Income Tax Appellate Tribunal - Ahmedabad
Rotomag Motors Controls (P) Ltd.,, ... vs Department Of Income Tax on 14 November, 2011
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'सी
सी'
सी अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
सव[ौी मुकुल कुमार ौावत, Ûयाियक सदःय एवं ौी ए.के.गरोǑडया, लेखा सदःय के सम¢ ।
BEFORE SHRI MUKUL Kr.SHRAWAT, JUDICIAL MEMBER AND
SHRI A.K. GARODIA, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.41/Ahd/2010
( िनधा[रण वष[ / Assessment Year : 2006-07)
Dy.CIT बनाम/
Rotomag Motors Controls
Anand Circle, Anand Vs. (P) Ltd.
C-1/5, Vithal Udyognagar
Tal & Dist.Anand
ःथायी ले खा सं . /जीआइआर सं . / PAN/GIR No.: AAACR 9061 K
(अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent)
अपीलाथȸ ओर से / Appellant by : Shri Vinod Tanwani, Sr.DR
ू×यथȸ कȧ ओर से/Respondent by : Shri N.C. Amin
सुनवाई कȧ तारȣख / Date of Hearing : 14/11/2011
घोषणा कȧ तारȣख /Date of Pronouncement : 25-11-2011
आदे श / O R D E R
PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :
This is an appeal at the behest of the Revenue which has emanated from the order of Learned CIT(Appeals)-IV, Baroda dated 01/10/2009 passed for Assessment Year 2006-07 and the only ground raised by the Revenue reads as follows:-
1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting Rs.16,24,153/- being premium for Keyman Insurance Policies, placing reliance on the CBDT's Cir.
No.762 dated 24-7-2000 and ignoring the information obtained by the Assessing Officer from the LIC Authority on 15/9/2008.
ITA No.41/Ahd/2010Dy.CIT vs. Rotomag Motors Controls (P) Ltd.
Asst.Year - 2006-07 -2-
2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 18/12/2008 were that the assessee-company during the year was engaged in the business of manufacturing and sale of ' Magnet Motors pumps'. It was noticed that a sum of Rs.16,24,153/- was claimed as "Keyman Insurance Policy". It was found by the Assessing Officer that the said policy was in the name of Shri Umesh Mohan Balani Director. It has also been noticed by the Assessing Officer that the said Director's share holding was only to the extent of 41.47%. As per Assessing Officer, under Keyman Insurance Scheme, the Keyman should hold more than 51% share holding. It was also noticed by the Assessing Officer that those policies were covered under the table 151/154 as per the Insurance Policy and that the said Directors share holding was less than 51%, therefore not entitled for the claim. Accordingly, the said payment was disallowed. The matter was carried before the first appellate authority.
3. The ld.CIT(A) has discussed the issue in the light of the directions of the CBDT Circular and allowed the claim as follows:
"2.2. I have considered the matter. There is no dispute that LIC had issued the policies as Keyman insurance policies, for which premium of Rs.16,24,153/- was paid by the appellant. It is for the LIC to see, before issuing a policy as Keyman insurance policy, whether the same is within the eligibility criteria for Keyman insurance policies. It is not open for the Assessing Officer or anybody else to question the nature of a policy, if LIC has issued it as Keyman insurance policy. In any case, as per LIC's Circular dated 24.07.2000, Keyman Insurance cover is permissible, even if key person's shareholding is less than 51%. Thus, the policies ITA No.41/Ahd/2010 Dy.CIT vs. Rotomag Motors Controls (P) Ltd.
Asst.Year - 2006-07 -3- taken by the appellant fulfilled the eligibility norms laid down by LIC. The Assessing Officer had made the disallowance without providing opportunity to the appellant and without taking into account LIC's Circular dated 24.7.2000. Premium paid in respect of Keyman insurance policies is an allowable deduction as per CBDT's Circular No.762. In view of this, addition of Rs.16,24,153/- is deleted."
4. Having heard the submissions of both the sides, we are of the view that there was no justification for the said disallowance on the part of the Assessing Officer. The issue now stood directly covered by the decision of ITAT Delhi 'SMC' Bench (Delhi) in the case of P.G.Electronics v/s. ITO reported in (2005) 098 TTJ 0896 (Del-Trib) and Sunita Finlease Ltd. vs. Dy.CIT reported in (2008) 118 TTJ 0263 (Bilaspur-Trib). In both these decisions, the said CBDT Circular No.762 dated 18/02/1998 was referred and thereafter held that though nowhere in the Act it is provided that the premium paid on the "Keyman Insurance Policy" is allowable as business expenditure, except by a CBDT Circular No.762 dated 18/02/1998, hence the Revenue Authorities are under obligation to carry- out the instruction. Therefore it was directed that once the Board had clarified that the premium paid on the Keyman Insurance Policy is to be allowed as business expenditure, then it ought to have been allowed. Thereafter, the Courts have held that the CBDT Circular is binding upon the Revenue Authorities. The ld.AR at this juncture has also cited a decision in the case of State of Kerala & Others vs. Kurian Abraham Pvt.Ltd. & Another reported in (2008) 303 ITR 284 (Ker.) for the legal proposition that the Assessing Officer is expected not to contravene an Instruction issued by CBDT while completing the assessment. Before ITA No.41/Ahd/2010 Dy.CIT vs. Rotomag Motors Controls (P) Ltd.
Asst.Year - 2006-07 -4- us, the said Circular No.762 dated 18/02/1998 Finance (No.2) Act, 1996, is placed and Vide clause 14.4, it was directed that the premium paid on the "Keyman Insurance Policy" is to be allowed as business expenditure.
5. Respectfully following these decisions, we find no fallacy in the judgement of ld.CIT(A), hence hereby affirm the same. Ground raised by the Revenue is dismissed.
6. In the result, the appeal of the Revenue is dismissed.
Sd/- Sd/-
( A.K. GARODIA ) ( MUKUL Kr. SHRAWAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 25/ 11 /2011
टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-IV, Baroda
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad ITA No.41/Ahd/2010 Dy.CIT vs. Rotomag Motors Controls (P) Ltd.
Asst.Year - 2006-07 -5-
1. Date of dictation.......................14.11.11
2. Date on which the typed draft is placed before the Dictating Member 15.11.11.................. Other Member.....................
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S...25.11.11
6. Date on which the file goes to the Bench Clerk............... 25.11.11
7. Date on which the file goes to the Head Clerk..................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................