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February 2013

Expenditure: Capital or revenue: Section 37: A. Y. 1997-98: Amounts paid by assessee to clubs for obtaining membership is revenue expenditure:

By K. B. Bhujle, Advocate
Reading Time 1 mins
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CIT vs. Infosys Technologies Ltd. (No. 3); 349 ITR 598 (Kar):

In the relevant year, the Assessing Officer disallowed the claim of the assessee for deduction of the amount paid to the clubs for obtaining membership holding the same as capital expenditure. The Tribunal allowed the assessee’s claim.

On appeal by the Revenue, Karnataka High Court upheld the decision of the Tribunal and held that the amount paid to the clubs for obtaining membership is revenue expenditure.

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