERSHIP OF THE DIRECTOR IT CANNOT BE SAID TH AT EXPENDITURE WAS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD. IT IS WELL SETTLED THAT THE INI TIAL ONUS IS UPON THE ASSESSEE TO PROVE THAT ANY EXPENDITURE INCURRED BY IT WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IF IT IS P ROVED THAT IT WAS INCURRED FOR THE PURPOSE OF BUSINESS THE NEXT QUES TION THAT ARISES FOR CONSIDERATION IS AS TO WHETHER THE SAID EXPENDITURE WAS CAPITAL OR REVENUE IN NATURE. AS REGARDS THE SECOND ASPECT COU RTS HAVE TIME AND AGAIN HELD THAT AS TO WHAT WOULD FALL IN THE REALM OF CAPITAL OR REVENUE IS A VEXED QUESTION BECAUSE THE LINE OF DEMARCATION BETWEEN THE TWO IS VERY THIN. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ENGINEERS INDIA LTD. (1999) 239 ITR 237 (DEL.) HAD OBSERVED T HAT IT IS NOT POSSIBLE TO LAY DOWN ANY SINGLE OR EXHAUSTIVE TEST AS INFALLIBLE OR ANY SINGLE CRITERION AS DECISIVE FOR DETERMINATION OF THE QUESTION AND 6 ONE OF THE BROAD CRITERIA TO DISTINGUISH BETWEEN TH E TWO (I.E. CAPITAL OR REVENUE) IS THE TEST OF ENDURING BENEFIT. AT T HE COST OF REPETITION IT MAY BE STATED THAT THE QUESTION AS TO WHETHER IT IS CAPITAL OR REVENUE IN NATURE REQUIRE TO BE DECIDED ONLY IN THE EVENT O F AN ASSESSEE SHOWING THAT THE EXPENDITURE WAS INCURRED FOR THE P URPOSE OF ITS BUSINESS. THERE IS NO BAR FOR A COMPANY BECOMING ME MBER OF A CLUB EITHER IN ITS CORPORATE CAPACITY OR THROUGH ITS DIR ECTORS OR EMPLOYEES OR EXECUTIVES IF THE INTENTION WAS TO GAIN BUSINESS ADVANTAGE BY VIRTUE OF BECOMING A MEMBER OF A CLUB. HOWEVER IT HAS TO BE PROVED THAT ASSESSEE DID OBTAIN SUCH BENEFIT OR THE PRIMARY OBJ ECT WAS TO MAKE USE OF THE CLUB FACILITIES FOR THE PURPOSE OF BUSIN ESS. IN MOST OF THE CASES CORPORATE MEMBERSHIP IS TAKEN WHEREBY COMPANY CAN NOMINATE EITHER ITS DIRECTORS OR ITS EXECUTIVES/EMPLOYEES TO BECOME MEMBERS OF THE CLUB THROUGH WHOM BUSINESS OF THE COMPANY IS CO NDUCTED. THE VERY FACT THAT THE COMPANY HAD TAKEN A MEMBERSHIP I N ITS NAME MAY PRIMA FACIE SUGGEST THAT THE DOMINANT OBJECT WAS TO GAIN SOME BUSINESS ADVANTAGE THOUGH IT IS NOT AN INFALLIBLE O R DOMINANT TEST TO BE SOLELY TAKEN INTO CONSIDERATION. IN THE CASE OF PRIVATE COMPANIES IF A MEMBERSHIP IS TAKEN IN THE NAME OF SOME OF THE EM PLOYEES WHO HAVE NO CONTROLLING INTEREST IN THE COMPANY ONE CAN PRIMA FACIE ASSUME THAT THE DOMINANT OBJECT OF MAKING SUCH EXEC UTIVES AS MEMBERS OF A CLUB WAS TO PROMOTE BUSINESS SINCE IT CANNOT BE ASSUMED THAT A COMPANY WOULD UNDERTAKE A CHARITABLE WORK OF MAKING AN EXECUTIVE OR EMPLOYEE A MEMBER OF A CLUB. HOWEVER PROBLEM ARISES WITHIN THE DETERMINATION OF THE INTE NTION OF THE COMPANY WHEN MEMBERSHIP IS TAKEN IN THE NAME OF THE DIRECTORS WHEN A DIRECTOR HAS HEAVY STAKES INVOLVED IN THE CO MPANY. IN SUCH A CASE IT IS FOR THE ASSESSEE TO PROVE THAT THE MEMB ERSHIP WAS OBTAINED SOLELY FOR THE PURPOSE OF BUSINESS AND EFFORTS HAVE TO BE MADE BY FURNISHING SOME EVIDENCE OR BY PROVING THROUGH SUBS TANTIAL EVIDENCE THAT THE FEES FOR THE MEMBERSHIP OF THE DIRECTOR WA S PAID BY THE COMPANY WITH AN OBJECT TO ADVANCE ITS BUSINESS INTE RESTS. ONCE IT IS PROVED THAT THE DOMINANT OBJECT WAS TO ADVANCE BUSI NESS INTEREST 7 MERELY BECAUSE CERTAIN INCIDENTAL BENEFITS ARE ENJO YED BY THE INDIVIDUAL BY BECOMING A MEMBER OF A CLUB IT CANNO T BE SAID THAT SUCH EXPENDITURE WAS NOT INCURRED FOR THE PURPOSE O F BUSINESS OF THE COMPANY. 9. TURNING TO THE FACTS OF THE INSTANT CASE MEMBE RSHIP WAS TAKEN IN THE NAME OF SHRI VISHNUKUMAR AGARWAL WHO I S NONE OTHER THAN THE DIRECTOR OF THE ASSESSEE-COMPANY AND NONE OF THE EXECUTIVES OF THE COMPANY APPEARS TO HAVE BEEN MADE MEMBERS OF THE CLUB. ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE RECORD ED A FINDING THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE AS TO HOW THI S MEMBERSHIP WAS ACTUALLY UTILISED FOR THE BENEFIT OF THE ASSESS EE-COMPANY. EVEN BEFORE US NO EVIDENCE WHATSOEVER WAS FURNISHED TO PROVE THAT THE MEMBERSHIP FACILITY WAS ACTUALLY UTILISED FOR THE B ENEFIT OF THE ASSESSEE-COMPANY. LEARNED CIT(A) OBSERVED THAT GARW ARE CLUB DOES NOT GRANT MEMBERSHIP TO COMPANIES WHICH IMPLIES THA T THE CLUB IS NOT MEANT FOR CORPORATE WORLD IN WHICH EVENT THE CLAIM OF THE ASSESSEE THAT GARWARE CLUB PROVIDES INCENTIVES TO A COMPANY FOR CONDUCTING BUSINESS MEETINGS CANNOT BE ACCEPTED. LEARNED CIT(A ) FURTHER NOTED THAT THE ASSESSEE HAD NOT FILED ANY EVIDENCE TO PRO VE THAT THIS MEMBERSHIP WAS ACTUALLY USED FOR THE BENEFIT OF THE ASSESSEE- COMPANY. EVEN BEFORE US NO EVIDENCE WAS FURNISHED TO REBUT THE FINDINGS OF THE LEARNED CIT(A). UNDER THESE CIRCUMS TANCES WE ARE OF THE OPINION THAT THE EXPENDITURE INCURRED BY THE AS SESSEE IS NOT ALLOWABLE UNDER SECTION 37 (1) OF THE ACT SINCE IT WAS NOT WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. S INCE THE IMPUGNED EXPENDITURE DID NOT PASS THE FIRST TEST IT IS NOT NECESSARY FOR US TO GO INTO THE NEXT ISSUE AS TO WHETHER IT WAS A CAPITAL EXPENDITURE OR A REVENUE EXPENDITURE THOUGH A LIFE MEMBERSHIP; ON TH E FACE OF IT GIVES AN ENDURING ADVANTAGE TO THE PARTY CONCERNED AND TH EREFORE DESERVES TO BE TREATED AS CAPITAL EXPENDITURE AS HELD BY TH E HONBLE KERALA HIGH COURT IN THE CASE OF FRAMATONE CONNECTOR OEN L TD. (2007) 294 ITR 559. 8 10. CASE LAW RELIED UPON BY THE LEARNED COUNSEL AR E DISTINGUISHABLE ON FACTS. IN THE CASE OF CIT VS. SA MTEL COLOUR LIMITED 180 TAXMAN 82 (DEL.) THE DECISION OF THE HONBLE C OURT WAS BASED UPON FINDING OF THE TRIBUNAL THAT EXPENDITURE WAS W HOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS AN D IT WAS A CASE WHERE ASSESSEE-COMPANY HAD NOMINATED ITS EMPLOYEES TO AVAIL BENEFIT OF CORPORATE MEMBERSHIP AND IT WAS NOT A CASE OF A DIRECTOR OF A PRIVATE COMPANY AVAILING PERSONAL BENEFIT AS A MEMB ER IN HIS INDIVIDUAL NAME. SIMILARLY IN THE CASE OF ENGINEERS INDIA LTD. (SUPRA) THE HONBLE DELHI HIGH COURT WAS CONCERNED WITH THE PAYMENT OF INITIAL FEES TO AN ORGANISATION WHICH WAS A CO-OPER ATIVE RESEARCH ORGANISATION. BASED UPON THE FINDING THAT BY BECOMI NG A MEMBER OF SUCH ORGANISATION ASSESSEE HAD THE BENEFIT OF REGUL AR SUPPLY OF INFORMATION CONCERNING MATHEMATICAL MODELS IT WAS HELD THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE CASE OF CIT VS. SUNDARAM INDUSTRIE S (1999) 240 ITR 335 (MAD.) IT WAS THE CASE OF PAYMENT OF SUBSCRIPTI ON TO THE CLUBS AND IT WAS NOT A CASE OF ENTRANCE FEES. SIMILARLY IN T HE CASE OF OTIS ELEVATOR CO. (INDIA) LTD. VS. CIT (SUPRA) THE ISSUE BEFORE THE HONBLE BOMBAY HIGH COURT WAS WITH REGARD TO APPLICATION OF SECTION 40(A)(V). WHETHER EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF BUSINESS AND WHETHER IT WAS A CAPITAL OR REVENUE EXPENDITURE WAS NOT THE SUBJECT MATTER OF CONSIDERA TION BEFORE THE HONBLE COURT. HOWEVER IN THE CASE OF ASSESSEE-COM PANY NO EVIDENCE WAS ADDUCED TO PROVE THAT DOMINANT OBJECT WAS TO UT ILISE THE CLUB FOR BUSINESS MEETINGS. 11. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY 2011. SD/- SD/- (PRAMOD KUMAR) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 28 TH FEBRUARY 2011 VBP 9 COPY TO 1. NEW INDIA EXTRUSIONS PVT. LTD. SHIVNERI APARTME NTS MUGHBHATT LANE PIMPLEWADI GIRGAON MUMBAI 400 004 PAN AAACN2283M 2. THE ACIT RANGE 5 (2) MUMBAI. 3. CIT(A)-V MUMBAI 4. CIT M.C.V MUMBAI 5. DR B BENCH 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.