ARCADIA SHARE & STOCK BROKERS P. LTD, MUMBAI V. DCIT4(1)(1), MUMBAI

ITA 1701/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8092 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Section: 143(3)

Judgement Text

1 ITA 1701/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO. 1701/MUM/2018 (ASSESSMENT YEAR : 2013-14) M/S ARCADIA SHARE & STOCK BROKERS PVT LTD, 328/329, NANAD CHS, 1ST FLOOR, BLDG NO.7, SERVICE ROAD, NEAR BHAVISHYA NIDHI BHAVAN, OPP. WESTERN EXPRESS HIGHWAY, BANDRA (E), MUMBAI-400 051 PAN : AAACA4562G VS DY.C IT, CIRCLE 4(1)(1), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY MS. NEELAM JADHAV RESPONDENT BY SHRI PANKAJ KUMAR DATE OF HEARING 28-03-2019 DATE OF PRONOUNCEMENT 28-03-2019 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT(A)-9, MUMBAI DATED 17-01-2018 AND IT PERTAINS TO AY 2013- 14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- DISALLOWANCE OF KEYMAN INSURANCE PREMIUM OFRS.13.0 8.S52/- 2 ITA 1701/MUM/2018 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCE OF KEYMAN INSURANCE PREMIUM OF RS.13,08,552/-, WITHOUT APPRECIATING THA T THE NOMINEE OF THE POLICY IS THE POLICY HOLDER AND EVEN IF THE NOMINEE WAS NOT MENTI ONED IN THE APPLICATION FORM, THE BENEFIT OF SUM INSURED WILL REMAINS WITH THE POLICY HOLDER OR POLICY BENEFICIAL. HENCE THE DISALLOWANCE MADE BY THE A.O AND CONFIRMED BY T HE CIT(A) MAYBE DELETED. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF KEYMAN INSURANCE PREMIUM WITHOUT APPRECIATING THAT THE KEYMAN INSURA NCE POLICY IS TAKEN BY THE COMPANY AND THE POLICY DOCUMENTS ITSELF MENTIONED T HAT POLICY OWNER IS A POLICY HOLDER AND THE BENEFICIARY OF THE_POLICY IS A PPELLANT COMPANY. HENCE, THE DISALLOWANCE OF KEYMAN INSURANCE PREMIUM PAID MAY B E DELETED. 3. THE LEARNED CIT[A) ERRED IN CONFIRMING THE DIS ALLOWANCE OF KEYMAN INSURANCE PREMIUM OF RS.13,08,552/-, WITHOUT APPRECIATING THA T ASSESSEE COMPANY IS THE POLICY OWNER AND THE POLICY OWNER DOSE NOT ASSIGN I TS RIGHTS FOR SUM INSURED TO THE OTHERS TILL DATE IT REMAINS WITH THE ASSESSEE COMPA NY ONLY. THEREFORE, KEYMAN INSURANCE PREMIUM PAID OBJECTING FOR NOMINATION IS NOT CORRECT IT MAY BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF SHARE AND STOCK BROKING. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR AY 2013-14 ON 03-09-2013 DECLARING TOTAL INCOME AT RS.7,71,07,665. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) ON 21-03-2015 BY DETERMIN ING THE TOTAL INCOME AT RS.7,84,36,053 BY MAKING ADDITION TOWARDS DISALLOWA NCE OF AMOUNT PAID TO KEYMAN INSURANCE POLICY FOR THE REASON THAT THE POL ICY HAS BEEN TAKEN IN THE NAME OF TWO DIRECTORS. 3. AGGRIEVED BY THE ASSESSMENT ORDER ASSESSEE PREFE RRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) DISMISSED AP PEAL FILED BY THE ASSESSEE, WHERE HE CONFIRMED ADDITION MADE BY THE AO TOWARDS DISALLOWANCE OF KEYMAN INSURANCE PREMIUM PAID TOWARDS INSURANCE POLICY TAK EN IN THE NAME OF 3 ITA 1701/MUM/2018 DIRECTORS OF THE COMPANY. AGGRIEVED BY THE ORDER O F LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.AR FOR THE ASSESSEE, AT THE TIME OF HEARI NG, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, MUMBAI BENCH I IN ASSESSEES OWN CASE FOR AYS 201 1-12 AND 2012-13 (2018) 170 ITD 616 (MUM), WHERE UNDER IDENTICAL FACTS, THE TRIBUNAL HELD THAT WHERE ASSESSEES CLAIM FOR DEDUCTION OF PREMIUM PAID ON K EYMAN INSURANCE POLICY TAKEN IN NAME OF DIRECTORS WAS ALLOWED ON THE GROUN D THAT POLICIES WERE, IN FACT, LIFE INSURANCE POLICIES IN VIEW OF FACT THAT IN THE EVENT OF DEATH OF DIRECTORS, ASSURED SUM HAD TO BE RECEIVED BY ASSESS EE COMPANY. 5. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE CO-ORDINATE BENCH OF ITAT, MUMBAI BENCH I HAD CONSIDERED AN IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR AYS 2011-12 & 2012-13, WHERE BY CONSIDERIN G FACTS HELD THAT SUM ASSURED UNDER THE INSURANCE POLICY AS PER THE TERMS AND CONDITIONS WOULD GO BACK TO THE ASSESSEE IN THE EVENT OF DEATH OF POLIC Y HOLDERS. THE RELEVANT PORTION OF THE FINDINGS OF THE TRIBUNAL ARE AS UND ER:- UNDISPUTEDLY, THE DEDUCTION CLAIMED BY THE ASSESSE E ON ACCOUNT OF PREMIUM PAID IS IN RESPECT OF KEYMAN INSURANCE POLICY MADE IN THE NAME OF TWO 4 ITA 1701/MUM/2018 DIRECTORS OF THE COMPANY. IT IS ALSO NOT DISPUTED T HAT THESE INSURANCE POLICIES WITH 'B CO. WERE MADE IN THE YEAR 2004 AND THE ASS ESSEE HAD CLAIMED DEDUCTION OF THE PREMIUM PAID IN RESPECT OF SUCH IN SURANCE POLICY FROM ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08. NOTA BLY, AFTER EXAMINING ASSESSEE'S CLAIM OF DEDUCTION IN THESE ASSESSMENT Y EARS, THE ASSESSING OFFICER IN ASSESSMENTS COMPLETED UNDER SECTION 143(3) HAS A LLOWED DEDUCTION IN RESPECT OF PREMIUM PAID. IN FACT, THE ASSESSEE HAS MADE A STATEMENT THAT, EXCEPT, THE IMPUGNED ASSESSMENT YEAR IN NO OTHER AS SESSMENT YEAR DEDUCTION CLAIMED ON ACCOUNT OF PREMIUM PAID HAS BEEN DISALLO WED. THUS, WHEN IT IS A FACT ON RECORD THAT THE INSU RANCE POLICIES ARE CONTINUING FROM THE YEAR 2004 AND IN THE PRECEDING ASSESSMENT YEARS ASSESSEE'S CLAIM OF DEDUCTION IN RESPECT OF PREMIUM PAID HAVE BEEN ALLO WED BY THE ASSESSING OFFICER IN SCRUTINY ASSESSMENTS, IN THE ABSENCE OF ANY MATERIAL CHANGE IN FACTS, THE DEDUCTION CLAIMED IN RESPECT OF PREMIUM PAID CA NNOT BE DISALLOWED IN THE IMPUGNED ASSESSMENT YEAR, AS THE RULE OF CONSISTENC Y MUST BE APPLIED. THE REVENUR EXCEPT STATING THAT IN THE PRECEDING ASSESS MENT YEARS THE ASSESSING OFFICER HAS NOT PROPERLY EXAMINED THE ISSUE HAS NOT BROUGHT TO NOTICE ANY MATERIAL CHANGE IN FACTS WHICH COULD HAVE INFLUENCE D THE ASSESSING OFFICER TO TAKE A DIFFERENT VIEW IN THE IMPUGNED ASSESSMENT YE AR DEPARTING FROM THE VIEW TAKEN IN THE PRECEDING ASSESSMENT YEARS. MOREOVER, THE KEYMAN INSURANCE POLICIES WERE TA KEN IN THE NAME OF DIRECTORS IN PURSUANCE TO RESOLUTION OF BOARD OF DI RECTORS AND IT HAS ALSO BEEN SUBMITTED BY THE ASSESSEE THAT THE SUM ASSURED UNDE R THE INSURANCE POLICY AS PER THE TERMS AND CONDITIONS WOULD COME BACK TO THE ASSESSEE ON THE DEATH OF POLICY HOLDERS. IN VIEW OF THE AFORESAID, ASSESSEE' S CLAIM OF DEDUCTION OF PREMIUM PAID IN BOTH THE ASSESSMENT YEARS IS ALLOWE D. [PARA 6] 7. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH T HE VIEW TAKEN BY THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER Y EAR, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN DISALLOWIN G INSURANCE PREMIUM PAID ON KEYMAN INSURANCE POLICY TAKEN IN THE NAME OF DIR ECTORS. HENCE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS DISALLOWANCE OF PREMIUM PAID ON KEYMAN INSURANCE POLICY TAKEN IN THE NAMES OF DIREC TORS OF THE COMPANY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. 5 ITA 1701/MUM/2018 ORDER PRONOUNCED IN THE OPEN COURT ON 28 -03-2019 . SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28 TH MARCH, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI