Assistant Commissioner of Income-tax 1(2), RAIPUR (CG) V. M/s Pankaj Oxygen Ltd, RAIPUR (CG)

ITA 28/BIL/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0536 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: S R RAO
• Keywords: Business expenditure
• Section: 37

Judgement Text

, RAIPUR IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BEFORE S/SHRI G.D.AGARWAL( VP) & MUKUL KR. SHRAWAT (JM) . . , , ./ I.T.A. NO. 28/BLPR/2012 ( / ASSESSMENT YEAR : 2008 - 09 ) ACIT - 1(2), RAIPUR. / VS. PANKAJ OXYGEN LTD., URLA INDUSTRIAL AREA, RAIPUR ./ ./ PAN/GIR NO. : AABCP 3442 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SH D.K.JAIN / RESPONDENT BY : SH S.R.RAO / DATE OF HEARING : 0 8 - 10 - 2015 / DATE OF PRONOUNCEMENT : 9 - 10 - 2015 / O R D E R PER MUKUL KR SHRAWAT, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF THE LD CIT(A), RAIPUR DATED 14.11.2011. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DECIDED AS FOLLOWS : 2. GROUND NO.1 READS AS UNDER: . WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,37,770/ - MADE BY 2 I.T.A. NO. 28/BLPR/2012 ASSESSMENT YEAR : 2008 - 09 THE AO BY DISALLOWING CLAIM OF PAYMENT MADE TO LIC OF INDIA TOWARDS CONTRIBUTION OF GROUP SUPERANNUATION SCHEME AND R ETIREMENT BENEFIT TO THE MD COMMERCIAL EXECUTIVE AND OTHER EXECUTIVE. 3 . FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER U/S.143(3) OF THE I.T.ACT DATED 29.12.2010 WERE THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURING INDUS TRIAL GASSES. IT WAS ALSO OBSERVED BY THE AO THAT A SUM OF RS.3,37,770/ - WAS DEBITED AS CONTRIBUTION TO SUPERANNUATION FUND. THE EXPLANATION OF THE ASSESSEE WAS THAT SAID PAYMENT WAS MADE TO LIC OF INDIA TOWARDS CONTRIBUTION OF GROUP SUPERANNUATION SC HEME AND RETIREMENT BENEFITS TO THE MD AND OTHERS. ON VERIFICATION, IT WAS NOTED BY THE AO THAT SAID SCHEME WAS MEANT ONLY FOR T HE BENEFIT OF MD AND CE. T HE BENEFITS WERE NOT EXTENDED TO ANY OTHER PERSON OTHER THAN THE FAMILY MEMBERS. THE AO AL SO ENQU IRED ABOUT THE APPROVAL OF THE SCHEME BY THE COMMISSIONER. IN THE ABSENCE OF ANY EVIDENCE , SAID EXPENDITURE WAS DISALLOWED. 4 . WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE LD CIT(A) HAS REFERRED AN ORDER OF THE HONBLE HIGH COUR T AND ON THAT BASIS OPINED THAT THE EXPENDITURE IS OTHERWISE ALLOWABLE U/S.37 OF THE ACT BEING IN THE NATURE OF BUSINESS EXPENDITURE. THE REVENUE HAS CHALLENGED SAID FINDINGS OF THE LD CIT(A). 5 . HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF T HE CONSIDERED OPINION THAT ONE OF THE BASIC REQUIREMENTS OF APPROVAL OF SCHEME BY THE LD COMMISSIONER HAS NOT BEEN FULFILLED IN THIS CASE. EVEN DURING THE COURSE OF 3 I.T.A. NO. 28/BLPR/2012 ASSESSMENT YEAR : 2008 - 09 HEARING BEFORE US, WE HAVE ENQ UIRED WHETHER ANY SUCH APPROVAL WAS OBTAINED , BUT NO SATISFA CTORY REPLY WAS FURNISHED BY THE RESPONDEN - ASSESSEE. FURTHER, WE ARE ALSO OF THE VIEW THAT THE INCOME TAX ACT PRESCRIBES CERTAIN SPECIAL PROVISIONS OVERRIDING THE GENERAL PROVISIONS ALLOWING BUSINESS EXPENDITURE. IN THIS REGARD, WE HAVE NOTED THAT U/S.36 , THERE ARE CERTAIN SPECIAL REQUIREMENTS TO BE COMPLIED WITH TO GET DEDUCTION WHILE COMPUTING THE TAXABLE INCOME OF THE TA XPAYER. W HICH MEANS, SECTION 36 HAS AN OVERRIDING EFFECT ON THE GENERAL P ROVISIONS OF SECTION 37 IN CERTAIN SPECIFIC CIRCUMSTANCES. THEREFORE, WE ARE NOT CONVINCED WITH THE REASONING GIVEN BY THE LD CIT(A) THAT EXPENDITURE IN QUESTION IS OTHERWISE ALLOWABLE U/S.37 OF THE I.T.ACT. WE HEREBY REVERSE THOSE FINDINGS OF THE LD CIT(A). THIS EXPENDITURE IS NOT ALL OWABLE BECAUSE THE ASSESSEE HAS NOT FURNISHED THE REQUISITE INFORMATION. RESULTANTLY, GROUND R AISED BY THE REVENUE IS ALLOWED . 