THE ITO, Ward-5(2), Ahmedabad V. M/S. PIPALIA CABLES & WIRES PVT .TD., Ahmedabad

ITA 2561/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89522 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 5(2); 37

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.2561/AHD/2011 / ASSTT. YEAR: 2007-08 ITO, WARD - 5(2) AHMEDABAD. VS M/S.PIPALIA CABLES & WIRES P.LTD. 6, NEPTUNE TOWER ASHRAM ROAD, AHMEDABAD. PAN :AAACP 9156 B ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV, SR.DR ASSESSEE BY : NONE / DATE OF HEARING : 08/06/2015 / DATE OF PRONOUNCEMENT: 12/06/2015 $%/ 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, AHMEDAB AD DATED 16.8.2011 FOR ASSTT.YEAR 2007-08. 2. THE SOLE GROUND TAKEN BY THE REVENUE IN THIS APP EAL IS THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE AD DITION 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 KE YMAN INSURANCE PREMIUM AND CLAIMED DEDUCTION OF ENTIRE AMOUNT OF R S.40 LAKHS AS DEDUCTION UNDER SECTION 37 OF THE ACT. ITA NO.2561/ AHD/2011 2 4. THE AO OBSERVED THAT AS PER IRDA, THE KEYMAN INS URANCE CANNOT BE ISSUED FOR MORE THAN RS.120 LAKHS FOR SUM ASSURE D 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 ASST T.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 INSURAN CE 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 F OR KEYMAN INSURANCE. THUS, IN OUR CONSIDERED VIEW, THE ISSUE INVOLVED IN THE PRESENT CASE IS NOT THE SAME AS WAS CONFRONTED BY T HE TRIBUNAL IN THE ABOVE STATED CASE. WE FIND THAT THE AR OF THE ASSE SSEE HAS PROVIDED NO MATERIAL BEFORE THE CIT(A) OR BEFORE US TO SHOW THA T ENTIRE PAYMENT OF RS.40 LAKHS MADE BY THE ASSESSEE WAS APPORTIONED BY THE INSURANCE COMPANY TOWARDS PREMIUM FOR KEYMAN INSURANCE. FURT HER, IT IS ALSO OBSERVED THAT THE AO HAS ALSO FAILED TO BRING ON RE CORD ANY MATERIAL TO SHOW THAT OUT OF THE PAYMENT OF RS.40 LAKHS MADE BY ASSESSEE TO THE INSURANCE COMPANY, THE INSURANCE COMPANY ACTUALLY O NLY 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 LAK HS PAID BY THE ASSESSEE WAS ACTUALLY APPORTIONED BY THE INSURANCE COMPANY TOWARDS PREMIUM OF KEYMAN INSURANCE, THEN THE ENTIRE PREMIU M AMOUNT IS ALLOWABLE AS DEDUCTION TO THE ASSESSEE UNDER SECTIO N 37 OF THE ACT. HOWEVER, IF ONLY RS.24 LAKHS WAS APPORTIONED TOWARD S THE KEYMAN INSURANCE PREMIUM AND RS.16 LAKHS WAS NOT APPORTION ED BY THE INSURANCE COMPANY TOWARDS INSURANCE PREMIUM, THEN A LLOWABILITY OF DEDUCTION OF RS.16 LAKHS IS TO BE DECIDED, KEEPING IN VIEW THE ACTUAL NATURE OF SUCH PAYMENT AS PER THE APPORTIONMENT MAD E BY THE INSURANCE COMPANY. WE, THEREFORE, SET ASIDE THE OR DERS OF THE LOWER AUTHORITIES ON THIS ISSUE, AND RESTORE THE MATTER B ACK 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 OBSERVATIO NS MADE HEREINABOVE. NEEDLESS TO MENTION, THE AO SHALL ALLOW REASONABLE AND PROPER OPPORTUNITIES TO THE ASSESSEE BEFORE ADJUDICATING T HE ISSUE AFRESH. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 12 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 12/6/2015