Income Tax Appellate Tribunal - Ahmedabad
Pipalia Cables & Wires Pvt .Td., ... vs Department Of Income Tax on 12 June, 2015
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'C' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND
SHRI RAJPAL YADAV, JUDICIAL MEMBER
आयकर अपील सं./ ITA No.2561/Ahd/2011
नधा रण वष /Asstt. Year: 2007-08
ITO, Ward-5(2) M/s.Pipalia Cables & Wires P.Ltd.
Ahmedabad. Vs 6, Neptune Tower
Ashram Road, Ahmedabad.
PAN :AAACP 9156 B
अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)
Revenue by : Shri Nimesh Yadav, Sr.DR
Assessee by : None
सन
ु वाई क तार ख/ Dateof Hearing : 08/06/2015
घोषणा क तार ख / Date of Pronouncement: 12/06/2015
आदे श/O R D E R
PER N.S. SAINI, ACCOUNTANT MEMBER: This an appeal filed by
the Revenue against order of the CIT(A)-XI, Ahmedabad dated 16.8.2011 for Asstt.Year 2007-08.
2. The sole ground taken by the Revenue in this appeal is that the CIT(A) erred in law and on facts in deleting the addition of Rs.16,00,000/- on account of disallowance of Keyman Insurance Premium.
3. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the assessee claimed to have paid Rs.40 lakhs as Keyman Insurance Premium and claimed deduction of entire amount of Rs.40 lakhs as deduction under section 37 of the Act.
ITA No.2561/ Ahd/2011 24. The AO observed that as per IRDA, the Keyman Insurance cannot be issued for more than Rs.120 lakhs for sum assured and cannot have annual premium exceeding Rs.24 lakhs. He held that out of Rs.40 lakhs, an amount of Rs.24 lakhs was towards Keyman Insurance, and consequently disallowed the balance amount of claim of Rs.16 lakhs.
5. On appeal, the CIT(A) following the decision of the Bench of the Tribunal in the case of DCIT Vs. M/s.P.G. Foils Ltd. in ITA No.2184/Ahd/2009 order dated 30.6.2011 for the Asstt.Year 2006-07 held that the entire Keyman Insurance Premium paid by the assessee is allowable as deduction under section 37 of the Act. Therefore, he deleted the disallowance of Rs.16 lakhs made by the AO.
6. Before us, the DR reiterated the findings of the AO.
7. We find that the Tribunal in the case of DCIT Vs. M/s.P.G. Foils Ltd.(supra) has held that the entire Keyman Insurance Premium of Rs.10 lakhs paid by the assessee is allowable under section 37 of the Act. Thus, we find that the issue that the payment exceeding Rs.24 lakhs cannot be premium of Keyman Insurance was not in dispute before the Tribunal, and the Tribunal in that case has not held that the payment exceeding Rs.24 lakhs can also be premium for Keyman Insurance. Thus, in our considered view, the issue involved in the present case is not the same as was confronted by the Tribunal in the above stated case. We find that the AR of the assessee has provided no material before the CIT(A) or before us to show that entire payment of Rs.40 lakhs made by the assessee was apportioned by the insurance company towards premium for Keyman Insurance. Further, it is also observed that the AO has also failed to bring on record any material to show that out of the payment of Rs.40 lakhs made by assessee to the insurance company, the insurance company actually only apportioned Rs.24 lakhs as premium for Keyman Insurance. Thus, we find that the actual nature of Rs.16 lakhs has not been verified by the lower ITA No.2561/ Ahd/2011 3 authorities. In our considered view, irrespective of the guidelines issued by the IRDA, if in fact the entire Rs.40 lakhs paid by the assessee was actually apportioned by the insurance company towards premium of Keyman Insurance, then the entire premium amount is allowable as deduction to the assessee under section 37 of the Act. However, if only Rs.24 lakhs was apportioned towards the Keyman Insurance Premium and Rs.16 lakhs was not apportioned by the insurance company towards insurance premium, then allowability of deduction of Rs.16 lakhs is to be decided, keeping in view the actual nature of such payment as per the apportionment made by the insurance company. We, therefore, set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO to re-adjudicate the issue of allowability of Rs.16 lakhs after proper verification as per law, in light of the observations made hereinabove. Needless to mention, the AO shall allow reasonable and proper opportunities to the assessee before adjudicating the issue afresh.
8. In the result, the appeal of the Revenue is allowed for statistical purpose.
Order pronounced in the Court on Friday the 12th June, 2015 at Ahmedabad.
Sd/- Sd/- (RAJPAL YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 12/6/2015