BST SAYONA AUTOMATIONS P. LTD, MUMBAI V. ACIT 9(1), MUMBAI

ITA 7394/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83955 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LAV KUMAR
• Assessee Lawyers: R C MODI
• Keywords: Business expenditure
• Section: 10(10D)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI , !' # # # # , , !' $ BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I .T.A. NO. 7394/MUM/2011 ( % % % % / ASSESSMENT YEAR : 2008-09 A N D ./I .T.A. NO. 4867/MUM/2013 ( % % % % / ASSESSMENT YEAR : 2010-11 M/S. BST SAYONA AUTOMATIONS PVT. LTD., A/320, BLUE ROSE INDUSTRIAL ESTATE, WESTERN EXPRESS HIGHWAY, BORIVALI (E), MUMBAI-400 066 / VS. THE ACIT 9(1), AAYAKAR BHAVAN, MUMBAI-400 020 '& ./ '( ./ PAN/GIR NO. : ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) &) , / APPELLANT BY: SHRI R.C. MODI *+&) - , / RESPONDENT BY: SHRI LAV KUMAR - ./ / DATE OF HEARING :14.10.2014 01% - ./ / DATE OF PRONOUNCEMENT :20.10.2014 !2 / O R D E R PER N.K. BILLAIYA, AM: THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST TH E ORDERS OF THE LD. CIT(A)-19, MUMBAI PERTAINING TO A.YRS.2008-09 A ND 2010-11 DT. ITA NO. 4867/M/2013 ITA NO. 7394/M/2011 2 23.8.2011 & 2.5.2013 RESPECTIVELY. IN BOTH THESE A PPEALS THERE ARE TWO GROUNDS WHICH ARE COMMON. 2. THE FIRST GROUND RELATES TO THE DISALLOWANCE OUT OF TRAVELLING, CONVEYANCE EXPENSES AND THE SECOND GROUND IS RELATI NG TO THE DISALLOWANCE OF KEYMAN INSURANCE PREMIUM. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THERE WAS A SHARP IN CREASE IN THE TRAVELLING AND CONVEYANCE EXPENDITURE. THE AO MADE AN ADHOC D ISALLOWANCE OF RS. 23,67,494/-. 4. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE IN R ESPECT OF TRAVELLING AND CONVEYANCE EXPENSES TO 5% OF THE TOTAL EXPENSE FOR WANT OF COMPLETE VERIFICATION. 5. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE DETAILS WERE FILED WHICH HAVE NOT BEEN CONSIDERED BY THE LOWER AUTHORI TIES. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE AO. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT OUT OF TRAVELLING AND CONVEYANCE EXPENSES , THE LD. CIT(A) HAS EXCLUDED THE FOREIGN TRAVELLING EXPENSES AND RESTRI CTED THE DISALLOWANCE AT 5%. WE FIND THAT SUCH DISALLOWANCE IS REASONABL E ON FACTS OF THE CASE. THEREFORE, NO INTERFERENCE IS CALLED FOR. RS. 2,28 ,085/- STANDS CONFIRMED IN A.Y. 2008-09 AND RS. 2,10,578/- STANDS CONFIRMED IN A.Y. 2010-11. ITA NO. 4867/M/2013 ITA NO. 7394/M/2011 3 8. THE NEXT DISPUTE RELATES TO THE CLAIM OF INSURAN CE ON KEYMAN INSURANCE POLICY. 9. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF POLICY IN SU PPORT OF ITS CLAIM. THE ASSESSEE DID NOT FILE COPY OF THE POLICIES TO ESTAB LISH THE GENUINENESS OF ITS CLAIM. HOWEVER, THE AO NOTICED THAT THE ASSESS EE HAS GIVEN POLICY NAMES WHICH ARE, WHICH ARE JEEVAN SHREE-1 AND AMULY A JEEVAN. ACCORDING TO THE AO, IN THESE POLICIES BENEFICIARY WOULD BE POLICY HOLDER. THE AO PROCEEDED BY RELYING UPON THE CIRCU LAR ISSUED BY THE INSURANCE REGULATORY AUTHORITY (IRDA) AND CAME TO T HE CONCLUSION THAT THESE ARE NOTHING BUT INVESTMENTS PLANS WHICH SHOUL D BE A PART OF BALANCE SHEET AND ACCORDINGLY DISALLOWED THE KEYMAN INSURAN CE PREMIUM OF RS. 3,22,728/- IN A.Y. 2008-09 AND RS. 5,48,691 IN A.Y. 2010-11. 10. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. KEYMAN INSURANCE POLICY HAS BEEN EXPLAINED VIDE E XPLANTION-1 TO SEC. 10(10D) WHICH READS AS UNDER: KEYMAN INSURANCE POLICY MEANS A LIFE INSURANCE P OLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FIRST-MENTIONED PERSON. SEC. 28(VI ) PROVIDES THAT PROFITS AND GAINS OF BUSINESS OR PROFESSION INCLUDE S ANY SUM RECEIVED UNDER A KEYMAN INSURANCE POLICY, INCLUDING THE SUM ALLOCATED BY WAY OF BONUS ON SUCH POLICY. ALL THAT HAS TO BE LOOKED UPON IS THAT WHETHER INSU RANCE POLICY WAS TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE. AS NO FACT HAS BEEN BROUGHT ON RECORD TO SUGGEST T HAT THE KEYMAN INSURANCE POLICY WAS NOT TAKEN IN THE NAME O F THE EMPLOYEE. IT ITA NO. 4867/M/2013 ITA NO. 7394/M/2011 4 IS PRESUMED THAT THE REVENUE AUTHORITIES HAVE ACCEP TED THAT THE POLICY WAS TAKEN IN THE NAME OF THE EMPLOYEE. THEREFORE, IN OUR CONSIDERED OPINION ANY PREMIUM PAID ON SUCH POLICY IS TO BE AL LOWED AS LEGITIMATE BUSINESS EXPENDITURE, THE SAME CANNOT BE TREATED AS PART OF THE INVESTMENT. WE, ACCORDINGLY, SET ASIDE THE FINDING S OF THE LD. CIT(A) AND DIRECT THE AO TO ALLOW THE PREMIUM IN BOTH THE YEARS AS EXPENDITURE. GROUND NO. 2 IS ACCORDINGLY ALLOWED. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.10.2014 SD/- SD/- (VIVEK VARMA ) (N.K. BILLAIYA) !' / JUDICIAL MEMBER !' / ACCOUNTANT MEMBER MUMBAI; 3! DATED : 20.10.2014 . . ./ RJ , SR. PS !2 !2 !2 !2 - -- - *. *. *. *. 4%. 4%. 4%. 4%. / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 67 *. , , / DR, ITAT, MUMBAI 6. 78 9 / GUARD FILE. !2 !2 !2 !2 / BY ORDER, +. *. //TRUE COPY// : :: : / ; ; ; ; ' ' ' ' (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI