Uniflex Industries Pvt. Ltd., Kanpur V. Dy. Commissioner of Income Tax-VI, Kanpur

ITA 682/LKW/2014

• Counselvise Citation: 68223714 RSA 2014
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ALOK MITRA
• Section: 10(10D)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.682/LKW/2014 ASSESSMENT YEAR:2006 - 07 DY. CIT, RANGE - VI, KANPUR. VS M/S UNIFLEX INDUSTRIES PVT. LTD., C - 14, PANKI INDUSTRIAL ESTATE, KANPUR. PAN:AAACU1883A (RESPONDENT) (APPELLANT) SHRI AKSHAY K. GUPTA, FCA APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY 01/10/2014 DATE OF HEARING 10 /1 2 /2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR DATED 30/05/2014 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.4,88,416/ - OUT OF KEY MAN INSURANCE PREMIUM. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT AS PER THE PROVISIONS OF SECTION 10(10D) OF THE ACT, THE TERM KEYMAN INSURANCE POLICY HAS BEEN DEFINED AND AS PER THE SAME , KEYMAN INSURANCE IS A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FIRST MENTIONED PERSON OR IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WIT H THE BUSINESS OF THE FIRST MENTIONED PERSON. HE FURTHER 2 SUBMITTED THAT FROM THIS DEFINITION IN THE ACT OF KEYMAN INSURANCE POLICY, IT IS NOT THE REQUIREMENT OF LAW THAT THE EMPLOYEE OF THE PERSON HAVING A KEYMAN INSURANCE POLICY SHOULD BE SUCH PERSON ONL Y WHO IS LOOKING AFTER KEY WORK. HE PLACED RELIANCE ON A TRIBUNAL DECISION RENDERED IN THE CASE OF INCOME TAX OFFICER VS. MODI MOTORS [2009] 27 SOT 476 (MUM). HE ALSO PLACED RELIANCE ON A JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. B. N. EXPORTS [2010] 190 TAXMAN 325 (BOM). HE SUBMITTED THAT AS PER THIS JUDGMENT, IT WAS HELD THAT EVEN ON THE LIFE OF ANY PERSON, A KEYMAN INSURANCE POLICY CAN BE OBTAINED. 4. ON THE OTHER HAND, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE PROVISION S OF SUB SECTION 10(D) OF SECTION 10, THE TERM KEYMAN INSURANCE WAS DEFINED AND AS PER THIS DEFINITION, KEYMAN INSURANCE IS A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FIRST MENTIONED PERSON OR IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE FIRST MENTIONED PERSON. FROM THIS DEFINITION, IT IS SEEN THAT IT IS NOT A REQUIREME NT OF LAW THAT THE EMPLOYEE OR THE PERSON ON WHOSE LIFE A KEYMAN INSURANCE I S OBTAINED BY AN ASSESSEE HAS TO BE SHOWN TO BE A KEYMAN OR VERY IMPORTANT PERSON FOR THE ASSESSEE. AS PER THIS DEFINITION, THE ONLY REQUIREMENT IS THAT THE PERSON ON WHOSE LIFE , KEYMAN INSURANCE POLICY HAS BEEN OBTAINED IS EMPLOYEE OF THE ASSESSEE OR IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE ASSESSEE. SINCE THIS IS NOT A REQUIREMENT OF LAW TO ASK THE ASSESSEE TO ESTABLISH THAT THE PERSON ON WHOSE LIFE KEYMAN INSURANCE POLICY WAS UNDERTAKEN BY THE ASSESSEE IS VERY IMPORTANT FOR THE ASSESSEE AND WITHOUT HIM , THE BUSINESS OF THE ASSESSEE WILL BE VERY ADVERSELY AFFECTED, IT CANNOT BE SAID THAT SUCH INSURANCE POLICY IS NOT A KEYMAN INSURANCE POLICY. IT MAY BE 3 THAT IN A GIVEN CASE, THE EFFECT TO THE BUSINESS OF THE ASSESSEE MAY NOT BE ENORMOUS BUT THE EFFECT MAY BE SMALLER AND EVEN THEN , THE ASSESSEE MAY CHOOSE TO PURCHASE A KEYMAN INSURANCE POLICY ON THE LIFE OF SUCH PERSON BUT IN THE ABSENCE OF ANY SUCH RE QUIREMENT AS PER LAW THAT THE PERSON SHOULD BE VERY IMPORTANT PERSON, THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED THAT THE POLICY IN QUESTION IS A KEYMAN INSURANCE POLICY. HENCE, WE FEEL THAT IN THE FACTS OF THE PRESENT CASE, THE AUTHORITIES BELOW WERE N OT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE LIFE INSURANCE POLICY PURCHASED BY THE ASSESSEE COMPANY ON THE LIFE OF SHRI VIKRAM GARG, EMPLOYEE OF THE ASSESSEE, WHO WAS LOOKING AFTER DAY TO DAY WORKING OF THE COMPANY, WAS NOT A KEYMAN INSURA NCE POLICY. HENCE, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /12/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR