DCIT CIR 13(1), MUMBAI V. NOVATEK ENGINEERS, MUMBAI

ITA 6529/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9006 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 22-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 21-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Business expenditure; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR,(AM) ITA NO.6529/MUM/2009 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME TAX -13(1) ROOM NO.418, 4 TH FLOOR AAYAKAR BHAVAN MUMBAI-20. ..( APPELLANT ) VS. M/S. NOVATEK ENGINEERS 3, NARAYAN DHRUV CROSS LANE MUMBAI-3. ..( RESPONDENT ) P.A. NO. (AAAFN 1521 H) APPELLANT BY : SHR I SUMEET KUMAR RESPONDENT BY : SHRI SANJAY R. PARIKH O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 26.10.2009 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM IS ENGAGED IN THE BUSINESS OF TRADING IN ELECTRONIC AND ELE CTRIC GOODS, FILED RETURN DECLARING TOTAL INCOME OF RS.50,15,051/- WHICH WAS SUBSEQUENTLY REVISED TO RS.48,62,090/- TO CLAIM DEDUCTIO N ON ACCOUNT OF DISALLOWANCE MADE IN THE PREVIOUS ASSESSMENT YEAR U/S. 4 0A(IA) OF THE INCOME TAX ACT, 1961 (THE ACT) RS.2,30,406/-. DUR ING THE COURSE OF ASSESSMENT PROCEEDING IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.18,7 8,750/- UNDER THE HEAD INSURANCE IN THE P&L ACCOUNT ON ACCOUNT OF KEY ITA NO.6529/M/09 A.Y:06-07 2 INSURANCE PREMIUM PAID ON THE LIFE OF PARTNERS OF THE ASSESSEE FIRM. THE ASSESSING OFFICER WHILE OBSERVING THAT THE IDENTICAL DEDUCTION WAS CLAIMED BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR I.E . ASSESSMENT YEAR 2005-06 WHEREIN AFTER DISCUSSION THE ASSESSEE' S CLAIM WAS DISALLOWED, FOLLOWING THE SAME VIEW DISALLOWED RS.18,78,750/- AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) FOLLOWING THE TRIBUNALS ORDER IN THE ASSESSEE'S OWN CASE IN ITA NO.4960/MUM/2008 FOR ASSESSMENT YEAR 2005-06 DAT ED 29.7.2009 HAS ALLOWED THE CLAIM OF THE ASSESSEE AS BUSINESS EXPENDITURE U/S.37(1) OF THE ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DE LETION OF ADDITION OF RS.18,78,750/- MADE ON ACCOUNT OF KEY INSURANCE POLICY PREMIUM OF PARTNERS. 4. AT THE TIME OF HEARING THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THE TRI BUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 HAS UPHELD THE OR DER OF THE LD. CIT(A) IN DELETING THE SIMILAR ADDITION MADE BY THE ASSESSING OFFICER. HE FURTHER SUBMITS THAT THE SAID ORDER OF THE TRIBUNAL HAS ALSO BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT I N CIT VS. NOVATEK ENGINEERS IN INCOME TAX APPEAL NO.791 OF 2010 DATED 5.4.2010. HE ALSO PLACED ON RECORD THE COPY OF THE SAID O RDERS. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THE PRESENT ISSUE IS SQUARE LY COVERED ITA NO.6529/M/09 A.Y:06-07 3 AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY TH E JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. B.N. EXPOR TS (2010)323 ITR 178 (BOM.) WHEREIN IT HAS BEEN HELD (HEAD NOTES): HELD, DISMISSING THE APPEAL, THAT THERE WAS A FINDI NG OF FACT BY THE TRIBUNAL THAT THE FIRM HAD NOT TAKEN IN SURANCE FOR THE PERSONAL BENEFIT OF THE PARTNER, BUT FOR TH E BENEFIT OF THE FIRM, IN ORDER TO PROTECT ITSELF AGAINST THE SETBACK THAT MAY BE CAUSED ON ACCOUNT OF THE DEATH OF THE PARTNER. THE INSURANCE PREMIUM WAS DEDUCTIBLE. THE ABOVE DECISION HAS BEEN FOLLOWED BY THE HON'BLE JUR ISDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2005-06 (SUPRA), BY HOLDING THAT THE PRESENT APPEAL DOES NOT R AISE ANY SUBSTANTIAL QUESTION OF LAW AND IS ACCORDINGLY DISMISSED. 7. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROU GHT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE ABOVE D ECISIONS AND THE CONSISTENT VIEW HOLD THAT THE PAYMENT OF PREMIUM OF K EYMAN INSURANCE POLICY IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND HENCE, THE SAME IS ALLOWABLE AS REVENUE EXP ENDITURE. ACCORDINGLY WE WHILE UPHOLDING THE ORDER PASSED BY THE LD. CIT(A), IN ALLOWING THE CLAIM OF RS.18,78,750/- REJECT THE GROUND S TAKEN BY THE REVENUE. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.1.2011. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 7.1.2011. JV. ITA NO.6529/M/09 A.Y:06-07 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.