6. GROUND NO.2 READS AS UNDER: . WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.28,40,783/ - MADE BY THE AO BY WAY OF DISALLOWANCE OUT OF PAYMENT MADE TO LIC OF INDIA TOWARDS KEY MAN INSURANCE POLICY. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE AO THAT THE ASSESSEE HAS DEBITED A SUM OF RS.29,4 7,289/ - UNDER THE HEAD INSURANCE PREMIUM. THE A O WAS CONVINCED ONLY IN RESPECT OF AMOUNT OF RS.1,06,506/ - PAID TOWARDS GENERAL INSURANCE. IN THE ABSENCE OF PROPER VERIFICATION, REST OF THE AMOUNT WAS DISALLOWED BY THE AO. THE MATTER WAS CARRIED BEFOR E THE FIRST APPELLATE AUTHORITY. 4 I.T.A. NO. 28/BLPR/2012 ASSESSMENT YEAR : 2008 - 09 8. BEFORE THE LD CIT(A), REQUISITE INFORMATION WAS FURNISHED AND AFTER EXAMINING THE CBDT CIRCULAR AND CASE LAW, THE LD CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE AS UNDER: I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AN SUBMISSIONS OF THE ` APPELLANT. THE APPELLANT HAS PLACED BEFORE ME THE COPIES OF KEYMAN INSURANCE POLICIES TAKEN BY THE APPELLANT TO SAFEGUARD ITSELF AGAINST THE PROBABLE LOSS ON ACCOUNT OF DEATH OR EX IST OF ITS DIRECTORS. IT IS NOT IN DISPUTE THAT THE APPELLANT HAS MADE THE CONTRIBUTION TO THE LIC OF INDIA AGAINST THE KEYMAN INSURANCE POLICY TAKEN BY THE APPELLANT. I AM IN AGREEMENT WITH THE SUBMISSIONS OF THE APPELLANT THAT THE SIMILAR PAYMENTS MADE IN THE PAST WERE DULY ACCEPTED AND NO DISALLOWANCE WAS MADE IN THE SCRUTINY ASSESSMENT PROCEEDINGS. IT IS SEEN THAT THE CASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL TRIBUNA L OF BILASPUR BENCH IN THE CASE OF SUNI TA FINLEASE LTD VS DCIT (2008) 118 TTJ (BILS) 263. THE BOARD CIRCULAR NO.762 DATED 18 TH FEB 1998 CLEARLY STATES THAT THE PREMIUM PAID ON KEYMAN INSURANCE POLICY IS ALLOWED AS BUSINESS EXPENDITURE. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AS ALS O DECISION CITED ABOVE, THE DISALLOWANCE MADE BY THE AO CANNOT BE SUSTAINED. HENCE, THE DISALLOWANCE IS DELETED. 9. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS ISSUE NOW STOOD COVERED BY THE DECISION OF SUNITA FINLEASE LTD VS DCIT(SUPRA). WE HAVE ALSO NOTED THAT THE LD CIT(A) HAS RIGHTLY FOLLOWED THE SAID DECISION AS WELL AS THE BOARD CIRCULAR ISSUED IN THIS REGARD. MOREOVER, THE LD CIT(A) HAS ALSO GIVEN UNCONTROVERTED FINDINGS THAT NO SUCH DISALLOWANCE WAS MADE IN TH E PAST IN SCRUTINY ASSESSMENT PROCEEDINGS. THUS, CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES, WE HEREBY APPROVE THE FINDINGS OF LD CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 5 I.T.A. NO. 28/BLPR/2012 ASSESSMENT YEAR : 2008 - 09 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 /10/2015 . SD/ - SD/ - ( . . , ) ( , ) G . D . AGARWAL , VICE PRESIDENT MUKUL KR SHRAWAT , JUDICIAL MEMBER RAIPUR , DATED 9 / 10/2015 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : ACIT - 1(2),RAIPUR 2. / THE RESPONDENT: PANKAJ OXYGEN LTD., URLA INDUSTRIAL AREA, RAIPUR 3. ( ) / THE CIT(A) - RAIPUR 4. / CIT , RAIPUR 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, C AMP: RAIPUR