M/s. M/s. Vishal Tools &Gorgings P.Ltd, Jalandhar V. The Addl. C.I.T., Jalandhar

ITA 502/ASR/2011

• Counselvise Citation: 50220914 RSA 2011
• Duration Of Justice: 4 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Rule of consistency; Commercial expediency
• Section: 10(10D); 37; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A. NO. 117(ASR)/2010 ASSESSMENT YEAR: 2006-07 PAN: AAACF2771Q M/S. F.C. SONDHI & CO.(INDIA) P. LTD. G.T.ROAD, SURANUSSI, JALANDHAR. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, RANGE-I, JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NOS. 502 & 131(ASR)/2011 & 2012 ASSESSMENT YEARS: 2006-07 & 2007-08 PAN: A AACV8722D M/S. VISHAL TOOLS & FORGINGS PVT. LTD. B-9, FOCAL POINT EXTENSION, JALANDHAR. VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-II, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANDEEP VIJH (CA) RESPONDENT BY: SH. TARSEM LAL (DR) DATE OF HEARING: 2 8.10.2015 DATE OF PRONOUNCEM ENT: 27.11.2015 ORDER PER T. S. KAPOOR (AM): THE APPEAL IN ITA NO. 117(ASR)/2010 FOR ASST. YEAR 2006-07 IS FILED BY THE ASSESSEE, AGAINST THE ORDER OF LEARNED CIT(A), JALANDHAR, DATED 28.12.2009, FOR THE ASST. YEAR 2006-07. THE ASSESSEE HAS TAKEN ONLY ONE GROUND WHEREIN IT IS AGGRIEVED WITH THE CONFIRMATION OF DISALLOWANCE MADE BY ASSESSING OFFICER ON ACCOUNT OF PAYMENT OF PREMIUM OF KEYMAN INSURANCE P OLICY AMOUNTING TO RS.59,96,356/-. THE APPEAL WAS EARLIER DISPOSED OFF VIDE TRIBUNAL ORDER DATED 2. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 21.04.2014, WHEREIN IT WAS DISMISSED ON MERITS. HOW EVER, THE SAID TRIBUNAL ORDER WAS RECALLED VIDE TRIBUNAL ORDER DATED 31.08. 2015 AS THE ASSESSEE IN ITS MISCELLANEOUS APPLICATION HAD POINTED OUT THAT CERT AIN ARGUMENTS ADVANCED BY IT WERE NOT DEALT WITH BY THE TRIBUNAL. THE CONCLUD ING PARA OF TRIBUNALS ORDER DATED 31.08.2015 READS AS UNDER: WE, THEREFORE, RECALL THE ORDER DATED 21 ST APRIL 2014 FOR THE PURPOSE OF ADJUDICATING UPON THE PLEA OF THE ASSESSEE TO THE E FFECT THAT, ON THE FACTS OF THIS CASE, THE IRDA CIRCULARS HAVE NO ROLE TO PLAY IN DE CIDING WHETHER THE PREMIUM ON THE INSURANCE POLICES PAID ARE COVERED BY THE SC OPE OF KEMAN INSURANCE POLICY UNDER SECTION 10(10D) OF THE ACT, AND FOR D ECIDING THE MATTER AFRESH IN THE LIGHT OF THE SAID ADJUDICATION. WE HAVE NOTED T HAT AN EARLIER DECISION OF THIS TRIBUNAL, IN THE CASE OF SHRI NIDHI CORPORATION VS. ADDITIONAL CIT[(2014) 15 1 ITD 470(MUM)], WAS NOT TAKEN INTO ACCOUNT BY THE TRIBUNAL, WHILE DISPOSING OF THE MATTER, AS THE SAID ORDER, THROUGH PASSED EARLIER, WAS NOT IN PUBLIC DOMAIN BY THAT POINT OF TIME. NOW THAT THE MATTER IS GOING BA CK TO THE TRIBUNAL FOR FRESH CONSIDERATION, NEEDLESS TO SAY, THIS DECISION WILL ALSO HAVE TO BE TAKEN INTO ACCOUNT. IN VIEW OF THE ABOVE TRIBUNAL ORDER, THE ASSESSEE I S AGAIN, BEFORE US. 2. THE APPEALS IN ITA NO. 502(ASR)/2011 FOR ASST. YEAR 2006-07 AND ITA NO. 131(ASR)/2012 FOR ASST. YEAR 2007-08, HAS ALSO BEEN FILED BY THE ASSESSEE WHEREIN IT IS AGGRIEVED WITH THE ORDER OF THE LEARN ED CIT(A) DATED 23.08.2011 AND DATED 12.03.2012 RESPECTIVELY, WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD UPHELD THE DISALLOWANCE ON PREMIUM PAID FOR KEYMAN INSURANCE POLICY AMOUNTING TO RS.16,00,000/- EACH. THESE APPEALS WER E HEARD TOGETHER AS THE ISSUE INVOLVED IS COMMON REGARDING ALLOWANCE OF KEY MAN INSURANCE POLICY AND THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE ARE B EING DISPOSED OFF BY THIS 3. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 COMMON AND CONSOLIDATED ORDER. THE LEARNED AR HAD ARGUED THE APPEAL IN THE CASE OF M/S F.C. SONDHI & CO. (INDIA) PVT. LTD. IN ITA NO.117(ASR)/2010. 3. AT THE OUTSET THE LEARNED AR SUBMITTED THAT NOW THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF TRIBUNAL IN THE CASE OF M/S. SURI SONS VS. ACIT, IN ITA NO.37(ASR)/2010, WHEREIN THE HONBLE T RIBUNAL VIDE ORDER DATED 31.08.2015 HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF ASSESSEE. HOWEVER, HE SUBMITTED THAT TO STRENGTHEN THE CASE OF ASSESSEE, HE WANTS TO ADVANCE CERTAIN OTHER ARGUMENTS ALSO. INVITING OUR ATTENTION TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED AR SUBMITTED THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE MANUFACTURING AND EXPORT OF SPORTS GOODS. DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD PAID PREMIUM ON THRE E KEYMAN INSURANCE POLICIES ON THE LIFE OF SH. RAJIV ANURAG SONDHI (M ARKETING DIRECTOR) AND HAD CLAIMED SUCH PREMIUM AMOUNT AS EXPENDITURE WHICH TH E ASSESSING OFFICER HAD DISALLOWED AND LEARNED CIT(A) HAD CONFIRMED SUCH DI SALLOWANCE. INVITING OUR ATTENTION TO THE DEFINITION OF KEYMAN INSURANCE PO LICY AS DEFINED IN SECTION 10(10D) OF THE INCOME TAX ACT, THE LEARNED AR SUBMI TTED THAT THE DEFINITION OF KEYMAN INSURANCE POLICY ITSELF INDICATES THAT THI S POLICY IS ON THE LIFE OF ANOTHER PERSON AND THE PAYMENT UNDER THE POLICY BEC OMES DUE ON THE DEATH OF THE INSURED PERSON. INVITING OUR ATTENTION TO TH E LEARNED CIT(A)S ORDER IN PARA 2.8. THE LEARNED AR SUBMITTED THAT AS PER THE AUTHORITIES BELOW THE KEYMAN INSURANCE POLICY SHOULD ONLY BE A TERM AS SURANCE POLICY AND IN THIS RESPECT HE SUBMITTED THAT WHILE HOLDING THAT KEYMA N INSURANCE POLICY SHOULD BE A ONLY TERM POLICY, THE AUTHORITIES BELOW HAD RE LIED UPON THE IRDA CIRCULAR 4. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 DATED 27.04.2005 AND 30.01.2006. THE LEARNED AR SUB MITTED THAT THERE IS A DIFFERENCE BETWEEN A TERM ASSURANCE POLICY AND K EYMAN INSURANCE POLICY. THAT IN TERM ASSURANCE POLICY IF DURING THE POLIC Y PERIOD DEATH DOES NOT OCCUR, NOTHING IS RECEIVABLE AND MOREOVER THE PROCE EDS OF TERM ASSURANCE POLICY ARE NOT TAXABLE WHEREAS IN KEYMAN INSURANC E POLICY THE PROFITS INCLUDING BONUS ARE TAXABLE EITHER UNDER SECTION17( 3)(II) OR UNDER SECTION 28(VI) OR U/S 56(I)(IV). THE LEARNED AR SUBMITTED THAT LEA RNED CIT(A) HAS MISGUIDED HIMSELF REGARDING THE ROLE OF IRDA AND HAS HELD THA T THE COVER UNDER KEYMAN INSURANCE POLICY COULD NOT BE WIDER THAN THAT UNDE R TERM INSURANCE. THE LEARNED AR FURTHER SUBMITTED THAT THE LEARNED CIT(A ) HAS NOT APPRECIATED CORRECTLY THE INTERPRETATION OF THE CASE LAW OF UNI TED AIRLINES VS. CIT REPORTED AT 287 ITR 281 DECIDED BY DELHI HIGH COURT AND HE SUBM ITTED THAT HONBLE HIGH COURT IN THAT CASE HAS HELD THAT IN TAXING STATUTE THE PRINCIPAL OF LITERAL INTERPRETATION IS VERY STRICTLY APPLIED. WHILE INTE RPRETING TAXING STATUTE ONE CANNOT GO BY THE NOTION AS TO WHAT IS JUST AND EXPE DIENT. HE SUBMITTED THAT SIMILAR VIEW HAS BEEN EXPRESSED BY MADRAS HIGH COUR T IN THE CASE OF CIT VS. MICORMAX P. LTD. REPORTED 277 ITR 409. THE LEARNED AR SUBMITTED THAT LEARNED CIT(A) AFTER REFERRING TO THE CASE LAW OF UNITED AI RLINES (SUPRA) HAS OBSERVED THAT THOUGH TERM KEYMAN INSURANCE HAS BEEN DEFINE D IN SECTION 10(10D) THE TERM LIFE INSURANCE HAS NOT BEEN SO DEFINED UNDER THE INCOME TAX ACT AND THEREFORE, HE HAD HELD THAT THE TERM LIFE INSURANC E IN THE CONTEXT OF KEYMAN INSURANCE POLICY BY IRDA IS IMPORTANT. THE LEARNED AR SUBMITTED THAT IRDA IS CONFINED TO REGULATE, PROMOTE AND ENSURE ORDERLY GR OWTH OF THE INSURANCE 5. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 BUSINESS. THE IRDA HAS NO RELEVANCE AS FOR AS THE A LLOWABILITY OF PREMIUM UNDER INCOME TAX ACT IS CONCERNED AND NO COGNIZANC E SHOULD BE TAKEN OF IRDA CIRCULARS. HE SUBMITTED THAT IN INCOME TAX ACT THE HELP OF ANOTHER ACT CANNOT BE TAKEN FOR THE PURPOSES OF INTERPRETATION AND WHEREVER IT IS REQUIRED IT IS MENTIONED IN THE RELEVANT SECTION OF THE INCOME TAX ACT ITSELF AND IN THIS RESPECT HE INVITED OUR ATTENTION TO THE FOLLOWING S ECTIONS OF INCOME TAX ACT WHERE FOR THE PURPOSES OF INTERPRETATION HELP OF OT HER ACTS HAS BEEN TAKEN: SECTION 2(25A) REFERS TO TERRITORIAL WATERS, CONTIN ENTAL SHELF, EXCLUSIVE ECONOMIC ZONE AND OTHER MARITIME ZONES ACT 1976. SEC 2(29D): REFERS TO NATIONAL TAX TRIBUNAL ACT 200 5. SEC.2(38): REFERS TO EMPLOYEES PROVIDENT FUND ACT 1 952. SEC.2(42A): EXPLANATION-2: REFERS TO SECURITIES CON TRACT (REGULATION) ACT, 1956. SEC. 2(47)(V): REFERS TO TRANSFER OF PROPERTY ACT 1 882. IN VIEW OF THE ABOVE, THE LEARNED AR SUBMITTED THAT THERE IS NO MENTION OF ANY IRDA REGULATIONS OR CIRCULAR IN THE INCOME T AX ACT, THEREFORE, NO COGNIZANCE CAN BE TAKEN THEREOF. THE LEARNED AR FUR THER SUBMITTED THAT CIRCULARS ISSUED BY IRDA DO NOT MENTION SECTION 10( 10D) WHICH DEFINES KEYMAN INSURANCE POLICY UNDER INCOME TAX ACT, THE REFORE, FOR THE PURPOSES OF INCOME TAX ACT THE CIRCULARS CANNOT BE RELIED UPON AND THE WORD LIFE INSURANCE SHOULD BE UNDERSTOOD AS IT IS UNDERSTOOD IN COMMON PARLANCE. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWIN G CASES. CIT VS. LAKE PALACE HOTELS-226ITR 561(RAJ) SWEDISH EAST INDIA CO. VS. 133 ITR 407 INDIAN HOTESL VS. ITO-245 ITR 538(SC) 6. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 THE LEARNED AR FURTHER SUBMITTED THAT LEARNED CIT(A ) HAS FAILED TO APPRECIATE THAT DESPITE THE FACT THAT RBI HAS POWER TO REGULA TE ANYTHING FOR FINANCE COMPANIES AND IS AUTHORIZED TO MONITOR & REGULATE T HE ACCOUNTS OF THOSE COMPANIES IN TERMS OF PROVISIONS OF NON PERFORMING ASSETS BUT THE SAME ARE NOT ALLOWABLE EXPENSES FOR COMPUTING INCOME UNDER T HE INCOME TAX ACT AS IS HELD BY HONBLE SUPREME COURT IN THE CASE OF SOUTHE RN TECHNOLOGIES LTD. VS. JCIT REPORTED AT 320 ITR 577. HE FURTHER ARGUED THA T SIMILARLY, EVEN IF A PERSON IS NOT AN OWNER OF THE PROPERTY UNDER THE TRANSFER OF PROPERTY ACT, HE IS STILL CONSIDERED TO BE AN OWNER AND ELIGIBLE FOR DEPRECIA TION IF HE IS IN POSSESSION OF THAT PROPERTY. RELIANCE IN THIS RESPECT WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. V S. CIT 239 ITR 755. IN VIEW OF THE ABOVE, THE LEARNED AR SUBMITTED THAT RE LIANCE ON OTHER ACTS OR CIRCULARS FOR CONSIDERING THE ALLOWABILITY OF KEYMA N PREMIUM UNDER THE INCOME TAX ACT IS THUS NOT JUSTIFIED. FURTHER ARGUING THE MEANING OF LIFE INSURANCE, THE LEARNED AR SUBMITTED THAT THE MEANING OF LIFE INSURANCE IN COMMON PARLANCE HAS TO BE ADOPTED WITHOUT IMPORTING WORDS WHICH ARE NOT THERE IN THE INCOME TAX ACT AND RELIANCE IN THIS RESPECT WAS PLA CED ON FOLLOWING CASE: SMT. TARULATA SHYAM 7 ORS. VS. CIT-108 ITR 345 (SC) ORISSA STATE WAREHOUSING CORPN VS. CIT-237 ITR 589 (SC) DILHARSHANKAR C. BHACHECH VS. CED-158 ITR 238 (SC) ELEL HOTELS & INVESTMENT LTD. VS. UOI-178 ITR 140(S C) MITTAL COLD STORAGE VS. CIT-159 ITR 18 (MP) REGARDING OBSERVATIONS OF LEARNED CIT(A) THAT THE K EYMAN INSURANCE POLICY IS UNIT LINKED POLICY AND ITS PROCEEDS ARE INVESTED IN CAPITAL MARKETS, THE LEARNED 7. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 AR SUBMITTED THAT IT IS NOT A UNIT LINKED POLICY AN D IT HAS BEEN CONSIDERED IN THE CASE OF SURI SONS. REGARDING RELIANCE PLACED BY LEARNED CIT(A) ON CIRCULAR NO.762, THE LEARNED AR SUBMITTED THAT IN FACT CIRCU LAR NO.762 STATES THAT PREMIUM PAID BY KEYMAN INSURANCE POLICY WAS ALLOWAB LE EXPENSES. THE LEARNED AR SUBMITTED THAT THE OBSERVATIONS OF LEARN ED CIT THAT MONEY OF INSURANCE PREMIUM IS INVESTED AS PER DIRECTIONS OF INSURED IS IRRELEVANT AS IN SECTION 10(10D), NO SUCH RESTRICTION HAS BEEN PLACE D THAT FUNDS CANNOT BE INVESTED AS PER DIRECTIONS OF INSURED. INVITING OUR ATTENTION TO PARA 2.12 OF LEARNED CIT(A)S ORDER, THE LEARNED AR SUBMITTED TH AT IRDA CIRCULAR HAD PROHIBITED THE ISSUE OF KEYMAN INSRUANCE POLICY U NLESS THEY WERE TERM INSURANCE POLICY ONLY AFTER 10.05.2005 WHEREAS IN THE PRESENT CASE THE POLICIES WERE ISSUED BEFORE 10.05.2005. THIS ALSO SHOWS THAT LEARNED CIT(A) WAS BENT UPON TAKING A VIEW AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND ARGUMENTS AND IN VIEW OF THE CASE LAWS OF SURI SONS DECIDED BY HONBLE TRIBUNAL IN ITA NO.37(ASR)/2010, THE LEARNED AR ARGUED THAT KEYMAN INSURANCE PREMIUM IS A DEDUCTIBLE EXPEN SES. 3. INVITING OUR ATTENTION TO THE TERMS AND CONDITIO NS OF KEYMAN INSURANCE POLICY THE LEARNED DR SUBMITTED THAT THE KEYMAN IN SURANCE POLICY CAN BE TAKEN ON THE LIFE OF A PERSON FALLING IN THE AGE GR OUP OF 0 TO 65 YEARS AND THEREFORE, HE ARGUED THAT HOW A PERSON NOT YET BORN CAN BE ELIGIBLE TO BECOME A KEYMAN. HE SUBMITTED THAT THIS ARGUMENT WAS TAKEN B Y THE DEPARTMENT IN THE CASE OF LAW OF SURI SONS(SUPRA) WHICH HAD SKIPPED T HE ATTENTION OF THE HONBLE TRIBUNAL WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LEARNED DR IN 8. