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Documents citing P.G. Electronics vs Income Tax Officer on 7 October, 2005

Parmeshwar Engineers, Surat vs Assessee on 28 September, 2007

6.2 As per the Explanation, if it is not an employee, the person in whose name the KIP is taken has to be connected in some manner with the business of the person taking policy. The partners are not merely 'connected' to the firm. They are the firm, and they constitute the firm. Therefore, any partner cannot be a keyman for the firm. To that extent, I would respectfully reject the view taken by the Hon'ble Delhi Bench of the ITAT in the case of P. G. Electronics supra). In any case, the only issue before the ITAT was whether or not the premium paid on the KIP is allowable as a business expenditure. The ITAT held that it was allowable as a business expenditure since it was clarified as such in the Circular NO.762 issued by the CBDT. Para 14.1A of the Circular clarified that a keyman is an employee or a director whose services are perceived to have a significant effect on the profitability of the business. The premium is paid by th4e employer. The A. O. therefore, was fully justified in taking the view that the partner of a firm could not be a keyman and consequently, in disallowing the sum of Rs.11 lacs paid by the Assessee firm as premium for the KIP. The addition of the said sum is confirmed".
Income Tax Appellate Tribunal - Ahmedabad Cites 7 - Cited by 0 - Full Document

Soundarya Decorators Pvt. Ltd., ... vs Assessee on 7 February, 2013

12. As regards the second ground relating to Keyman Insurance Premium, the CIT(A) referring to CBDT Circular No.762 dated 18.2.1998 has held that the aforementioned circular is clear that Keyman Insurance Premium should be treated as business expenditure. In view of the circular, the CIT(A) allowed the sum of `1,89,08,394/-. Moreover, the Delhi Bench of the Tribunal in the case of P.G. Electronics Vs. ITO reported as 15 SOT 79 has held that Keyman Insurance Premium has to be allowed as expenditure in view of Board's Circular No.762 (supra).
Income Tax Appellate Tribunal - Chennai Cites 1 - Cited by 0 - Full Document

Toshniwal & Co., Mumbai vs Assessee

3. The learned counsel for the assessee submitted that in this case the premium paid on Key-men's Insurance Policy had been held to be allowable only for a particular portion of the period on the basis of mercantile system of accounting. Since such expenditure is allowable in view of the decision of the Delhi Bench of the Tribunal in the case of P.G. Electronics v. ITO (98 TTJ 896. Therefore, suitable direction may be given to allow the balance of premium in the next year on the same matching principle.
Income Tax Appellate Tribunal - Mumbai Cites 2 - Cited by 0 - Full Document
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