- (1.) We have heard both sides.
(2.) The Assessee being a Company paid certain amounts to a club intended for its employees. Half of the expenditure was disallowed under Section 37 (1) of the Income Tax Act by the Assessing Officer holding that it was not verifiable whether the expenditure was expended wholly and exclusively for the purposes of business. The Assessing Officer has wrongly applied Section 40A(2) of the Income Tax Act, which has no application in this case. The C.I.T. (Appeals) allowed the expenditure but the order of the C.I.T. (Appeals) was reversed by the Income Tax Appellate Tribunal, Ranchi which upheld the order of the Assessing Officer.
(3.) It may be repeated here that the Assessing Officer has allowed 50% of such expenditure.;