Hon’ble ITAT Delhi held Director’s club expenses not ‘personal’. Is ITC available under GST?

Under income tax law, deductions are not allowed for personal expenses. Similarly, under Section 17(5) of the GST law, Input Tax Credit (ITC) is not available for personal expenses.

The Hon’ble ITAT has recently held that since a company is a juristic person, it cannot have ‘personal expenses.’ Therefore, club expenses incurred on behalf of the Managing Director should not be disallowed. The ruling states:

“Undisputedly, the assessee is a company, it would have no expenses of personal in nature. The AO ought to have verified whether such expenses were incurred in the course of business and for the business of the assessee. The company being juristic person would not have any personal expenses and would not incur personal expenses unlike living being. The body corporate operates through living beings.”

I personally think that this case is a good reference under GST law as well considering the fact that the consumption qua the company will always be for a business purpose.

** ITA 2598/2023