Income Tax Appellate Tribunal - Ahmedabad
Prakash Chemicals Pvt.Ltd.,, Baroda vs Department Of Income Tax on 30 September, 2011
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'डȣ
डȣ'
डȣ अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" D " 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.172/Ahd/2011
( िनधा[रण वष[ / Assessment Year : 2007-08)
Dy.CIT बनाम/
M/s.Prakash Chemical
Circle-4 Vs. Pvt.Ltd.
Baroda Induchaha House
Opp.Chhani Octroi Naka
Baroda
ःथायी ले खा सं . /जीआइआर सं . / PAN/GIR No.: AABCP 1987 H
(अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent)
अपीलाथȸ ओर से / Appellant by : Shri A.K. Patel, D.R.
ू×यथȸ कȧ ओर से/Respondent by : Shri M.K. Patel, A.R.
सुनवाई कȧ तारȣख / Date of Hearing : 30/09/2011
घोषणा कȧ तारȣख /Date of Pronouncement : 14.10.11
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)-III, Baroda dated 20/09/2010 passed for A.Y. 2007-08 and the only ground reads as follows:
1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in allowing Keyman Insurance premium amounting to `10,50,000/-, overlooking the fact that the expenditure was disallowable u/s.37(1) of the Income Tax Act, 1961, as the assessee could not establish that the payment was wholly and exclusively for the purpose of the assessee's business."ITA No.172/Ahd/2011
Dy.CIT v. M/s.Prakash Chemical P.Ltd.
Asst.Year - 2007-08 -2-
2. Facts in brief as emerged from the assessment order passed u/s.143(3)of the Act dated 11/12/2009 were that the assessee-company is in the business of import and distribution of chemicals. The assessee is also carrying transportation business. It was noted by the AO that a sum of Rs.10,50,000/- was debited to P&L account under the head "Keyman Insurance premium". The details of the same was submitted as follows:-
Sr.No. Name Nature of work Experience Premium Paid and qualification
1. Chirag Marketing of 13 years BBA Rs.3,50,000 P.Shah products, banking and finance
2. Atul C.Shah Marketing of 23 Years Rs.3,50,000 products, ERP B.Com.
& Accounts
3. Hitesh C.Shah Marketing of 29 Years Rs.3,50,000 products B.Com.
[Admn.& H.R.] Total Rs.10,50,000
3. The Assessing Officer was not convinced and held that the assessee has not placed on record the significance of the services of those persons and how their services was profitable to the business carried on by the assessee. In his opinion, those persons could not be considered as key persons, resultantly it was disallowed.
ITA No.172/Ahd/2011Dy.CIT v. M/s.Prakash Chemical P.Ltd.
Asst.Year - 2007-08 -3- 3.1. The matter was carried before the first appellate authority who has discussed a decision of Hon'ble Bombay High Court pronounced in the case of CIT vs. B.N.Exports [2010]190 Taxman 325 (Bom), wherein it was held that the allowability of the expenditure incurred on premium paid towards the Keyman Insurance Policy could not be confined only to a situation where policy is in respect of life of an employee. For the purpose of clause (10D), a Keyman Insurance Policy is a life insurance policy taken by a person on the life of an another person, who is an employee of the person who has subscribed to the policy of insurance which is connected in any manner whatsoever with the business of the subscriber to the policy. Ld.CIT(A) has also discussed CBDT Circular No.762 dated 18/02/1998 and allowed the claim.
3.2. In addition to above precedents, the issue of Keyman Insurance is also covered by the decisions of (i) P.G. Electronics vs. ITO 98 TTJ 896, CIT vs. B.N. Exports 37 DTR 381(Bom), Sunita Finlease Ltd. vs. DCIT 118 TTJ 263 (ITAT)[Bilaspur] and ITO vs. Modi Motors 27 SOT 476 [ITAT](Bom) and allowed the claim.
4. Having heard the submissions of both the sides, the issue now stood covered by a latest decision of ITAT "D" Bench Ahmedabad pronounced in the case of M/s.Gee Aar Tex vs. ACIT in ITA No.3469/Ahd/2008 (for A.Y. 2005-06), dated 31/03/2009, wherein the issue was discussed at length and finally held that in the light of the CBDT Circular (supra) and the Explanation to section 10(10D) the premium paid under the "Keyman Insurance Policy" on the life of a ITA No.172/Ahd/2011 Dy.CIT v. M/s.Prakash Chemical P.Ltd.
Asst.Year - 2007-08 -4- partner should not be disallowed. Though from the side of the Revenue, ld.DR Mr.A.K.Patel has objected the relief granted by ld.CIT(A) on the ground that the Keyman Insurance Policy pertained only to the Directors of the Company, and not for the employees of the company, therefore, the AO has rightly disallowed the same, but that aspect of his argument has already been considered by the Respected Co-ordinate Bench, therefore following the aforesaid decision, we find no force in this ground of the Revenue, hence dismissed.
5. In the result, Revenue's appeal stands dismissed.
Order signed, dated and pronounced in the Court on 14.10. 2011.
Sd/- Sd/-
( A.K. GARODIA ) ( MUKUL Kr. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 14/ 10 /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)-III, 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.172/Ahd/2011 Dy.CIT v. M/s.Prakash Chemical P.Ltd.
Asst.Year - 2007-08 -5-
1. Date of dictation.......................10.10.2011
2. Date on which the typed draft is placed before the Dictating Member 10.10.2011.................. 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.........14.10.11
6. Date on which the file goes to the Bench Clerk..................... 14.10.11
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..................