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Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of Where out of amount of Rs. 2 lakhs paid towards membership fee of club, Assessing Officer disallowed Rs. 1 lakh, under section 37(2) as Assessing Officer's order showed that expenses incurred by assessee were for the business purposes, entire club membership fee was allowable as deduction [A.Y 1995-96, 1996-97] Where out of the amount of Rs. 2 lakhs paid towards membership fee of the club, the Assessing Officer disallowed Rs. 1 lakh under section 37(2). Held that it was true that insofar as the present case was concerned, there was no specific finding that the payment was made by the assessee for improving its business. The Assessing Officer had allowed a deduction of 50 per cent of Rs. 2 lakhs under section 37(2). He did so on the basis that the expenditure incurred was for business purposes, otherwise the entire amount would have been disallowed by him. Consequently, even though there was no explicit finding to that effect, but there was an implicit acknowledgment that the expenses incurred by the assessee were for business purposes. Therefore, the assessee was entitled to the deduction of the club fee. JUDGMENT (ORAL JUDGMENT) Madan B. Lokur, J.-The Revenue is aggrieved by an order dated March 24, 2006, passed by the Income-tax Appellate Tribunal, Delhi Bench "G", New Delhi in I.T.A. No. 2039/Del/99 and 4909/Del/99 relevant for the assessment years 1995-96 and 1996-97. The only issue that arises in this appeal, as noted in our order dated October 9, 2006, is whether an opinion should have been expressed by the Tribunal that the question of membership of Madras Gymkhana Club taken by the assessee was with a view to promote its business. We find from a perusal of the assessment order that a membership fee of Rs. 2 lakhs was paid by the assessee to the Madras Gymkhana Club. In so far as expenses incurred by the assessee towards food etc., are concerned, they were subject to disallowance under section 37(2) of the Income-tax Act, 1961. As regards the amount of Rs. 2 lakhs paid towards membership fee of the club is concerned, the Assessing Officer permitted a disallowance of Rs. 1…

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