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 THIS RESPECT INVITED OUR ATTENTION TO POINT-D OF WR ITTEN NOTE FILED BY THE DEPARTMENT IN THE CASE OF SURI SONS WHICH FINDS MEN TION IN THE TRIBUNAL ORDER FROM PARA 5 ONWARDS. THE LEARNED DR SUBMITTED THAT IN THE CASE OF SH. NIDHI CORPORATION VS. ACIT 151 ITD 470(MUMBAI TRIBUNAL) T HE ASSESSEE WAS GIVEN THE LIBERTY TO CHOOSE THE INVESTMENT PLAN, WHEREAS NO SUCH OPTION WAS AVAILABLE TO THE ASSESSEE. HE SUBMITTED THAT THE AS SESSEE BEING ALLOWED AN OPTION TO CHOOSE ITS INVESTMENT PLANS THE NATURE OF KEYMAN INSURANCE POLICY ITSELF IS GONE. INVITING OUR ATTENTION TO POINT-(E ) OF HIS WRITTEN SUBMISSIONS IN THE CASE OF SURI SONS(SURPA), THE LEARNED DR SUBMIT TED THAT EARLIER THE HONBLE BENCH HAD DECIDED THE CASE OF F.C SONDHI & CO, VIDE ORDER DATED 21.04.2014 IN FVAOUR OF THE DEPARTMENT AND THEREFORE, IT WAS A RGUED THAT THE CASE OF F.C. SONDHI & CO. (INDIA) PVT. LTD. BE FOLLOWED IN THE C ASE OF SURI SONS AND IN THE EVENT THE SAID ORDER WAS NOT TO BE FOLLOWED THEN TH E MATTER SHOULD BE REFERRED TO PRESIDENT FOR CONSTITUTING A SPECIAL BENCH. THE LEARNED DR SUBMITTED THAT HIS REQUEST FOR CONSTITUTION OF SPECIAL BENCH HAS N OT BEEN DEALT WITH BY THE TRIBUNAL AND THEREFORE, IN VIEW OF NON CONSIDERATIO N OF WRITTEN ARGUMENTS OF REVENUE IN THE CASE OF SURI SONS (SUPRA) THE SAME S HOULD NOT BE FOLLOWED. FURTHER, HE ARGUED THAT THE JUDGMENT PASSED IN ITA NO.37(ASR)/2010 IN THE CASE OF SURI SONS(SUPRA) WAS ITSELF INVALID ORDER A S THE CONSTITUTION OF BENCH WAS TERMINATED ON 12.06.2015 AND ORDER WAS PRONOUNC ED ON 31.08.2015 BY NOT FOLLOWING THE RULES, AND THEREFORE, ORDER PASSE D BY BENCH WAS NOT A VALID ORDER AND CANNOT BE FOLLOWED. 9. ITA NO. 1 17(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 4. THE LEARNED AR IN HIS REJOINDER SUBMITTED THAT H E IS IN AGREEMENT WITH THE ARGUMENT OF LEARNED DR THAT KEYMAN CANNOT BE A PERSON OF ZERO AGE BUT IN THE PRESENT CASE THE PERSON INSURED IS A MARKETING DIRECTOR AND THEREFORE, THE ARGUMENT OF LEARNED DR ON THIS ACCOUNT DOES NOT HOL D ANY GROUND. AS REGARDS OTHER ARGUMENT OF LEARNED DR REGARDING CONSTITUTION OF SPECIAL BENCH, THE LEARNED AR SUBMITTED THAT SINCE THE ORDER IN THE CA SE OF ASSESSEE HAS BEEN RECALLED AND THEREFORE, THERE WAS NO CASE HAVING DI FFERENT VIEWS SO THEREFORE, THERE IS NO NEED FOR CONSTITUTION OF SPECIAL BENCH. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIRST TAKE UP APPEAL IN ITA NO . 117(ASR)2010 FOR ASST. YEAR 2006-07. WE FIND THAT THE ONLY ISSUE TO BE DEC IDED BY US IS REGARDING ALLOWABILITY OF PREMIUM OF KEYMAN INSURANCE POLICY. WE FURTHER FIND THAT THIS CASE WAS EARLIER DECIDED BY HONBLE BENCH VIDE ITS ORDER DATED 21.04.2014 IN FAVOUR OF THE REVENUE WHICH WAS LATTER ON RECALLED AND WAS DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 31.08.2015. WE FURTHE R FIND THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THE HONBLE BENCH IN FAVO UR OF THE ASSESSEE BY THE ORDER OF TRIBUNAL DATED 31.08.2015 IN ITA NO.37(ASR )/2010 IN THE CASE OF M/S SURI SONS, IN WHICH THE LEARNED DR HAD ARGUED THAT IT SHOULD NOT BE FOLLOWED FOR TWO REASONS ONE OF BEING THAT THE PRONOUNCEMENT WAS NOT PROPER AND THEREFORE, IT WAS AN INVALID ORDER AND SECONDLY THE ARGUMENTS TAKEN BY REVENUE IN THE CASE OF SURI SONS WERE NOT CONSIDERE D BY THE TRIBUNAL. AS REGARDS THE FIRST ARGUMENT THAT THE ORDER IN THE CA SE OF M/S SURI SONS WAS NOT 10. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 VALID, WE HAVE ENQUIRED FROM THE REGISTRY ABOUT THE MANNER OF PRONOUNCEMENT OF THIS ORDER AND THE REGISTRY HAS REPLIED AS UNDER : ON VERBAL QUERY FROM SHRI T.S.KAPOOR, HONBLE A.M REGARDING PRONOUNCEMENT OF ORDERS DATED 31.08.2015 IN THE CAS ES OF M/S SURI SONS, JALANDHAR, IT IS RESPECTFULLY SUBMITTED THAT THE SAID CASES HAVE DULY BEEN PRONOUNCED ON 31.08.2015, AS PER LIST OF PRONOUNCEMENT OF ORDER UNDER THE SIGNATURES OF HONBLE MEMBER, WHICH WAS PUT ON NOTICE BOARD. WE FIND THAT CLAUSE-4 OF RULE 34 OF ITAT RULES PROV IDES AS UNDER: (4) THE BENCH SHALL PRONOUNCE ITS ORDERS IN THE CO URT. [HOWEVER, WHERE THE BENCH IS NOT FUNCTIONING OR FOR ANY OTHER GOOD REASON THE PRONOUNCEMENT OF ORDER IN THE COURT IS N OT POSSIBLE OR PRACTICABLE, A LIST OF SUCH ORDERS(S) SHALL BE PREP ARED DULY SIGNED BY THE MEMBERS SHOWING THE RESULT OF THE APPEAL AND THE SA ME WOULD BE PUT ON THE NOTICE BOARD OF THE BENCH IT SHALL BE DEEMED PR ONOUNCEMENT OF ORDER.] WE HAVE GONE THROUGH THE LIST OF PRONOUNCEMENTS MAD E ON 31.08.2015 WHICH CONTAINED THE PRONOUNCEMENT IN THE CASE OF SURI SON S ALSO AND WE FIND THAT THE LIST SHOWING THE RESULTS OF APPEALS DULY SIGNED BY THE BOTH MEMBERS WAS IN THE RECORD OF BENCH CLERK AND THEREFORE, THE PRONOU NCEMENT WAS PROPER. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF LEARNED DR THAT THE PRONOUNCEMENT WAS NOT PROPER. MOREOVER, WE FIND THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THIS BENCH IN THE CASE OF M/S. AMBIKA OVERSEAS IN ITA NO.45(ASR)/2010, IN WHICH THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2015 HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN ITA NO.45(ASR)/2010 AND ITA NO.700(ASR)/2013 FOR ASST. YEAR 2006-07 & 2007- 08, THE TRIBUNAL IN THIS CASE HAD DEALT WITH IN LENGTH REGARDING ARGUMENTS O F BOTH PARTIES AND HAD ALLOWED TO THE RELIEF TO ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJAN NANDA, 349 ITR 8 (DEL). THE RELEVANT 11. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 FINDINGS OF HONBLE TRIBUNAL AS CONTENDED IN THE CA SE OF M/S AMBIKA OVERSEAS CONTAINED IN PARA 8 ONWARDS ARE REPRODUCED BELOW: 8. LET US NOW COME BACK TO THE CORE ISSUE BEFORE U S. THE SHORT QUESTION THAT WE HAVE TO REALLY ADJUDICATE IS AS TO WHETHER THE PREMIUM OF RS 1,49,99,922 PAID ON THE KEYMAN INSURANCE POLICIE S CAN BE ALLOWED ON THE FACTS OF THIS CASE. AS TO WHAT CONSTITUTES KEY MAN INSURANCE POLICY, WE FIND GUIDANCE FROM THE EXPLANATION BELOW SECTION 10 (10D), AS IT STOOD AT THE RELEVANT POINT OF TIME, WHICH DEFINED THE KEYMA N INSURANCE POLICY AS FOLLOWS: FOR THE PURPOSES OF THIS CLAUSE, 'KEYMAN INSURANCE POLICY' MEANS A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FI RST- MENTIONED PERSON OR IS OR WAS CONNECTED IN ANY MANN ER WHATSOEVER WITH THE BUSINESS OF THE FIRST-MENTIONED PERSON 9. VIDE FINANCE ACT 2013, THE FOLLOWING WORDS HAVE BEEN ADDED TO THIS DEFINITION- AND INCLUDES SUCH POLICY WHICH HAS BEEN ASSIGNED TO A PERSON, AT ANY TIME DURING THE TERM O F THE POLICY, WITH OR WITHOUT ANY CONSIDERATION . 10. ALL THAT IS REQUIRED FOR AN INSURANCE POLICY TO MEET THE REQUIREMENTS OF SECTION 10(10D), THEREFORE, HAS TO BE (A) IT SHOULD BE A LIFE INSURANCE POLICY; (B) IT SHOULD BE TAKEN BY THE ASSESSEE ON THE LIFE OF ANOTHER PERSON WHO IS, OR WAS, AN EMPLO YEE OF THE ASSESSEE OR IS RELATED TO THE BUSINESS OF THE ASSES SEE IS ANY MANNER. 11. DEALING WITH BOTH THE LIMBS OF THE ABOVE REQUIR EMENST, A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF S HRI NIDHI CORPORATION (SUPRA), HAS OBSERVED AS FOLLOWS: IT APPEARS THAT AFTER THE ASSESSEE HAS PURCHASED TH ESE POLICIES, IRDA CAME UP WITH CIRCULAR DATED 27TH APRIL 2005 TH AT PARTNERSHIP INSURANCE IN THE NAME OF PARTNER WILL NOT BE COVERE D UNDER KEYMAN INSURANCE BUT AS A TERM INSURANCE COVER. THUS, SUCH IRDA CIRCULAR CANNOT BE ADVERSELY VIEWED IN CASE OF THE ASSESSEE AS WHEN THE ASSESSEE HAS TAKEN THE POLICY UNDER KEYMAN INSURANC E SCHEME FROM TWO REPUTED INSURANCE COMPANIES THERE WAS NO S UCH REGULATION. THE OTHER OBJECTIONS OF THE REVENUE ARE THAT THE DEDUCTION OF THE PREMIUM UNDER KEYMAN INSURANCE CAN NOT BE ALLOWED IN THE CASE OF PARTNERSHIP FIRM, IS NOT TEN ABLE IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N B.N. EXPORTS (SUPRA), WHEREIN, IT HAS BEEN HELD THAT IF THE KEYM AN INSURANCE 12. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 POLICY IS OBTAINED ON A LIFE OF A PARTNER, TO SAFEG UARD THE FIRM AGAINST A DISRUPTION OF BUSINESS, THEN THE PAYMENT FOR PREM IUM ON SUCH POLICY IS LIABLE FOR DEDUCTION AS BUSINESS EXPENDIT URE. THUS, EVEN IF A KEYMAN INSURANCE HAS BEEN TAKEN IN THE NAME OF A PARTNER BY THE PARTNERSHIP FIRM, THEN ALSO THE DEDUCTION HA S TO BE ALLOWED ON THE PAYMENT OF PREMIUM . THE OTHER MAIN OBJECTIONS OF THE LEARNED COMMISSIONER (APPEALS) HAS BEEN THAT FIRSTLY, THESE ARE NOT INSURANCE POLICY AS SUCH BUT ARE MAINLY FOR CAPITAL APPRECIATION UNDER THE INVESTMENT SCHEME AND SECOND LY, THE ASSESSEE HAS NOT RECEIVED THE MATURITY SUM BUT IT H AS BEEN ASSIGNED TO THE PARTNERS, THEREFORE, THE ASSESSEE C ANNOT BE GIVEN DEDUCTION FOR ANY PREMIUM PAID. INSOFAR AS THE FIRS T OBJECTION OF THE LEARNED COMMISSIONER (APPEALS) IS CONCERNED, WE DEC LINED TO AGREE WITH THIS CONCLUSION, BECAUSE ONCE THE ASSESSEE HAS BOUGHT A POLICY UNDER A LIFE INSURANCE SCHEME, THEN WHETHER THE INSURANCE COMPANY IS MAKING INVESTMENT IN MUTUAL FU NDS FOR CAPITAL APPRECIATION OR UNDER ANY OTHER INVESTMENT SCHEME, WILL NOT MAKE ANY MATERIAL DIFFERENCE. (EMPHASIS, BY UNDERLINING, SUPPLIED BY US) 12. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS S O EXPRESSED BY OUR DISTINGUISHED COLLEAGUES. AS LONG AS A POLI CY IS AN INSURANCE POLICY, WHETHER IT INVOLVES A CAPITAL APPRECIATION OR IS UNDER ANY OTHER INVESTMENT SCHEME, IT MEETS THE TESTS LAID DO WN UNDER SECTION 10(10D). 13. THE REQUIREMENT OF PURE INSURANCE POLICY IS SOM ETHING WHICH IS NOT LAID DOWN BY THE STATUTE. YET, IT IS THIS WHICH HAS BEEN INFERRED BY THE AUTHORITIES BELOW. 14. EVEN IF SUCH AN INFERENCE IS DESIRABLE, AS LONG AS IT DOES NOT EMERGE FROM THE PLAIN WORDS OF THE STATUTE, IT CANN OT BE OPEN TO SUPPLY THE SAME. THE CONCEPTS OF TERM POLICY, PURE LIFE POLICY AND THE IRDA GUIDELINES FIND NO MENTION IN THE STATUTORY PR OVISIONS. BUT EVEN IF THESE CONCEPTS OUGHT TO BE INCORPORATED IN THIS STATUTORY PROVISION OF THE INCOME TAX ACT TO MAKE IT MORE MEANINGFUL AN D WORKABLE, IT CANNOT BE OPEN TO ANY JUDICIAL FORUM TO SUPPLY THES E OMISSIONS. RELYING UPON HONBLE SUPREME COURTS JUDGMENT IN TH E CASE OF TARULATA SHYAM VS CIT [(1977) 108 ITR 245 (SC)], A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF TATA TEA LIMITED VS JCIT [(2003) 87 ITD 351 (CAL)] , HAS EXPLAINED THIS PRINCIPLE AS FOLLOWS: 8. CASUS OMISSUS, WHICH BROADLY REFERS TO THE PRINC IPLE THAT A MATTER WHICH HAS NOT BEEN PROVIDED IN THE ST ATUTE 13. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 BUT SHOULD HAVE BEEN THERE, CANNOT BE SUPPLIED BY U S, AS, TO DO SO WILL BE CLEARLY BEYOND THE CALL AND SCOPE OF OUR DUTY WHICH IS ONLY TO INTERPRET THE LAW AS IT EXIST S. HONBLE SUPREME COURT, IN THE CASE OF SMT. TARULATA SHYAM VS. CIT 1977 CTR (SC) 275 : (1977) 108 ITR 34 5 (SC) AT P 356 HAS OBSERVED : 'WE HAVE GIVEN ANXIOUS THOUGHT TO THE PERSUASIVE ARGUMENTS..... (WHICH) IF ACCEPTED, WILL CERTAINLY SOFTEN THE RIGOUR OF THIS EXTREMELY DRASTIC PROVISION AND BRING IT MORE IN CONFORMITY WITH LOGIC AND EQUITY. BUT TH E LANGUAGE OF SECTIONS........ IS CLEAR AND UNAMBIGUO US. THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE TH E WORDS WHICH ARE NOT THERE. SUCH INTERPRETATION WOUL D BE, NOT TO CONSTRUE, BUT TO AMEND THE STATUTE. EVEN IF THERE BE A CASUS OMISSUS, THE DEFECT CAN BE REMEDIED ONLY BY LEGISLATION AND NOT BY JUDICIAL INTERPRETATION..... .TO US, THERE APPEARS NO JUSTIFICATION TO DEPART FROM NORMA L RULE OF CONSTRUCTION ACCORDING TO WHICH THE INTENTION OF LEGISLATURE IS PRIMARILY TO BE GATHERED FROM THE WO RDS USED IN THE STATUTE. IT WILL BE WELL TO RECALL THE WORDS OF ROWLATT. J. IN CAPE BRANDY SYNDICATE VS. IRC (1921) 1 KB 64 (KB) AT P. 71, THAT : '........... IN A TAXING A CT ONE HAS TO LOOK AT MERELY WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE REA D IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED.' ONCE IT IS SHOWN THAT THE CASE OF T HE ASSESSEE COMES WITHIN THE LETTER OF LAW, HE MUST BE TAXED, HOWEVER GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE.' EVEN IN THE CASE OF CIT VS. NATIONAL TAJ TRADERS (S UPRA), RELIED UPON BY THE ASSESSEE, THEIR LORDSHIPS OF HON BLE SUPREME COURT HAVE REFERRED TO, WITH APPROVAL, MAXW ELL ON INTERPRETATION OF STATUTES OBSERVATION THAT 'A CASE NOT PROVIDED FOR IN A STATUTE IS NOT TO BE DEALT WI TH MERELY BECAUSE THERE SEEMS NO GOOD REASON WHY IT SH OULD HAVE BEEN OMITTED, AND THAT THE OMISSION APPEARS IN CONSEQUENCE TO HAVE BEEN UNINTENTIONAL'. THEIR LORD SHIPS THEN OBSERVED THAT 'IN OTHER WORDS, UNDER THE FIRST PRINCIPLE, A CASUS OMISSUS CANNOT BE SUPPLIED BY TH E COURT EXCEPT WHEN REASON FOR IT IS FOUND TO BE IN T HE FOUR CORNERS OF THE STATUTE ITSELF BUT AT THE SAME TIME A CASUS OMISSUS SHOULD NOT BE READILY INFERRED AND FOR THAT PURPOSE ALL THE PARTS OF A STATUTE OR SECTION MUST BE 14. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 CONSTRUED TOGETHER AND EVERY CLAUSE OF A SECTION SH OULD BE CONSTRUED WITH REFERENCE TO THE CONTEXT AND OTHE R CLAUSES THEREOF SO THAT THE CONSTRUCTION TO BE PUT ON A PARTICULAR PROVISION MAKES A CONSISTENT ENACTMENT O F THE WHOLE STATUTE'. 15. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT T HAT THE IRDA GUIDELINES, NO MATTER HOW RELEVANT AS THESE GUIDELI NES MAY BE, HAVE NO ROLE TO PLAY IN THE INTERPRETATION OF THE STATUT ORY PROVISIONS. IRDA IS A BODY CONTROLLING THE INSURANCE COMPANIES AND I TS GUIDANCE IS RELEVANT ON HOW THE INSURANCE COMPANIES SHOULD COND UCT THEIR BUSINESS. BEYOND THIS LIMITED ROLE, THESE GUIDELINE S DO NOT AFFECT HOW THE PROVISIONS OF THE INCOME TAX ACT ARE TO BE CONSTRUED. WHENEVER THE PROVISIONS OF THE OTHER STATUTUTES ARE TO BE TAKEN INTO ACCOUNT, FOR INTERPRETING THE PROVISIONS OF THE INC OME TAX ACT, THE INCOME TAX ACT SPECIFICALLY PROVIDES SO, SUCH AS IN THE CASE OF EXPLANATION 2 TO SECTION 2 (42A) WHICH PROVIDES THA T THE EXPRESSION 'SECURITY' SHALL HAVE THE MEANING ASSIGN ED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956 )]. IT CANNOT, THEREFORE, BE OPEN TO US TO TURN TO THE GUIDELINES OF THE IRDA TO INTERPRET THE PROV ISIONS OF THE INCOME TAX ACT, 1961. IN THIS VIEW OF THE MATTER, LEARNED ASSESSING OFFICERS OBSERVATIONS TO THE EFFECT THAT, THAT THE POLICY TAKEN IS KEYMAN AS PER DEFINITION GIVEN IN THE INCOME TAX ACT, I.E. PO LICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON AND ALSO FULFILLING THE TERMS AND CONDITIONS LAID DOWN BY IRDA IN THIS REGARD , NECESSITY AND EXPEDIENCY OF THE PERSON BEING KEYMAN AND THE POLIC Y TAKEN FOR THE BENEFIT OF THE ASSESSEE FIRM (EMPHASIS, BY UNDERLING, SUPPLIED BY THE AO) ARE DEVOID OF ANY LEGALLY SUSTAINABLE MERI TS. THE FULFILMENT OF IRDA TERMS AND CONDITIONS IS WHOLLY ALIEN TO THE PR ESENT CONTEXT. AS FOR THE POLICY BEING TAKEN FOR THE BENEFIT OF THE ASSESSEE FIRM, AS LONG AS IT IS FOR THE PURPOSE OF TAKING AN INSURANCE POLICY ON THE LI FE OF A PERSON WHO IS RELATED TO THE FIRM, THE SAME CANNOT BE CALLED INTO QUESTION EITHER. WE HAVE ALSO NOTED THAT THE AUTHORITIES BELOW HAVE PAID A L OT OF EMPHASIS ON THE CONTENTION THAT THE INSURANCE POLICIES IN QUESTION WERE NOT TERMED AS KEYMAN INSURANCE POLICIES BUT NOTHING TURNS ON THAT ASPECT, EVEN IF THAT BE SO, EITHER. THE KEYMAN INSURANCE POLICY IS A DEFINE D CONCEPT AND AS LONG AS IT MEETS THE REQUIREMENTS OF THIS DEFINITION, TH E TERMINOLOGY GIVEN BY THE INSURERS HAVE NO RELEVANCE FOR THE PURPOSES OF THE INCOME TAX ACT. ALL THAT IS NECESSARY IS THAT IT SHOULD BE A LIFE INSURANCE POLICY, WHETHER PURE LIFE INSURANCE POLICY OR NOT- AS SUCH CRITERION IS NOT S ET OUT ANYWHERE IN THE STATURE, AND IT SHOULD BE TAKEN ON THE LIFE OF A PE RSON WHO IS, OR HAS BEEN, AN EMPLOYEE OF THE ASSESSEE OR ANY OTHER PERSON WHO IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE A SSESSEE. THESE CONDITIONS ARE CLEARLY SATISFIED ON THE FACTS OF TH E CASE BEFORE US. 15. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 16. A LOT OF EMPHASIS HAS BEEN PLACED BY THE AUTHOR ITIES BELOW ON THE CIRCULARS ISSUED BY THE IRDA. IT MAY, THEREFORE, B E APPROPRIATE TO BRIEFLY DEAL WITH THE IRDA AND THE IMPACT OF THE CIRCULARS ISSUED BY THE IRDA. IRDA, I.E. INSURANCE REGULATORY AND DEVELOPMENT AUT HORITY, IS SET UP UNDER THE INSURANCE REGULATORY AND DEVELOPMENT ACT 1999. SECTION 14 OF THE INSURANCE REGULATORY AND DEVELOPMENT ACT, 1999, DESCRIBES THE DUTIES, POWERS AND FUNCTIONS OF THE IRDA AS FOLLOWS : 14. DUTIES, POWERS AND FUNCTIONS OF AUTHORITY. (1) SUBJECT TO THE PROVISIONS OF THIS ACT AND ANY O THER LAW FOR THE TIME BEING IN FORCE, THE AUTHORITY SHALL HAVE THE DUTY T O REGULATE, PROMOTE AND ENSURE ORDERLY GROWTH OF THE INSURANCE BUSINESS AND RE-INSURANCE BUSINESS. (2) WITHOUT PREJUDICE TO THE GENERALITY OF THE PROV ISIONS CONTAINED IN SUB-SECTION (1), THE POWERS AND FUNCTIONS OF THE AU THORITY SHALL INCLUDE, - (A) ISSUE TO THE APPLICANT A CERTIFICATE OF REGIST RATION, RENEW, MODIFY, WITHDRAW, SUSPEND OR CANCEL SUCH REGISTRATION; (B) PROTECTION OF THE INTERESTS OF THE POLICY HOLD ERS IN MATTERS CONCERNING ASSIGNING OF POLICY, NOMINATION BY POLIC Y HOLDERS, INSURABLE INTEREST, SETTLEMENT OF INSURANCE CLAIM, SURRENDER VALUE OF POLICY AND OTHER TERMS AND CONDITIONS OF CONTRACTS OF INSURANCE; (C) SPECIFYING REQUISITE QUALIFICATIONS, CODE OF C ONDUCT AND PRACTICAL TRAINING FOR INTERMEDIARY OR INSURANCE INTERMEDIARI ES AND AGENTS; (D) SPECIFYING THE CODE OF CONDUCT FOR SURVEYORS A ND LOSS ASSESSORS; (E) PROMOTING EFFICIENCY IN THE CONDUCT OF INSURAN CE BUSINESS; (F) PROMOTING AND REGULATING PROFESSIONAL ORGANISA TIONS CONNECTED WITH THE INSURANCE AND RE-INSURANCE BUSINESS; (G) LEVYING FEES AND OTHER CHARGES FOR CARRYING OU T THE PURPOSES OF THIS ACT; (H) CALLING FOR INFORMATION FROM, UNDERTAKING INSP ECTION OF, CONDUCTING ENQUIRIES AND INVESTIGATIONS INCLUDING AUDIT OF THE INSURERS, INTERMEDIARIES, INSURANCE INTERMEDIARIES AND OTHER ORGANISATIONS CO NNECTED WITH THE INSURANCE BUSINESS; (I) CONTROL AND REGULATION OF THE RATES, ADVANTAGE S, TERMS AND CONDITIONS THAT MAY BE OFFERED BY INSURERS IN RESPE CT OF GENERAL INSURANCE BUSINESS NOT SO CONTROLLED AND REGULATED BY THE TAR IFF ADVISORY COMMITTEE UNDER SECTION 64U OF THE INSURANCE ACT, 1938 (4 OF 1938); (J) SPECIFYING THE FORM AND MANNER IN WHICH BOOKS OF ACCOUNT SHALL BE MAINTAINED AND STATEMENT OF ACCOUNTS SHALL BE RE NDERED BY INSURERS AND OTHER INSURANCE INTERMEDIARIES; (K) REGULATING INVESTMENT OF FUNDS BY INSURANCE CO MPANIES; (L) REGULATING MAINTENANCE OF MARGIN OF SOLVENCY; (M) ADJUDICATION OF DISPUTES BETWEEN INSURERS AND INTERMEDIARIES OR INSURANCE INTERMEDIARIES; 16. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 (N) SUPERVISING THE FUNCTIONING OF THE TARIFF ADVI SORY COMMITTEE; (O) SPECIFYING THE PERCENTAGE OF PREMIUM INCOME OF THE INSURER TO FINANCE SCHEMES FOR PROMOTING AND REGULATING PROFES SIONAL ORGANISATIONS REFERRED TO IN CLAUSE (F); (P) SPECIFYING THE PERCENTAGE OF LIFE INSURANCE BU SINESS AND GENERAL INSURANCE BUSINESS TO BE UNDERTAKEN BY THE INSURER IN THE RURAL OR SOCIAL SECTOR; AND (Q) EXERCISING SUCH OTHER POWERS AS MAY BE PRESCRI BED. 17. CLEARLY, THEREFORE, IRDA IS PRIMARILY TO REGUL ATE, PROMOTE AND ENSURE ORDERLY GROWTH OF THE INSURANCE BUSINESS AND RE-INSURANCE BUSINESS. IN DOING SO, AS EVIDENT FROM SECTION 14( 2)(A) TO (Q) ABOVE, IT REGULATES THE CONDUCT OF THE SERVICE PROVIDERS I N THE BUSINESS OF THE INSURANCE. IT DOES NOT, AND CANNOT, REGULATE TH E CONDUCT OF THE POLICY HOLDERS. AS IN SECTION 14(2)(B), IF AT ALL I T HAS ANYTHING TO DO WITH THE POLICYHOLDERS, IT IS PROTECTION OF INTERES T OF THE POLICYHOLDERS. IT IS IN THIS BACKGROUND THAT WE HAVE TO SEE THE CI RCULARS ISSUED BY THE IRDA. IN THE CIRCULAR DATED 27 TH APRIL, 2005, THE IRDA STATES AS FOLLOWS: THE AUTHORITY IS AWARE THAT SOME OF THE ABERRATIONS HAVE TAKEN PLACE IN THE MONTH OF MARCH 2005 IN THE MATTE R OF SALE OF KEYMAN INSURANCE . WE SHALL CONDUCT A DETAILED EXAMINATION OF THE POLI CIES MARKETED IN MARCH 2005 AND SHALL COME UP WITH DETAI LED GUIDELINES ON THE SALE OF KEYMAN INSURANCE AT THE A PPROPRIATE TIME. IN THE MEANTIME, IT HAS BEEN DECIDED THAT ONL Y TERM INSURANCE POLICY WILL HENCEFORTH BE ISSUED AS KEYM AN INSURANCE COVER . YOUR COMPANY IS REQUESTED TO ENSURE THAT YOUR COMPA NY FOLLOWS THIS CIRCULAR TILL FRESH GUIDELINES ARE ISS UED. 18. A PLAIN LOOK AT THE ABOVE CIRCULAR SHOWS THAT I T DEALS WITH ABERRATIONS IN SALE OF KEYMAN INSURANCE POLICIES AN D IT IS WAS A DIRECTION TO THE INSURANCE COMPANIES THAT EFFECT 27 TH APRIL 2005 ONLY TERM INSURANCE POLICIES SHOULD BE ISSUED AS KEYMAN INSURANCE COVER. THAT IS BETWEEN THE REGULATORY AUTHORITY AND THE IN SURANCE COMPANIES AS TO WHAT SHOULD BE ALLOWED TO BE MARKET ED AS KEYMAN INSURANCE COVER. HOWEVER, IT DOES NOT ALTER THE REQ UIREMENTS OF SECTION 10(10D) WHICH IS FOR LIFE INSURANCE POLICY . WHAT CAN BE SOLD AS A LIFE INSURANCE POLICY TAKEN BY A BUSINESS EN TITY FOR ITS EMPLOYEE, FORMER EMPLOYEE OR ANY OTHER PERSON IMPOR TANT FOR BUSINESS OF SUCH AN ENTITY IS BETWEEN THE INSURANCE REGULATOR AND INSURANCE SERVICE PROVIDER. HOWEVER, ONCE IT HAS BE EN SOLD AS A LIFE INSURANCE POLICY ON THE KEYMAN TO THE BUSINESS, AS LONG AS IT IS IN 17. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 THE NATURE OF LIFE INSURANCE POLICY, WHETHER PURE L IFE COVER OR TERM COVER OR A GROWTH OR GUARANTEED RETURN POLICY, IT I S ELIGIBLE FOR COVERAGE OF SECTION 10(10D). IT IS NOT OPEN TO US T O INFER THE WORDS WHICH ARE NOT THERE ON THE STATUTE AND THEN PROCEED TO GIVE LIFE AND EFFECT TO THE SAME. WE HAD DETAILED DISCUSSIONS ABO UT THIS ASPECT OF THE MATTER IN PARAGRAPH NUMBERS 10 TO 15 ABOVE, AND , AS WE HAVE HELD THERE, SUCH AN EXERCISE IS NOT PERMISSIBLE UND ER THE SCHEME OF THE ACT. 19. WHAT IRDA REGULATES IS ISSUANCE OF LIFE INSURAN CE POLICIES BY THE INSURANCE COMPANIES TO THE POLICYHOLDERS ON THE LIVES OF ITS EMPLOYEES, FORMER EMPLOYEES AND KEY PERSONNEL BUT O NCE SUCH A POLICY IS ISSUED IT CANNOT BUT BE TREATED AS A KEY MAN INSURANCE COVER AS IT ESSENTIALLY MEETS THE REQUIREMENT OF S ECTION 10(10D) BECAUSE IT IS A A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE O F THE FIRST- MENTIONED PERSON OR IS OR WAS CONNECTED IN ANY MANN ER WHATSOEVER WITH THE BUSINESS OF THE FIRST-MENTIONED PERSON. THE MANDATE OF SECTION 10(10D) DOES NOT PUT ANY FUR THER TESTS, NOR CAN WE INFER THE SAME. 20. THE ASSESSING OFFICER HAS QUESTIONED COMMERCIAL EXPEDIENCY OF TAKING THE KEYMAN INSURANCE POLICIES ON THE SHOR T GROUNDS THAT (A) THE FALL IN TURNOVER, APPARENTLY ACCORDING TO THE A SSESSING OFFICER, SHOWS THAT THERE WAS NO COMMERCIAL BENEFIT FROM TAKING TH E KEYMAN INSURANCE COVER; (B) THE INSURANCE POLICY WAS TAKEN FOR THE B ENEFIT OF THE PARTNER RATHER THAN THE FIRM; AND (C) NO NECESSITY OR EXPED IENCY OF THE PERSON BEING KEYMAN AND THE POLICY BEING TAKEN FOR THE BENEFIT O F THE FIRM WAS ESTABLISHED. WHEN BENEFIT OF POLICY WAS ASSIGNED TO THE INSURED, THE POLICY CANNOT BE SAID TO BE FOR THE BENEFIT OF THE ASSESSE E FIRM. WE SEE NO MERITS IN THESE OBJECTIONS TO THE COMMERCIAL EXPEDIENCY. A S FOR THE FALL IN TURNOVER, THE BENEFIT OF AN EXPENDITURE CANNOT BE, BY ANY STRETCH OF LOGIC, RELEVANT TO DETERMINE ITS COMMERCIAL EXPEDIENCY, AN D, IN ANY CASE. SUCH A BENEFIT OF HINDSIGHT CANNOT BE AVAILABLE AT THE POI NT OF TIME WHEN BUSINESS DECISIONS ARE MADE; MORE OFTEN THAN NOT, THESE ARE THE TOOLS OF POST MORTEM OF EVENTS, RATHER THAN INPUTS FOR THE DECISION MAKI NG. AS FOR THE OTHER ISSUES RAISED BY THE ASSESSING OFFICER AS SUCH, WE MAY REFER TO THE FOLLOWING OBSERVATIONS MADE, IN THIS CONTEXT, BY HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS RAJAN NANDA ETC. [(2012) 349 ITR 8 (DEL)] : 25. AFTER GIVING OUR DUE AND THOUGHTFUL CONSIDERATI ON TO THE SUBMISSIONS OF THE PARTIES OF BOTH SIDES, WE FEEL T HAT THE ASSESSEE HAS BEEN ABLE TO MAKE OUT A CASE IN ITS FA VOUR AND ORDER OF THE TRIBUNAL DOES NOT CALL FOR ANY INTERFE RENCE. WE ARE PERSUADED BY THE FOLLOWING REASONS IN SUPPORT O F THIS VIEW OF OURS: 18. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 (I) THE DEPARTMENT HAS ITSELF ALLOWED THE EXPENDITU RE INCURRED ON THE PREMIUM PAID FOR KEYMAN INSURANCE P OLICIES IN PREVIOUS YEARS AS BUSINESS EXPENDITURE UNDER SEC TION 37 OF THE ACT. RIGHT FROM 1991-92 UPTO 1993-94 AND THEREA FTER EVEN IN RESPECT OF ASSESSMENT YEAR 1997-98, THE EXP ENDITURE WAS ALLOWED. THOUGH THEREAFTER, THE EXPENDITURE WAS DISALLOWED, BUT AGAIN THE CLAIM WAS ACCEPTED FOR TH E ASSESSMENT YEARS 2001-02 AND 2002-03. PRINCIPLE OF CONSISTENCY WOULD, THEREFORE, BY APPLICABLE IN SUCH A CASE. (II) THE TRIBUNAL HAS RIGHTLY REFERRED TO AND RELIE D UPON THE CBDT'S CIRCULAR DATED 18.2.1998. THIS CIRCULAR IS B INDING ON THE INCOME TAX DEPARTMENT, WHICH CATEGORICALLY STIP ULATES THAT PREMIUM ON KEYMAN POLICY SHOULD BE ALLOWED AS BUSINESS EXPENSES. THE ASSESSEE WOULD, NATURALLY, T AKE INTO CONSIDERATION SUCH CLARIFICATIONS ISSUED BY THE CBD T AND WOULD ACT ON THE BASIS THEREOF. WHEN THE ASSESSEE W AS GIVEN THE IMPRESSION, BY MEANS OF THE AFORESAID CIRCULAR, THAT IF EXPENDITURE IS INCURRED ON THE KEYMAN POLICY, IT WO ULD BE TREATED AS BUSINESS EXPENDITURE . THERE IS NO REASON FOR THE DEPARTMENT TO DEVIATE THEREFROM WHEN IT COMES TO TH E ASSESSMENT. (III) THE NATURE OF EXPENDITURE INCURRED ON KEYMAN INSURANCE POLICY HAS EVEN BEEN JUDICIALLY CONSIDERED AND BOMB AY HIGH COURT HAS HELD IN B.N. EXPORTS (SUPRA) THAT THIS EX PENDITURE IS TO BE ALLOWED AS BUSINESS EXPENDITURE, IN THE FOLLO WING WORDS: 'THE EFFECT OF SECTION 10(10D) IS THAT MONIES WHICH ARE RECEIVED UNDER A LIFE INSURANCE POLICY ARE NOT INCL UDED IN THE COMPUTATION OF THE TOTAL INCOME OF A PERSON FOR A P REVIOUS YEAR. HOWEVER, ANY SUM RECEIVED UNDER A KEYMAN INSU RANCE POLICY IS TO BE RECKONED WHILE COMPUTING THE TOTAL INCOME. FOR THAT PURPOSE, A KEYMAN INSURANCE POLICY MEANS A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF A NOTHER PERSON WHO IS OR WAS IN EMPLOYMENT AS WELL AS ON A PERSON ON WHO IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE SUBSCRIBER. THE WORDS 'IS OR WA S CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINES S OF THE SUBSCRIBER' ARE WIDER THAN WHAT WOULD BE SUBSUMED U NDER A CONTRACT OF EMPLOYMENT . THE LATTER PART MAKES IT CLEAR THAT A KEYMAN INSURANCE POLICY FOR THE PURPOSES OF CLAUSE (10D) IS NOT CONFINED TO A SITUATION WHERE THERE IS A CONTRA CT OF EMPLOYMENT. CLAUSE (10D) RELATES TO THE TREATMENT F OR THE 19. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 PURPOSE OF TAXATION OF MONEYS RECEIVED UNDER AN INS URANCE POLICY. IN THIS APPEAL, THE COURT HAS TO DETERMINE THE QUESTION OF EXPENDITURE INCURRED TOWARDS THE PAYMENT OF INSU RANCE PREMIUM ON A KEYMAN INSURANCE POLICY. THE CIRCULAR WHICH HAS BEEN ISSUED BY THE CENTRAL BOARD OF DIRECT TAXE S CLARIFIES THE POSITION BY STIPULATING THAT THE PREMIUM PAID F OR A KEYMAN INSURANCE POLICY IS ALLOWABLE AS BUSINESS EXPENDITURE. IN THE PRESENT CASE, ON THE QUESTION W HETHER THE PREMIUM WHICH WAS PAID BY THE FIRM COULD HAVE BEEN ALLOWED AS BUSINESS EXPENDITURE, THERE IS A FINDING OF FACT BY THE TRIBUNAL THAT THE FIRM HAD NOT TAKEN INSURANCE FOR THE PERSONAL BENEFIT OF THE PARTNER, BUT FOR THE BENEFI T OF THE FIRM, IN ORDER TO PROTECT ITSELF AGAINST THE SET BACK THA T MAY BE CAUSED ON ACCOUNT OF THE DEATH OF A PARTNER. THE OB JECT AND PURPOSE OF A KEYMAN INSURANCE POLICY IS TO PROTECT THE BUSINESS AGAINST A FINANCIAL SET BACK WHICH MAY OCC UR, AS A RESULT OF A PREMATURE DEATH, TO THE BUSINESS OR PRO FESSIONAL ORGANIZATION. THERE IS NO RATIONAL BASIS TO CONFINE THE ALLOWABILITY OF THE EXPENDITURE INCURRED ON THE PRE MIUM PAID TOWARDS SUCH A POLICY ONLY TO A SITUATION WHERE THE POLICY IS IN RESPECT OF THE LIFE OF AN EMPLOYEE. A KEYMAN INS URANCE POLICY IS OBTAINED ON THE LIFE OF A PARTNER TO SAFE GUARD THE FIRM AGAINST A DISRUPTION OF THE BUSINESS THAT MAY RESULT DUE TO THE PREMATURE DEATH OF A PARTNER. THEREFORE, THE EXPENDITURE WHICH IS LAID OUT FOR THE PAYMENT OF PR EMIUM ON SUCH A POLICY IS INCURRED WHOLLY AND EXCLUSIVELY FO R THE PURPOSES OF BUSINESS .' (IV) THE ARGUMENT OF MR. N.P. SAHNI, LEARNED COUNSE L FOR THE REVENUE THAT TAKING SUCH KEYMAN INSURANCE POLICY EV ERY YEAR AND THEREAFTER ASSIGNING THE SAME TO THE BENEF ICIARIES MAY BE TREATED AS COLOURABLE DEVICE, MAY NOT BE COR RECT. THOUGH THIS ARGUMENT APPEARS TO BE ATTRACTIVE WHEN WE LOOK INTO THE FACT THAT THE ASSESSEE HAD BEEN TAKING THE POLICIES AND THEREAFTER ASSIGNING THE SAME YEAR AFTER YEAR I N FAVOUR OF THE BENEFICIARIES, WHAT CANNOT BE IGNORED THAT T HIS COURSE OF ACTION IS PERMITTED BY THE DEPARTMENT ITSELF AS STATED IN CBDT'S CIRCULAR DATED 18.2.1998. (V) THE EXPENDITURE INCURRED HAS TO BE TESTED ON TH E TOUCHSTONE OF SECTION 37 OF THE ACT AND TO SEE AS T O WHETHER SUCH EXPENDITURE IS PERMISSIBLE OR NOT. NO DOUBT, T HE OBJECT OF A KEYMAN INSURANCE POLICY IS TO ENABLE BUSINESS ORGANIZATIONS TO INSURE THE LIFE OF A KEYMAN IN ORD ER TO PROTECT THE BUSINESS AGAINST THE FINANCIAL LOSS WHI CH MAY OCCUR IN THE LIKELY EVENTUALITY OF PREMATURE DEATH. SUCH AN 20. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 EXPENDITURE IS TREATED AS BUSINESS EXPENDITURE BY T HE DEPARTMENT ITSELF AND RECOGNIZED AS SUCH IN CIRCULA R DATED 18.2.1998. THE EXPENDITURE IS TO BE SEEN AT THE TIM E IT IS INCURRED. MERELY BECAUSE THE POLICY WAS ASSIGNED AF TER SOMETIME WOULD NOT MEAN THAT THE EXPENDITURE INCURR ED IN THE FIRST INSTANCE WOULD LOSE THE FLAVOUR OF IT BEI NG BUSINESS EXPENDITURE' . (VI) ONCE THE LEGAL PROVISIONS AND THE OUTLOOK OF D EPARTMENT ITSELF BASED ON SUCH LEGAL PROVISIONS PERMIT THE AS SESSEE TO HAVE THE TAX PLANNING OF THIS NATURE, AND THE COURS E OF ACTION TAKEN BY THE ASSESSEE IS PERMISSIBLE UNDER LAW, THE ARGUMENT OF COLOURABLE DEVICE CANNOT BE ADVANCED BY THE REVE NUE. WHEN EXPENDITURE OF THIS NATURE IS TREATED BUSINES S EXPENDITURE' PER SE BY THE DEPARTMENT ITSELF, THERE CANNOT BE ANY QUESTION OF RAISING THE ISSUE OF WANT OF BUSINE SS EXPEDIENCY. THE LEARNED COUNSEL FOR THE RESPONDENT IS RIGHT IN HIS SUBMISSION THAT THE DEPARTMENT COULD NOT SIT ON THE ARMCHAIR OF THE ASSESSEE AND DECIDE AS TO WHETHER I T WAS APPROPRIATE ON BUSINESS EXPEDIENCY FOR THE ASSESSEE TO INCUR SUCH AN EXPENDITURE OR NOT. IF THE TRANSACTION IS O THERWISE VALID IN LAW AND IS A PART OF TAX PLANNING, MERELY BECAUSE IT HAS RESULTED IN REDUCTION OF TAX, SUCH EXPENDITURE CANNOT BE IGNORED RAISING THE ISSUE OF UNDERLYING MOTIVE OF E NTERING INTO THIS TYPE OF TRANSACTION . VARIOUS JUDGMENTS CITED BY THE LEARNED COUNSEL FOR THE RESPONDENTS CLEARLY GET ATT RACTED TO THIS COURT. (EMPHASIS, BY UNDERLINING, SUPPLIED BY US) 21. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF HONBL E DELHI HIGH COURT, WE REJECT THE STAND OF THE AUTHORITIES BELOW ON THIS ASPECT OF THE MATTER AS WELL. AS FOR THE STATEMENT MADE B Y THE EMPLOYEES OF THE INSURANCE COMPANIES, NOTHING TURNS ON THESE STATEMENTS. WHAT CONSTITUTES A KEYMAN INSURANCE POL ICY UNDER SECTION 10(10D) IS NOT DEPENDENT ON WHAT IS IT TREA TED EVEN BY THE INSURER; AS LONG AS THE ASSESSEE IS ALLOWED TO TAKE LIFE INSURANCE POLICY ON ITS KEYMEN, AS HAVE BEEN UNDISPUTEDLY TAK EN IN THIS CASE, THE SAME SATISFIES THE REQUIREMENT OF SECTION 10(10D). IN VIEW OF THESE DETAILED DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD THE GRIEVANCE OF TH E ASSESSEE AND DELETE THE IMPUGNED DISALLOWANCE OF RS.1,49,99,922. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 21. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 WE FIND THAT FACTS & CIRCUMSTANCES OF GROUND NO.5 I N THE PRESENT APPEAL ARE SIMILAR, THEREFORE, RESPECTFULLY FOLLOWI NG THE ABOVE TRIBUNAL ORDERS, WE ALLOW GROUND NO.5. WE FIND THAT THE CASE LAW OF M/S SURI SONS AS RELIE D UPON BY LEARNED AR IN ITA 37(ASR)/2010 ALSO CONTAINS SIMILAR FINDINGS. THEREF ORE, IN ANY CASE THE CASE OF THE ASSESSEE IS COVERED IN ITS FAVOUR. 6. AS REGARDS THE ARGUMENT OF LEARNED DR THAT IN VIEW OF CONFLICTING JUDGMENTS, SPECIAL BENCH SHOULD HAVE BEEN CONSTITUT ED, WE FIND THAT THE CONTRARY JUDGMENT PASSED BY TRIBUNAL IN THE CASE OF ASSESSEE ITSELF STANDS RECALLED AND THEREFORE, THE ORDER PASSED BY THE BEN CH IN FAVOUR OF REVENUE AS HAVING BEEN RECALLED IS A NULLITY AND SINCE THERE A RE NO CONFLICTING VIEWS, THERE IS NO NEED TO CONSTITUTE A SPECIAL BENCH. 7. AS REGARDS THE ARGUMENT OF LEARNED DR THAT THE W RITTEN NOTE SUBMITTED IN THE CASE OF M/S SURI SONS AS CONTAINED IN PARA D AND E WERE NOT CONSIDERED, WE FIND THAT IN PARA D AS NOTED BY THE HONBLE TRIB UNAL THE OBJECTION OF LEARNED DR WAS THAT THE DECISION OF SH. NIDHI CORPORATION V S. ACIT 151 ITD 470 WAS NOT APPLICABLE AS IN THAT CASE THE ASSESSEE WAS GIV EN THE LIBERTY TO CHOOSE THE INVESTMENT PLAN WHEREAS NO SUCH OPTION WAS AVAILABL E TO THE ASSESSEE IN THE PRESENT CASE. IN THIS RESPECT, WE FIND THAT IN THE CASE OF SH. NIDHI CORPORATION ALSO, THE ASSESSEE HAD TAKEN KEYMAN INSURANCE POLIC IES ON THE LIFE OF PARTNERS AND HONBLE TRIBUNAL HAD HELD THAT WHEREVER INSURAN CE COMPANY IS MAKING INVESTMENT IN MUTUAL FUNDS FOR CAPITAL APPRECIATION OR UNDER ANY OTHER INVESTMENT SCHEME WILL NOT MAKE ANY MATERIAL DIFFER ENCE IN RESPECT OF 22. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 ALLOWANCE OF PREMIUM. MOREOVER, WE FIND THAT DEFINI TION OF KEYMAN INSURANCE POLICY HAS BEEN PROVIDED IN EXPLANATION TO SECTION 24(XI) WHICH READS AS UNDER. EXPLANATION: FOR THE PURPOSE OF THIS CLAUSE THE EXP RESSION KEYMAN INSURANCE POLICY SHALL HAVE THE MEANING ASSIGNED T O IT IN EXPLANATION TO CLAUSE (10D) OF SECTION 10 WHICH IS REPRODUCED BELO W: SECTION 10(10D), FOR THE PURPOSES OF THIS CLAUSE, KEYMAN INSURANCE POLICY MEANS A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FIRST MENTIONED P ERSON OR IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE F IRST MENTIONED PERSON. WE FIND THAT KEYMAN INSURANCE POLICY IS A POLICY ON THE LIFE OF ANOTHER PERSON WHO IS AN EMPLOYEE OF THE ASSESSEE OR IS CONNECTED WITH THE BUSINESS OF ASSESSEE AND THERE IS NO SUCH RESTRICTION AS TO WHE THER THE ASSESSEE IS GIVEN LIBERTY TO DECIDE INVESTMENT PLANS OF INSURANCE COM PANIES OR NOT. THEREFORE, THE ARGUMENT RAISED BY LEARNED DR HAS NO FORCE. 8. AS REGARDS THE PARA-E OF WRITTEN NOTE SUBMITTED BY REVENUE IN THE CASE OF M/S SURI SONS, WE FIND THAT THIS PARA DEALT WITH TH E REQUEST FOR CONSTITUTION OF SPECIAL BENCH WHICH HAS ALREADY BEEN DEALT WITH BY US. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE JUDICIAL PRECEDENTS, WE FIND THAT THE ISSUE OF PAYMENT OF KEYMAN INSURANCE POLICY IS DULY COVERED IN FAVOUR OF ASSESSEE AND THEREFORE, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. 9. NOW, WE TAKE UP APPEALS IN ITA NOS. 502(ASR)2011 & ITA NO.131(ASR)2012. SINCE, THE ISSUE INVOLVED IN BOTH THE APPEALS IS SIMILAR TO THE ISSUE DECIDED BY US HEREIN ABOVE IN ITA NO.117(ASR) 2010, THE FINDINGS GIVEN 23. ITA NO. 117(ASR)/2010 502 & 131 (ASR)/2011 &2012 ASST. YEAR 2006-07 & 2007-08 THEREIN WILL SECURELY BE APPLICABLE TO THE FACTS AN D CIRCUMSTANCES OF THESE PRESENT APPEALS ALSO. ACCORDINGLY, THE APPEALS IN I TA NO.502(ASR)/2011 & ITA NO.131(ASR)2012 ARE ALLOWED. 10. IN THE RESULT, ALL THE THREE APPEALS FILED BY THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 27.11.2015. /PK/ PS. COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: (I) M/S. F.C.SONDHI & CO. (INDIA) PVT . LTD., JALANDHAR. (II) VISHAL TOOLS & FORGI NGS PVT. LTD. 2. (I) THE DCIT, RANGE-I, JALANDHAR (II) THE ACIT, RAN GE-II, JALANDHAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.