The ACIT,(OSD), Circle -5, Ahmedabad V. P.G. Foils Ltd., Ahmedabad

ITA 849/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80316 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KULSHRESTHA
• Keywords: Business expenditure
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 849 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2008 - 09) ACIT(OSD ), CIRCLE - 5, AHMEDABAD V/S P.G. FOILS LTD., 6, NEPTUNE TOWER, ASHRAM ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACP 9274C APPELLANT BY : SHRI B. KULSHRESTHA, SR. D.R. RESPONDENT BY : SHRI GAURAV NAHTA, A.R. ( )/ ORDER DATE OF HEARING : 26 - 08 - 2014 DATE OF PRONOUNCEMENT : 05 - 09 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - XI, AHMEDABAD DATED 10.01.2011 FOR A.Y. 2008 - 09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN T HE BUSINESS OF MANUFACTURING, LAMINATION AND TRADING OF ALUMINIUM FOILS AND TRADING OF ALUMINIUM RODS/INGOTS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 08 - 09 ON 18.09.08 DECLARING TOTAL INCOME OF RS. 11,47,01,73 0/ - . THE CASE WAS ITA NO 849/AHD/2011 . A.Y. 2008 - 09 2 SELECTED FOR SCRUTINY AN D THEREAFTER THE ASSESSMENT WAS FRAM ED 143(3) VIDE ORDER DATED 26.03 .201 0 AND THE TOTA L INCOME WAS DETERMINED AT RS. 15,62, 2 1,73 0/ - . AGGRIEVED BY THE ORDER OF A.O ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) VIDE ORDER DATED 10.10.2012 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AN D HAS RAISED FOLLOWING GROUND : - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 4,15,20,000/ - MADE ON ACCOUNT OF D ISALLOWANCE OF KEYMAN INSURANCE PREMIUM. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAD CLAIMED PAYMENT OF KEYMAN INSURANCE PREMIUM OF RS. 2,25,00,000/ - EACH IN THE NAME OF SHRI ABHAY P. SHAH AND SHRI PANKAJ P. SHAH. THE ASSES SEE WAS ASKED TO FURNISH THE JUSTIFICATION OF ITS CLAIM TO WHICH ASSESSEE INTERALIA SUBMITTED THAT THE TWO PERSONS FOR WHOM THE INSURANCE PREMIUM HAS BEEN PAID WERE THE KEY PERSONS AND THE PREMIUM PAID IS ALLOWABLE BUSINESS EXPENDITURE U/S 37(1) OF THE ACT . THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. A.O WAS OF THE VIEW THAT THE ANNUAL REMUNERATION PAID BY ASSESSEE TO SHRI PANKAJ P. SHAH WAS RS. 9,00,000/ - AND TO SHRI ABHAY P. SHAH WAS RS. 8.4 LACS AND THE TOTAL REMUNERATION TO THE K EYMAN WAS RS. 17.4 LACS. HE ALSO NOTED THAT THE SUM ASSURED WOULD WORK OUT TO 1.74 LACS BEING 10 TIMES THE REMUNERATION. AS PER THE TERMS AND CONDITIONS OF THE INSURANCE POLICY 1/5 TH OF THE SUM ASSURED WORKS OUT TO RS. 34.80 LACS AS AGAINST WHICH THE ASSES SEE HAS CLAIMED RS. 4,50,00,000/ - . HE WAS THEREFORE OF THE VIEW THAT THE EXCESS INSURANCE PREMIUM OF RS. 4,15,20,000/ - WAS NOT ALLOWABLE. HE ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER ITA NO 849/AHD/2011 . A.Y. 2008 - 09 3 OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) N OTED THAT IDENTICAL ISSUE AROSE IN ASSESSEE S OWN CASE FOR A.Y. 07 - 08 AND WAS ALLOWED BY HIM. HE FOLLOWING HIS OWN DECISION FOR A.Y. 07 - 08 DELETED THE DISALLOWANCE MADE BY THE A.O. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 5. BEF ORE US AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NO. 2184/AHD/09 A.Y. 06 - 07 ORDER DATED 30.06.2011. HE PLACED ON RECORD THE COPY OF THE AFORESAID ORDER. HE ALSO SUBMITTED THAT FOR A.Y. 07 - 08 IN ITA NO. 2960/AHD/2010 ORDER DATED 27.09.2013 ON IDENTICAL FACTS THE ISSUE HAS BEEN IN FAVOUR OF THE ASSESSEE. HE THEREFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF EARLIER YEARS, THE ORDER OF CIT(A) NEEDS TO BE UPHELD. THE LD. D.R. ON THE SUPPORTED THE ORDER OF A.O. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THE ISSUE IN THE PRESENT CASE IS THE DISALLOWANCE OF KEYMAN INS URANCE PREMIUM PAID BY THE ASSESSEE. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEE S OWN CASE IN A.Y. 06 - 07 AND THE SAME WAS ALLOWED BY DISMISSING THE APPEAL OF THE REVENUE VIDE ORDER DATED 30.06.2011. WE ALSO FIND THAT FOR A.Y. 07 - 08, THE ISSUE WAS DECID ED IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REVENUE BY HOLDING AS UNDER: - 7. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE GRANTING THE RELIEF HAS NOTED THAT THE PREMIUM PAID IN THE CURRENT FINANC IAL YEAR WAS THE SECOND INSTALLMENT AND THE FIRST INSTALLMENT OF PREMIUM PAID IN A.Y. 05 - 06 BY THE ASSESSEE HAS BEEN ACCEPTED AND NOT DISPUTED BY REVENUE. BEFORE US, THE REVENUE COULD NOT CONTROVERT THE FINDINGS OF CIT(A), NOR COULD HE BRING ANY DECISION O F HIGH COURT IN ITS SUPPORT. WE ALSO FIND THAT THE HON. BOMBAY HIGH ITA NO 849/AHD/2011 . A.Y. 2008 - 09 4 COURT IN THE CASE OF CIT VS. B.N. EXPORTS (2010) 323 ITR 178 HAS HELD THAT PREMIUM ON THE KEYMAN INSURANCE POLICY OF PARTNER OF THE FIRM IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSIN ESS AND IS ALLOWABLE AS BUSINESS EXPENDITURE. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 7. SINCE THE FACTS OF THE CASE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF EARL IER YEARS. WE RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OR EARLIER YEARS FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS DISMISS THE GROUND OF REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRON OUNCED IN OPEN COURT ON 05 - 09 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, A HMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD