M/s. F.C.Sondhi & Co, ( India) P.Ltd, Jalandhar V. The Dy.Commissioner of Inocme-tax, Jalandhar

MA 75/ASR/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3380 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Rectification of order; Opportunity of being heard; Wrong claim
• Section: 80C; 260A; 10(10D); 154

Judgement Text

M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR [CORAM: PRAMOD KUMAR AM AND A.D. JAIN JM] M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0 ASSESSMENT YEAR: 200 6 - 07 F.C. SONDHI & COMPANY (INDIA) PVT. LTD., . APPELLANT G.T. ROAD , JALANDHAR. [PAN: AA A C F 2771 Q ] VS. DY. COMMISSIONER OF INCOME TAX , .. ....... RESPONDENT RANGE - I , JALANDHAR . APPEARANCES BY: SANDEEP VIJH FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: JUNE 02, 201 5 DATE OF PRONOUNCING THE ORDER: AUGU ST 31 , 2015 O R D E R PER PRAMOD KUMAR : 1. BY WAY OF THIS RECTIFICATION PETITION, THE ASSESSEE APPLICANT S EEKS RECALL OF O R DER DATED 21 ST APRIL, 2014 ON THE GROUND, INTE R ALIA, (I) THAT THE CORE ARGUMENT S ADVANCED BY THE ASSESSEE HAVE BEEN SIMPLY BRUSHED ASIDE, WITHOUT ADJUDICATING UPON THE SAME, AND (II) THAT THE BINDING JUDICIAL PRECEDENTS, CITED BY THE ASSESSEE, HAVE BEEN DISTINGUISHED, WITHOUT ANY SPECIFIC REASONS AND ON A WHOLESALE BASIS, BY SIMPLY O BSERVING THAT THE CIRCULAR OF IRDA HAS CLARIFIED THE POSITION AND THE ARGUMENT MADE BY THE LEARNED COUNSEL THAT IT IS PROSPECTIVE IN NATURE CANNOT BE ACCEPTED AS IT IS CLARIFICATORY IN NATURE AND THAT A CCORDINGLY, THE CASES OF VARIOUS COURSE OF LAW, WHI CH HAVE BEEN CAREFULLY PERUSED BY US, ARE NOT AT ALL APPLICABLE. 2. THE RECTIFICATION PETITION, STATES A S FOLLOWS : - THAT THE FINDINGS OF THE HONBLE BENCH ARE CONTAINED IN PARA NO.6 OF THE IMPUGNED ORDER STARTING FROM PAGE NO.29 OF THE SAID ORDER. THE B ASIC ISSUE IN APPEAL WAS AS M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 2 OF 15 TO WHETHER THE PREMIUM PAI D BY US ON THE POLICY PURCHASED BY US WHICH WAS ISSUED AS KEYMAN INSURANCE POLICY FROM INSURANCE COMPANIES INCLUDING THE LIFE INSURANCE CORPORATION OF INDIA WAS AN ALLOWABLE EXPENDITURE. THE AUTHORIT IES BELOW HAD MAINLY RELIED UPON THE CIRCULAR ISSUED BY IRDA AS WELL AS THE FACT THAT THE POLICIES WERE NON TERM ASSURANCE POLICIES. TO CLARIFY THE ISSUE, IT WAS IMPORTANT TO UNDERSTAND THE MEANING OF THE WORD TERM INSURANCE AND FOR THIS PURPOSE THE M EANING OF THE WORK WAS MENTIONED IN THE FIRST PARA AT PAGE NO.2 OF THE SYNOPSIS FILED AND EVEN THE PRINTOUT OF DEFINITION OF THIS TERM WAS PROVIDED AT THE TIME OF THE HEARING OF THE APPEAL. THIS LINE OF ARGUMENT/CONTENTION HAS NOT BEEN CONSIDERED IN THE F INDING GIVEN AT PA R A NO.6 OF THE IMPUGNED ORDER. THIS BY ITSELF CONSTITUTES A MISTAKE APPARENT FROM RECORD. TERM INSURANCE MEANS THAT NO AMOUNT IS TO BE RECEIVED BACK AFTER THE EXPIRY OF THE TEM OF THE POLICY BUT THIS MEANING DOES NOT FIT INTO THE SCHEME OF THE INCOME TAX ACT WHICH HAS CLEARLY PROVIDES THAT THE AMOUNT RECEIVED BACK IS TO BE PUT TO TAX UNDER SECTION 17(3)(II), SECTION 28(IV) OR SECTION 56(1)(IV). THE ARGUMENT THUS MADE THUS HAD NECESSARILY TO BE DEALT WITH WHILE DECIDING THE ISSUE. FURTH ER, FOR INTERPRETATION OF THE TERM KEYMAN INSURANCE AND LIFE INSURANCE NUMEROUS CASE LAWS WERE CITED TO BRING OUT THE PRINCIPALS OF INTERPRETATION FOR TERMS NOT SPECIFICALLY DEFINED IN THE INCOME TAX ACT. THE PAPER BOOK FILED ON 9/12/2011 CONTAINED PR INT OUT OF SIXTEEN CASE LAWS CASE WHICH WERE ABSOLUTELY RELEVANT TO THE ISSUE AT HAND. HOWEVER AWHILE DECIDING THE ISSUE IT HAS BEEN SIMPLY STATED TOWARD S THE BOTTOM OF PAGE NO.33 THAT: ACCORDINGLY, THE CASES OF VARIOUS COURTS OF LAW, WHICH HAVE BEEN CA REFULLY PERUSED BY US ARE NOT AT ALL APPLICABLE. IN THE FACTS AND CIRCUMSTANCES , THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE, CANNOT HELP THE ASSESSEE FOR THE REASONS MENTIONED HEREINABOVE. IT IS CLEAR FROM THE ORDER ITSELF THAT NONE OF THE C ASE LAWS HAS BEEN SPECIFICALLY DISTINGUISHED EXCEPT FOR A GENERAL OBSERVATION. IT IS NOT AT ALL CLEAR FROM THE ORDER AS TO WHY THE CASE CITED ARE NOT APPLICABLE AND DO NOT SUPPORT THE CASE OF THE ASSESSEE. WHERE CASE LAWS HAVE BEEN CITED, THESE HAVE TO B E CONSIDERED AND DISTINGUISHED AND A GENERAL COMMENT WILL NOT SERVE THE PURPOSE. THE VARIOUS CASE LAWS INCLUDING MANY OF THE SUPREME COURT WHICH ARE THE LAW OF THE LAND AND ARE BINDING IN NATURE HAD TO BE FOLLOWED FOR DETERMINING AS TO HOW THE ABOVE REFER RED TERMS USED IN THE INCOME TAX ACT ARE TO BE INTERPRETED. BY GIVING A GENERAL COMMENT, NUMEROUS RELEVANT CASE LAWS HAVE BEEN IGNORED. THIS ALSO CONSTITUTES A MISTAKE APPARENT FROM RECORD. THE CASES CITED INCLUDED THE DECISION OF THE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LD. VS. CIT REPORTED AT 320 ITR 577 WHEREIN IT WAS CLEARLY HELD THAT THOUGH THE RESERVE BANK OF INDIA GOVERNS THE WORKING OF THE NON BANKING FINANCIAL COMPANIES AND HAS LAID DOWN THAT THEY HAVE TO PROVIDE FOR THE NON PERF ORMING ASSETS IN THEIR ANNUAL ACCOUNTS, THE SAME CANNOT BE ALLOWED AS AN EXPENSE AS THE RESERVE BANK HAS NOTHING TO DO WITH COMPUTATION OF TAXABLE INCOME UNDER INCOME TAX ACT. BY HOLDING THAT THE IRDA CIRCULARS ARE APPLICABLE FOR DETERMINING THE CORRECT N ATURE OF KEYMAN INSURANCE POLICIES YOU HAVE IGNORED M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 3 OF 15 THE RATIO OF DECISION OF THE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA) WITHOUT GIVING ANY REASONING. IT HAS ALSO BEEN OBSERVED THAT THE ASSESSEE HAS HIMSELF ADMITTED THROUGH LETTE R DATED 12/11/2008 THAT THE POLICIES ARE NOT IN THE NATURE OF LIFE INSURANCE POLICIES EXACTLY. AT THE OUTSET, IT IS SUBMITTED THAT THIS ASPECT WAS NEVER DISCUSSED DURING THE HEARING AT THE ITAT NOR THIS ISSUE WA S RAISED BY THE DEPARTMENT REPRESENTATIVE . IN ANY CASE WHY THIS OBSERVATION WAS MADE BY THE ALREADY S TANDS EXPLAINED AND THIS IS APPEARING IN THE FIRST PARA AT PAGE NO.7 OF THE PAPER BOOK. THIS EXPLANATION HAS NOT BEEN CONSIDERED AT ALL. THE SELECTIVE REFERENCE TO THE ISSUE WITHOUT APPRECIATING T HE EXPLANATION GIVEN TO THE AUTHORITIES BELOW WAS TOTALITY UNJUSTIFIED AND ALSO CONSTITUTES A MISTAKE APPARENT FROM RECORD. THE RELIANCE PLACED BY CIT( A ) ON THE CIRCUL AR OF IRDA HAS BEEN APPROVED WITHOUT APPRECIATING THAT IT WAS POINTED OUT DURING THE HEA RING THAT THE CIRCULAR OF IRDA BEING REFERRED ARE IN THE CONTEXT OF PARTNERSHIP FIRMS. WHY THESE WOULD BE APPLICABLE TO A COMPANY HAS ALSO NOT BEEN EXPLAINED IN THE IMPUGNED ORDER. IN VIEW OF THE ARGUMENTS MADE BY THE DEPARTMENTAL REPRESENTATIVE, THE ATT ENTION OF THE HONBLE BENCH WAS INVITED TO THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJAN NANDA REPORTED AT 349 ITR 8 AND ALSO THE SUBSEQUENT AMENDMENT TO SECTION 10(10D) WHERE THE AMENDMENT TO SECTION 10(10D) HAD BEEN MADE BY THE FINANC E ACT 2013 BY INSERTING CLAUSE (D) AND AMENDING EXPLANATION 1. BOTH THESE AMENDMENT WHICH HAVE A BEARING ON THE ISSUE WERE PROSPECTIVE AND NOT RETROSPECTIVE. THIS ASPECT HAS ALSO NOT BEEN CONSIDERED WHILE DISPOSING OFF THE APPEAL. THE CIRCULARS ISSUED B Y THE IRDA HAS BEEN HELD TO BE CLARIFICATORY IN NATURE WHEN IT CIRCULAR ITSELF USES THE PHRASE POST 10 TH MAY. IT HAS ALSO BEEN OBSERVED THAT AT PA G E NO.33 OF THE ORDER THAT ONLY A NOMINAL AMOUNT HAS BEEN CHARGED FOR MORTALITY CHARGES. THIS HAS ALSO BEE N CONVEYED AT PAGE NO.30 OF THE ORDER BY REFERRING TO THE A CCIDENT BENEFIT PREMIUM OF RS.4,250/ - . THE EXPLANATION THAT THE CIT(A) HAS FAILED TO APPRECIATE THE DIFFERENCE BETWEEN ACCIDENT INSURANCE AND LIFE INSURANCE HAS ALSO NOT BEEN CONSIDERED AT ALL [PL EASE SEE THE SECOND LAST PA AT PAGE NO.5 OF THE SYNOPSIS]. 3. W HEN WE ASKED LEARNED COUNSEL WHETHER THE ORDER SO PASSED BY THE TRIBUNAL HAS BEEN CARRIED IN APPEAL BEFORE HONBLE HIGH COURT, HE DID ACCEPT THAT APPEAL IS PENDING BEFORE HONBLE PUNJAB & HAR YANA HIGH COURT SINCE 29.11.2014 . HE, HOWEVER, HASTENED TO ADD THAT PENDENCY OF APPEAL BEFORE HONBLE HIGH COURT DOES NOT COME IN THE WAY OF OUR EXERCISING POWERS UNDER SECTION 254(2) OF THE ACT. IN SUPPORT OF THIS PROPOSITION, HE INVITED OUR ATTENTION T O THE FOLLOWING OBSERVATIONS MADE BY HONBLE BOMBAY HIGH COURT, IN THE CASE OF R.W. PROMOTIONS PVT. LTD. V S. ITAT [ W P NO.2238 OF 2014, JUDGEMENT DATED 8 TH APRIL, 2015; NOW REPORTED AS 277 CTR 401 (BOM) ] ; M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 4 OF 15 9. AFTER HEARING BOTH SIDES AND PERUSING THE TWO LEGAL PROVISIONS, NAMELY UNDER SECTION 254 AS REPRODUCED ABOVE, AND SECTION 260A OF THE INCOME TAX ACT, 1961 WE ARE OF THE VIEW THAT THE TRIBUNALS ORDER AND IMPUGNED IN THE WRIT PETITION CANNOT BE SUSTAINED. THIS COURT ALSO HAS CLARIFIED THE LEGAL POSIT ION IN AN ORDER PASSED COPY OF WHICH IS ANNEXED T O PAGE 146 OF THE PETITION PAPER BOOK. WE HAVE NOTED THAT SUCH A POWER IS POSSESSED BY THE COURT OR TRIBUNAL AND EVEN AFTER IT DISPOSES OF THE MAIN MATTER AND APPLICATION OF THE NATURE MADE AND TO SEEK RECT IFICATION OR CORRECTION OF AN APPARENT MISTAKE CAN BE ENTERTAINED. THE LEGAL PROVISION BEFORE US IS PLAIN AND CLEAR. SUB - SECTION (2) OF SECTION 254 ENABLES THE TRIBUNAL TO ENTERTAIN THE APPLICATION OF THE ABOVE NATURE BUT WHAT ORDERS OUGHT TO BE PASSED O N SUCH AN APPLICATION DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. NO GENERA L RULE CAN BE LAID DOWN IN THAT BEHALF. THE TRIBUNAL CAN RECTIFY ANY MISTAKE APPARENT FROM THE RECORD AND AMEND ITS ORDER PASSED UNDER SECTION (1) OF SECTION 254. IF T HE AMENDMENT HAS THE EFFECT OF ENHANCIN G AN ASSESSMENT OR REDUCING A R EFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE, THEN, SUCH AN AMENDMENT SHALL NOT BE MADE UNDER THIS SUB - SECTION UNLESS THE APPELLATE TRIBUNAL HAS GIVEN NOTICE TO THE ASSES SEE OF ITS INTENTION TO DO SO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. WE ARE NOT CONFRONTED WITH SUCH A SITUATION. WHAT WE ARE CALLED UPON TO DECIDE IS THE CORRECTNESS OF THE VIEW TAKEN BY THE TRIBUNAL AND THAT T HE JUDICIAL PROPRIETY DOES NOT ALLOW THE PETITIONER - ASSESSEE TO SEEK A FULL REMEDY SIMILAR BEFORE TWO AUTHORITIES AND IN PARTICULAR WHERE THE ISSUE IS PENDING FOR ADMISSION BEFORE HIGHER FORUM. 10 THE LEAST THAT CAN BE SAID ABOUT THE UNDERSTANDING OF THE LEGAL PRO VISION BY THE TRIBUNAL IS THAT IT IS EX FACIE INCORRECT AND ERRONEOUS. MERELY BECAUSE THE ASSESSEE HAS CHALLENGED THE ORDER OF THE TRIBUNAL IN AN APPEAL UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 BEFORE THE HIGH COURT DOES NOT MEAN THAT THE POWER UNDE R SECTION (2) OF SECTION 254 CANNOT BE INVOKED EITHER BY THE ASSESSEE OR BY THE REVENUE/ASSESSING OFFICER. SUCH A POWER ENABLES THE TRIBUNAL TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD AND MAKE AMENDMENTS. THAT IN A GIVEN CASE WOULD NOT ONLY SAVE PRE CIOUS JUDICIAL TIME OF THE TRIBUNAL BUT EVEN OF THE HIGHER COURT. ONLY WHEN THE ASSESSEE OR THE ASSESSING OFFICER CALLS UPON THE TRIBUNAL TO UNDERTAKE AN EXERCISE WHICH IS NOT PERMISSIBLE WITHIN THE MEANING OF SECTION (2) OF SECTION 254 THAT THE TRIBUNAL CAN RELY ON THE PRINCIPLE OF JUDICIAL PROPRIETY OR ITS RELUCTANCE OR REFUSAL TO TAKE UPON ITSELF THE POWERS OF THE HIGHER COURT OF APPEAL. WE CAN UNDERSTAND IF THE TRIBUNAL HAD PASSED AN ORDER AFTER CONSIDERING THE APPLICATION MADE BY THE PETITIONER - ASSES SEE ON ITS MERITS AND IN ACCORDANCE WITH LAW. HOWEVER, THE REFUSAL OF THE TRIBUNAL TO GO AHEAD AND REJECT THE APPLICATION ONLY ON THE GROUND THAT THE PETITIONER - ASSESSEE HAS INVOKED THE APPELLATE POWERS OF HIGHER COURT CANNOT BE SU ST AINED. THAT IS CONTRA RY TO THE PLAIN LANGUAGE OF THE TWO STATUTORY PROVISIONS AND WHICH HAVE BEEN BROUGHT TO OUR NOTICE. NOTHING CONTRARY HAVING BEEN POINTED OUT AND SUCH A VIEW OF THE TRIBUNAL MAY AFFECT AND PREJUDICIALLY THE INTEREST OF THE REVENUE THAT A LL THE MORE WE CANN OT S USTAIN THE IMPUGNED ORDER. THE WRIT PETITION IS ALLOWED. THE PETITIONERS MISC. APPLICATION SEEKING TO INVOKE THE POWERS UNDER SUB - SECTION (2) OF SECTION 254 OF THE INCOME TAX ACT, S 1961 BEING MISC. APPLICATION NO.194/M/2013 SHALL NOW BE HEARD BY THE TRIBUNAL AND AIT SHALL BE DECIDED IN ACCORDANCE WITH LAW. THE TRIBUNAL SHALL HEAR BOTH SIDES AND PASSED A REASONED M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 5 OF 15 ORDER ON THE SAID APPLICATION AS EXPEDITIOUSLY AS POSSIBLE AND, IN ANY EVENT, WITHIN A PERIOD OF SIX WEEKS FROM THE DATE OF RECEIPT OF THE COPY OF THIS ORDER. WE CLARIFY THAT BEYOND THE ISSUE OF MAINTAINABILITY AND JURISDICTION OF THE TRIBUNAL TO DEAL WITH THE APPLICATION OF THE ABOVE NATURE, WE HAVE OBSERVED NOTHING ON THE MERITS OR DEMERITS OF THIS APPLICATION. ALL CONTENTION OF BOTH SIDE S ON THE MERITS OF THE RECTIFICATION APPLICATION ARE KEPT OPEN. THEY CAN BE RAISED BEFORE THE TRIBUNAL. 4. WE WERE THUS URGED TO TAKE UP THE RECTIFICATION PETITION ON MERITS AND DEAL WITH THE SAME IN ACCORDANCE WITH THE LAW. 5. IN ORDER TO ADJUDICATE ON THIS PETITION, A FEW MATERIAL FACTS WILL HAVE TO BE TAKEN NOTE OF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.59,96,365/ - IN RESPECT OF PREMIUM FOR KEYMAN INSURANCE POLICIES ON THE LIFE OF SHRI RAJEEV ANURAG SONDHI, MANAGING DIRECTOR. HE DISALLOWED THE SAME, ON THE BASIS OF, AS HE HIMSELF SET OUT AT PAGE NOS.12 & 13 OF THE ASSESSMENT ORDER, THE FOLLOWING REASONING: - (I) THE ASSESSEE FIRM HAS TAKEN POLICY, T HE TYPE OF WHICH I S UNIT LINKED INSURANCE PLAN AN INVESTMENT PLAN. THE PURPOSE IS GUARANTEED RETURNS ON THE PREMIUM AMOUNT THROUGH INVESTMENT IN UNITS. IT WAS CLAIMED AS KEYMAN POLICY AND AMOUNT OF PREMIUM OF RS.59,96,355/ - PER ANNUM HAS BEEN CLAIMED AS DEDUCTION. (II) T HE POLICY TAKEN IS UNIT LINKED INSURANCE PLAN AN INVESTMENT PLAN OF ICICI PRUDENTIAL & JEEVAN SHREE - I OF LIC OF GUARANTEED RETURNS AND PROFITS AND NOT KEYMAN INSURANCE POLICY AS PER DEFINITION OF KEYMAN INSURANCE POLICY , [ EXPLANATION TO CLAUSE ( C ) TO S ECTION 10(10D) OF THE I.T. ACT]. IT IS NOT TERM ASSURANCE PLAN POLICY AS PER IRD A GUIDELINES, FOR THE POLICY TO BE QUALIFIED AS KEYMAN INSURANCE POLICY. (III) A NOMINAL AMOUNT IS BEING CHARGED FOR MORTALITY CHARGES FOR LIFE COVER AND THE BALANCE AMOUNT H AS BEEN DEPLOYED TO PURCHASE UNITS AS PER CLIENTS CHOICE. STATUS OF THE POLICY, CONTENTS, TERMS & CONDITIONS MENTIONED THEREIN ESTABLISHED THAT THE PLAN IS UNIT LINKED INSURANCE PLAN & PLAN WITH GUARANTEED RETURN AND NOT TEM ASSURANCE PLAN I.E. POLICY OF LIFE S PER DEFINITION OF THE I.T. ACT AS WELL AS CIRCULAR ISSUED BY THE IRDA. ONLY A FR A CTION OF THE TOTAL PREMIUM IS MEANT FOR RISK PREMIUM, THE BALA N CE IS FOR THE DEPLOYMENT OF PURCHASE OF UNITS I.E. INVESTMENT IN UNITS WHICH CANNOT BE TAKEN FOR BUSINES S EXPENDITURE. THE ASSESSEE DID NOT REPLY TO THIS VITAL SPECIFIC ISSUE OF NOMINAL MORTALITY CHARGES FOR LIFE COVER AND B ALANCE HUGE AMOUNT IN THE INVESTMENT IN UNITS. M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 6 OF 15 THE ASSESSEE FIRM HA S BEEN ASK E D TO PROVE THAT T HE POLICY TAKEN IS KEYMAN AS PER DE F INI TION GIVEN IN I.T. ACT I. E. POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON AND AL S O FULFILLING THE TERMS AND CONDITIONS LAID DOWN BY THE IRDA IN THIS REGARD, NECESSITY AND EXPEDIENCY OF THE PERSON BEING KEYMAN A ND THE POLICY TAKEN FOR THE BENEFIT O F THE ASSESSEE COMPANY BUT THE ASSESSEE FAILED TO PROVE THAT . (IV) IT DOES NOT FULFIL THE CONDITION OF POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON AS PER DEFINITION OF KEYMAN IN THE I.T. ACT, I.E. PURE LIFE INSURANCE AS ALSO ADMITTED BY THE ASS ESSEE IN ITS SUBMISSION. THE IRDA WAS AWARE OF MANIPULATION BY THE INSURANCE AGENCIES OF SELLING UNIT LINKED INSURANCE PLAN UNDER KEYMAN INSURANCE POLICY INSTEAD OF TERM ASSURANCE PLAN UNDER KEYMAN AS PER INCOME T AX ACT AND THE ASSESSEE THEREBY WRONGLY DEPRIVING THE REVENUE OF ITS RIGHTFUL TAXES BY NAMING THE POLICY AS KEYMAN AND CLAIMING HUGE AMOUNT OF PREMIUM A S DEDUCTION. (V) THE ASSESSEE CLAIMS THAT THE INSURANCE COMPANY HAS SAID THAT IT HAS ISSUED UNDER KEYMAN POLICY. THE POLICY MAY BE TERMED AS KEYMAN BY THE INSURANCE COMPANY FOR ITS OWN PURPOSE AND GUIDELINES MIGHT HAVE BEEN ISSUED BY IRDA SUBSEQUENTLY, THESE GUIDELINES AND TERM AS K EYMAN BY INSURANCE COMPANY CANNOT OVERRIDE THE PROVISION OF KEYMAN INSURANCE POLICY AS PER I.T. ACT WHICH A RE APPLICABLE AND IN PLACE AT THE TIME OF POLICY BEING TAKEN BY THE ASSESSEE. EVEN THE BROCHURE OF THE INSURANCE COMPANY SAYS REGARDING TAX BENEFIT UNDER 80C ONLY AND SECTION 10(10D) OF THE I.T. ACT FOR RECEIPTS TO BE EXEMPTED IF CONDITIONS FULFILLED. TH US, THE CLAIM OF DEDUCTION OF SUCH EXPENDITURE ON ACCOUNT OF PAYMENT OF THIS PREMIUM OF RS.59,96,365/ - WHICH HAS BEEN INVESTED IN UNIT AS PER ASSESSEES OPTION IN ICICI PRUDENTIAL FUND AND JEEVAN SHREE - I POLICY OF GUARANTEED ADDITION COULD NOT BE SAID TO HAVE INCURRED FOR THE PURPOSE OF THE BUSINESS AND IS THUS NOT ALLOWABLE AS BUSINESS EXPENDITURE OF THE ASSESSEE FIRM. THE ASSESSEE COMPANY HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME BY MAKING WRONG CLAIM OF DEDUCTION OF PREMIUM PAYMENT UNDER THE HEAD KEYMAN INSURANCE P O LICY AND THUS PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF T HE I.T. A CT IS BEING INITIATE D . (EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW) 6. ON APPEAL, CIT ( A ) CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND THE MATTER THUS TRAVELLED IN APPEAL BEFORE THIS TRIBUNAL. WHILE UPHOLDING THE DISALLOWANCE, THE TRIBUN AL , IN THE ORDER WHICH IS SUBJECT MATTER OF THIS RECTIFICATION PETITION, HAS HELD AS FOLLOWS : - M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 7 OF 15 6.1 THERE IS NO DISPUTE AS ARGUED BY THE LD. COUNSEL FOR THE ASSESS E E T HA T ME A NING TO KEYMAN INSURANCE P O LICY IS TAKEN FROM THE EXPL A NATION TO THE CLAUSE(C) OF SECTION 10(10D) OF THE ACT, WHICH HAS BEEN REPRODUCED HEREINABOVE. AS PER DEFINITION OF KEYMAN INSURANCE POLICY, A PERSON PURCHASING LIFE INSURANCE CAN ONLY DO SO TO THE EXTENT OF HIS INSURABLE INTEREST IN THE ASSURED. WITH THE BACKGROUND OF THE POLICIES AND TERMS AND CONDITIONS AND FROM THE ARGUMEN TS PUT FORTH BY THE LD. COUNSEL FOR THE ASSESSEE A ND THE LD. DR AND THE RELEVANT MATERIAL ON RECORD, WE ARE OF THE VIEWS THAT THE POLICIES HAVE BEEN T AKEN FROM UNIT LINKED INVESTMENT PLAN IS INVESTMENT PLAN, PREMIUM OF WHICH HAS BEEN PUT INTO GROWTH FUND AND IT IS NOT A PURE LIFE INSURANCE POLICY ON THE LIFE OF ANOTHER PERSON. THEREFORE, THE POLICY ITSELF DOES NOT FALL UNDE R THE DEFINITION OF KEYMAN INSURANCE POLICY AS DEFINED UNDER EXPLANATION TO CLAUSE (C) OF SECTION 10(10D) OF THE ACT. THE FINDINGS OF THE LD. CIT( A ) AND THAT OF THE A.O. I N THIS REGARD ARE REASONED ONE AND WE FIND NO IN FIRMITY IN THE ORDERS OF BOTH T H E AU THORITIES BELOW, IN PARTICULAR, THE FINDINGS OF THE A.O. WHICH HAVE BEEN CONFIRMED BY THE LD. CIT(A) I.E. THE FINDINGS OF T HE AO IN PARAS 6.1, 6.2 & 6.3 , WITH REFERENCE TO THE CIRCULAR OF IRDA AND THE ORDER OF THE A.O. IN PARA 11, WHICH ARE WELL REASONED O NE AND WE CONCUR WITH THE VIEWS OF THE LD . CIT(A) AND TH A T OF THE A.O. WE FIND NO INFIRMITY IN THE ORDER OF THE LD . CI T(A) IN THIS REGARD, WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE AO. THE ARGUMENT OF LD. COUNSEL FOR T HE ASSESSEE BEFORE THE AUTHORITIES BELOW WERE MAINLY THAT THE INSURANCE POLICIES ARE KEYMAN INSURANCE POLICIES TAKEN ON THE LIFE OF A PERSON AND EVEN OTHERWISE A LSO INVEST THE FUNDS AVAIL ABLE WITH THEM IN DEBT/STOCK ETC., WHICH CANNOT BE THE DECIDING FACTOR IN DETERMINING THE ALLOWABILITY OF THE PREMIUM, PAID. BUT AT THE SAME TIME, THE ASSESSEE HAS ADMITTED VIDE LETTER DATED 12.11.2008 AND ON PERUSAL OF RECORD, IT IS FOUND THAT THESE POLICIES ARE NOT IN THE NATURE OF LIFE INSURANCE POLICIES EXACTLY. 6.1 ON PERUSAL OF FACTS ON RECORD AN D ARGUMENTS OF BOTH THE PARTIES AND LEGAL POSITION AND INTERPRETATION OF THE ACT, WE ARE OF THE VIEW THAT THE ARGUMENTS MADE BY THE LD. DR ARE FOUND TO BE CONVINCING AND FINDINGS OF THE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. THAT THE ASSESSEE - FIRM HAS TAKEN POLICY, WHICH IS, IN FACT, UNIT LINKED INSURANCE PLAN, AN INVESTMENT PLAN , THE PURPOSE OF WHICH IS GUARANTEED RETURNS ON THE PREMIUM AMOUNT THROUGH INVESTMENT IN UNIT AND UNIT LINKED INSURANCE PLAN FOR WHICH THE PREMIUM IS PAID THRO UGH WRONGLY CLAIMED AS AN EXPENDITURE, WHICH IS NOT ALLOWABLE AS AN EXPENDITURE. THE CIRCULAR OF IRDA HAS CLARIFIED THE POSITION AND THE ARGUMENTS MADE BY THE LD. COUNSEL THAT IT IS PROSPECTIVE IN NATURE, CANNOT BE ACCEPTED SINCE THE CIRCULAR IS CLARIFICA TORY IN NATURE . IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS NOT A TERM ASSURANCE POLICY PLAN AS PER IRDA GUIDELINES . A NOMINAL AMOUNT IS BEING CHARGED FOR MORTALITY CHARGES FOR LIFE COVER AND BALANCE AMOUNT HAS BEEN DEPLOYED TO PURCHASE UNITS AS PER ASSESSEES CHOICE. ONLY A FRACTION OF THE TOTAL PREMIUM IS MEANT FOR RISK PREMIUM, THE BALANCE IS FOR THE DEPLOYMENT OF PURCHASE OF UNITS I.E. INVESTMENT IN UNITS WHICH IN FACT, CANNOT BE CLAIMED AS BUSINESS EXPENDITURE, WHICH QUERY, IN FACT, HAS NEVE R BEEN EXPLAINED BY THE ASSESSEE BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US. IT DOES NOT FULFIL THE CONDITION OF POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON AS PER DEFINITION OF EXPLANATION TO CLAUSE (C) OF SECTION 10(10D) OF THE ACT . ACCORDINGLY, THE CASES OF VARIOUS COURTS OF L A W, WHICH HAVE BEEN M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 8 OF 15 CAREFULLY PERUSED BY US ARE NOT AT ALL APPLICABLE. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE, CANNOT HELP THE ASSESS E E FOR THE REASONS MENTION ED HEREINABOVE. ACCORDINGLY , WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY UPHELD THE ORDER OF AO. THUS, THE SOLITARY GROUND RAISED BY THE ASSESSEE IS DISMISSED . (EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW) 7. LEARNED COUNSE LS SHORT CONTENTION IS THAT THE TRIBUNAL HAD NOT DEALT WITH HIS CORE CONTENTION THAT SO FAR AS DEDUCTION FOR PREMIUM PAID ON KEYMAN INSURANCE IS CONCERNED, ALL THAT I S REQUIRED TO BE SEEN IS WHETHER IT IS FOR LIFE INSURANCE POLICY ON THE LIFE OF ANOTHER P ERSON WHO IS, OR WAS, AN EMPLOYEE OF THE ASSESSEE, AND THAT NO FURTHER TESTS, I.E. WHETHER IT IS A TERM INSUR ANCE POLICY OR NOT, WERE ENVISAGED BY THE STATUTE. IT IS ALSO POINTED OUT THAT THE CONTENTION OF THE ASSESSEE THAT CIRCULARS OF THE IRDA HAVE NO D ECISIVE BEARING ON THE DEFINITION OF WHAT CONSTITUTES, KEYMAN INSURANCE POLICY HAS ALSO NOT BEEN DISPOSED OF BY THE TRIBUNAL. IT IS SUBMITTED THAT THESE ASPECTS NOT HAVING BEEN DECIDED, WHICH WERE SPECIFICALLY R AISED IN PAGE NOS. 1 AND 3 OF THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, THE ORDER SHOULD BE RECALLED FOR THE PURPOSE OF DECIDING THE S E ISSUES. LEARNED COUNSEL FOR THE ASSESSEE ALSO RAISED SEVERAL OTHER CONNECTED ISSUE S BUT, FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE, IT IS NOT REALLY N ECESSARY TO GO INTO THOSE ISSUES. 8. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSES THE RECTIFICATION PETITION. HE SUBMITS THAT IT IS CONSIDERED DECISION OF THE TRIBUNAL THAT INSURANCE POLICIES IN QUESTION WERE NOT KEYMAN INSURANCE POLICIES, AND, THEREFORE, IN THE G ARB OF RECTIFYING A MISTAKE APPARENT ON RECORD, SUCH A DECISION CANNOT BE REVISITED. HE SUBMITS THAT EVEN IF THERE ARE SOME MINOR OMISSIONS IN THE ORDER OF THE TRIBUNAL, AS LONG AS THESE ORDERS DONOT AFFECT THE OUTCOME OF THE APPEAL, TH E ORDER CANNOT BE RECALLED FOR THE M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 9 OF 15 REASON OF THESE MISTAKES. AS FOR THE STAND TAKEN BY THE TRIBUNAL THAT ONLY TERM INSURANCE POLICIES ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 10 (10D), LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT EVEN IF IT BE A MISTA KE, THOUGH IT IS NOT, IT CANNOT BE TERMED AS A MISTAKE APPARENT ON RECORDS WHICH ALONE CAN BE RECTIFIED AT PRESENT. HE SUBMITS THAT THE POLICY PREMIUM PAID BY THE ASSESSE BEING INELIGIBLE FOR DEDUCTION UNDER SECTION 10(10D) IS THE MAIN POINT DECIDED BY TH E TRIBUNAL, AND THAT DECISION, BEING A CONSCIOUS AND CONSIDERED DECISION, CANNOT AT ALL BE TERMED AS A MISTAKE APPARENT ON RECORD. LEARNED DEPARTMENTAL REPRESENTATIVE THEN INVITES OUR ATTENTION TO THE INHERENTLY LIMITED SCOPE OF THE RECTIFICATION PROCEEDIN GS UNDER SECTION 254(2) WHICH IS THE SAME AS IN THE COURSE OF PROCEEDINGS UNDER SECTION 154 AND WHICH MUST REMAIN CONFINED TO THE PATENT AND GLARING MISTAKES, EVEN IF ANY, ON WHICH NO TWO VIEWS ARE POSSIBLE. WE ARE THUS URGED TO DISMISS THE RECTIFICATION P ETITION AS DEVOID OF ANY LEGALLY SUSTAINABLE MERITS. 9. AS FOR THE SCOPE OF OUR POWERS UNDER SECTION 254(2), WE MAY REFER TO THE FOLLOWING OBSERVATIONS MADE , AFTER TAKING INTO ACCOUNT A FULL BENCH DECISION OF HONBLE JURISDICTIONAL HIGH COURT, BY A COOR DINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PLAZA INVESTMENTS PVT LTD VS INCOME TAX OFFICER [(2006) 108 ITD 239 (BOM)] : - .WHILE ADJUDICATING UPON THIS RECTIFICATION PETITION, WE ARE NOT REALLY INFLUENCED BY COMPLEXITY OF THE ISSUE IN APPEAL; WE ARE ONLY CONCERNED ABOUT SIMPLICITY OF THE ERROR WHICH IS SAID TO HAVE BEEN COMMITTED. ONCE WE COME TO THE CONCLUSION THAT TRIBUNAL DID ERR IN COMING TO A PARTICULAR CONCLUSION, AND THE ERROR IS SUCH AN ERROR ON WHICH NO TWO VIEWS ARE POSSIBLE, IT IS IRRELEVAN T WHETHER THE ERROR WAS AN ERROR ON A POINT OF LAW OR ON A POINT OF FACT, OR AS TO WHAT IS THE DEGREE OF COMPLEXITY OF THE ISSUE. ELABORATING UPON THE SCOPE OF THE EXPRESSION MISTAKE APPARENT FROM RECORD AND EXPLAINING THE IMPORT OF HONBLE SUPREME COURT S JUDGMENT IN THE CASE OF VOLKART BROS. (SUPRA), A FULL BENCH OF HONBLE PUNJAB & HARYANA M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 10 OF 15 HIGH COURT, IN THE CASE OF R.A. BOGA VS. AAC (1977) 110 ITR 1 (P&H)(FB), HAS OBSERVED : 'THE BASIC PRINCIPLE IS THUS CLEAR. A MISTAKE APPARENT FROM RECORD MEANS AN OBVIOUS OR PATENT MISTAKE OR A GLARING AND OBVIOUS MISTAKE. HOTLY DEBATABLE ISSUES ARE EXCLUDED; HARDLY DEBATABLE ISSUES ARE INCLUDED. THE ISSUE MAY BE COMPLICATED, YET THE MISTAKE MAY BE SIMPLE. IT IS A MISTAKE APPARENT FROM RECORD. THE TEST IS NOT CO MPLEXITY OF THE ISSUE BUT SIMPLICITY OF THE MISTAKE .' THE QUESTION WHETHER DIVIDEND INCOME CAN BE TAXED AS INCOME UNDER THE HEAD INCOME FROM BUSINESS, IN OUR CONSIDERED VIEW, IS HARDLY DEBATABLE. 9. THE NEXT ISSUE RAISED BEFORE US IS WHETHER A CONSIDER ED VIEW OF THE TRIBUNAL CAN BE SUBJECTED TO RECTIFICATION OF MISTAKE. IT IS REVENUES CONTENTION THAT THE MISTAKE, EVEN IF THERE BE ANY, IS A CONSCIOUS ONE INASMUCH AS THE TRIBUNAL DULY CONSIDERED ALL ASPECTS OF THE MATTER AND THEN CAME TO A PARTICULAR CON CLUSION. WHATEVER BE THE MERITS OF SUCH A CONCLUSION, THE CONCLUSIONS SO ARRIVED AT BY THE TRIBUNAL CANNOT BE UNSETTLED AS IT WOULD AMOUNT TO REVIEWING THE ORDER OF THE TRIBUNAL. WE ARE NOT PERSUADED BY THIS LINE OF REASONING. UNDOUBTEDLY, ALL MISTAKES CAN NOT BE RECTIFIED UNDER S. 254(2). THE RECTIFIABLE MISTAKES ARE THE MISTAKES WHICH ARE OBVIOUS, PATENT, AND GLARING MISTAKES ON WHICH NO TWO VIEWS ARE POSSIBLE. ONCE A MISTAKE FITS IN THIS CATEGORY, AS IS THE CASE BEFORE US, IT IS IMMATERIAL WHETHER IT IS A CONSCIOUS MISTAKE OR UNCONSCIOUS MISTAKE. IF A JUDICIAL BODY LIKE THIS TRIBUNAL APPLIES ITS MIND TO A SITUATION BUT REACHES A WRONG CONCLUSION BECAUSE OF A SIMPLE MISTAKE COMMITTED IN THE PROCESS ON REASONING, ON WHICH NO TWO VIEWS ARE POSSIBLE, IT WILL I NDEED BE UNREASONABLE TO SUGGEST THAT ONLY BECAUSE THIS MISTAKE IS COMMITTED AFTER APPLICATION OF MIND ON A SITUATION, THIS IS NOT A MISTAKE APPARENT FROM RECORD. IT CANNOT BE TERMED AS AN ERROR OF JUDGMENT, BUT, IN OUR HUMBLE UNDERSTANDING, IT HAS TO BE T ERMED AS A MISTAKE APPARENT FROM RECORD RESULTING IN A VITIATED JUDGMENT. THE DIFFERENCE BETWEEN AN ERROR OF JUDGMENT VIS - - VIS AN ERROR APPARENT FROM RECORD LEADING TO AN ERRONEOUS JUDGMENT MAY BE THIN BUT IS TOO SUBTLE TO BE IGNORED BY A JUDICIAL BODY. T HE QUESTION OF ERROR OF JUDGMENT CAN ONLY ARISE WHEN TWO VIEWS ARE POSSIBLE AND ONE OF THE VIEWS IS ADOPTED. THAT IS NOT THE CASE BEFORE US. IT IS A SIMPLE CASE OF OMISSION TO TAKE NOTE OF THE CONTEXT IN WHICH HONBLE SUPREME COURT MADE CERTAIN OBSERVATION S AND THEN INTERPRETING THOSE OBSERVATIONS AS COMPLETE EXPOSITION OF LAW ON THAT SUBJECT. HONBLE SUPREME COURT ITSELF, IN THE CASE OF CIT VS. SUN ENGINEERING WORKS (P) LTD. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC), HAS OBSERVED THAT, 'IT IS NEITH ER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION, AND TO TREAT IT TO BE COMPLETE LAW DECLARED BY THIS COURT'. THE TRIBUNAL HAS ENDED UP DOING SOMETH ING WHICH, AS IS THE LAW LAID DOWN BY THE HONBLE SUPREME COURT, IS IMPERMISSIBLE IN LAW. THAT CANNOT BUT BE A GLARING, OBVIOUS AND PATENT ERROR AND, ACCORDINGLY, LIABLE TO BE RECTIFIED UNDER S. 254(2) OF THE ACT. TO SUGGEST THAT A CONSCIOUS MISTAKE, EVEN IF THAT BE A M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 11 OF 15 MISTAKE APPARENT FROM RECORD, CANNOT BE RECTIFIED UNDER S. 254(2) IS SOMEWHAT DEVOID OF LOGIC AND RATIONALE. IF A CONSCIOUS MISTAKE IS A MISTAKE APPARENT FROM RECORD, THERE IS NO REASON FOR NOT RECTIFYING THE SAME UNDER THE PROVISIONS OF LAW. TO ERR IS HUMAN BUT THERE CANNOT BE ANY JUSTIFICATION FOR PERPETUATING AN ERROR. IN HIS INIMITABLE WORDS, JUSTICE BHAGWATI, IN THE CASE OF DISTRIBUTORS (BARODA) (P) LTD. VS. UNION OF INDIA (1985) 47 CTR (SC) 349 : (1985) 155 ITR 120 (SC), HAD OBSERVED THUS : 'TO PERPETUATE AN ERROR IS NO HEROISM. TO RECTIFY IT IS THE COMPULSION OF JUDICIAL CONSCIENCE. IN THIS, WE DERIVE COMFORT AND STRENGTH FROM WISE AND INSPIRING WORDS OF JUSTICE BRONSON IN PIERCE VS. DELAMETER : A JUDGE OUGHT TO BE WISE ENOUGH TO KNOW T HAT HE IS FALLIBLE, AND, THEREFORE, EVER READY TO LEARN; GREAT AND HONEST ENOUGH TO DISCARD ALL MERE PRIDE OF OPINION AND FOLLOW THE TRUTH WHEREVER IT MAY LEAD; AND COURAGEOUS ENOUGH TO ACKNOWLEDGE HIS ERRORS.' WE ARE, THEREFORE, UNABLE TO ACCEPT REVENUE S CONTENTION THAT A CONSIDERED OPINION EXPRESSED BY THE TRIBUNAL, AFTER APPLYING ITS MIND TO AN ISSUE IN APPEAL, CANNOT BE UNSETTLED EVEN IF THE MISTAKE IN THE PROCESS OF REASONING IS A SIMPLE MISTAKE APPARENT FROM RECORD ON WHICH NO TWO VIEWS ARE POSSIBL E . (EMPHASIS, BY UNDERLINING, SUPPLIED BY US) 10. EVERYTHING, THUS, HINGES ON WHETHER THE PROCESS OF REASONING ADOPTED BY THE TRIBUNAL, IN RELYING UPON THE IRDA GUIDELINES WHICH FIND NO MENTION IN THE INCOME TAX ACT, AND IN HOLDING THAT ONLY PURE LIFE IN SURANCE POLICIES ARE COVERED BY SECTION 10(10D ) , WAS A MISTAKE APPARENT ON RECORD OR NOR. EXPLANATION TO SECTION 10 (10D) , AS IT STOOD AT THE RELEVANT POINT OF TIME, SIMPLY PROVIDED THAT 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 PERSON OR IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE FIRST - MENTIONED PERSON . 11. ALL THAT ENTITLES A POLIC Y TO BE COVERED BY SECTION 10(10D) THEREFORE IS THAT IT SHOULD BE A LIFE INSURANCE POLICY ON THE LIFE OF AN ELIGIBLE PERSON. 12. THE CONCEPT OF TERM POLICY, PURE LIFE POLICY AND IRDA GUIDELINES FIND NO MENTION IN THE STATUTORY PROVISIONS. EVEN IF THESE CONCEPTS OUGHT TO BE INCORPORATED IN THIS STATUTORY PROVISION TO MAKE IT MORE MEANINGFUL AND WORKABLE, IT CANNOT BE OPEN TO ANY M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 12 OF 15 JUDICIAL FORUM TO SUPPLY THESE OMISSIONS. RELYING UPON HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF TARULATA SHYAM VS CIT [(1 977) 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 PRINCIPLE THAT A MATTER WHICH HAS NOT BE EN PROVIDED IN THE STATUTE BUT SHOULD HAVE BEEN THERE, CANNOT BE SUPPLIED BY US, AS, TO DO SO WILL BE CLEARLY BEYOND THE CALL AND SCOPE OF OUR DUTY WHICH IS ONLY TO INTERPRET THE LAW AS IT EXISTS. HONBLE SUPREME COURT, IN THE CASE OF SMT. TARULATA SHYAM V S. CIT 1977 CTR (SC) 275 : (1977) 108 ITR 345 (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 CONFO RMITY WITH LOGIC AND EQUITY. BUT THE LANGUAGE OF SECTIONS........ IS CLEAR AND UNAMBIGUOUS. THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE THE WORDS WHICH ARE NOT THERE. SUCH INTERPRETATION WOULD BE, NOT TO CONSTRUE, BUT TO AMEND THE STATUTE. EVEN IF THE RE 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 NORMAL RULE OF CONSTRUCTION ACCORDING TO WHICH THE INTENTION OF LEGISLATURE IS PRIMARILY TO B E GATHERED FROM THE WORDS 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 ACT 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 READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED.' ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COMES WITHIN T HE 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 (SUPRA), RELIED UPON BY THE ASSESSEE, THEIR LORDSHIPS OF HONBLE SUPREME COURT HAVE REFERRED TO, WITH A PPROVAL, MAXWELL ON INTERPRETATION OF STATUTES OBSERVATION THAT 'A CASE NOT PROVIDED FOR IN A STATUTE IS NOT TO BE DEALT WITH MERELY BECAUSE THERE SEEMS NO GOOD REASON WHY IT SHOULD HAVE BEEN OMITTED, AND THAT THE OMISSION APPEARS IN CONSEQUENCE TO HAVE B EEN UNINTENTIONAL'. THEIR LORDSHIPS THEN OBSERVED THAT 'IN OTHER WORDS, UNDER THE FIRST PRINCIPLE, A CASUS OMISSUS CANNOT BE SUPPLIED BY THE COURT EXCEPT WHEN REASON FOR IT IS FOUND TO BE IN THE FOUR CORNERS OF THE STATUTE ITSELF BUT AT THE SAME TIME A CAS US OMISSUS SHOULD NOT BE READILY INFERRED AND FOR THAT PURPOSE ALL THE PARTS OF A STATUTE OR SECTION MUST BE CONSTRUED TOGETHER AND EVERY CLAUSE OF A SECTION SHOULD BE CONSTRUED WITH REFERENCE TO THE CONTEXT AND OTHER CLAUSES THEREOF SO THAT THE CONSTRUCTI ON TO BE PUT ON A PARTICULAR PROVISION MAKES A CONSISTENT ENACTMENT OF THE WHOLE STATUTE'. M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 13 OF 15 13. THE VERY FACT THAT THE TRIBUNAL LEANED OVER MATERIAL OUTSIDE THE STATUTE, WITHOUT ADJUDICATING UPON THE CORE QUESTION AS TO WHETHER IT IS PERMISSIBLE TO LEAN UPO N THE SAME - AS IN T H IS CASE, IN OUR CONSIDERED VIEW, IS A MISTAKE APPARENT ON RECORD WHICH SHOULD BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. 1 4 . AS WE HAVE NOTED EARLIER IN THIS ORDER, THE TRIBUNAL HAS, AT ONE PLACE, OBSERVED THAT, AS PER DEFINITION OF KEYMAN INSURANCE POLICY, A PERSON PURCHASING LIFE INSURANCE CAN ONLY DO SO TO THE EXTENT OF HIS INSURABLE INTEREST IN THE ASSURED BUT THEN, IN OUR CONSIDERED VIEW, THIS OBSERVATION IS CLEARLY A MISTAKE APPARENT ON RECORD. THE EXPLANATION BELOW SECTIO N 10(10D), WHICH IS THE ONLY RELEVANT FACTOR FOR DECIDING AS TO WHAT IS KEYMAN INSURANCE POLICY, HAS NO MENTION ABOUT THIS CONDITION. APPARENTLY, THIS EXPRESSION HAS BEEN TAKEN FROM THE IRDA CIRCULAR BUT THEN THERE IS NO FINDING ON RECORD TO HOLD THAT ON E CAN REFER TO THESE CIRCULARS TO FIND OUT THE CONNOTATIONS OF EXPRESSION KEYMAN INSURANCE POLICY FOR THE PURPOSES OF THE INCOME TAX ACT. 15. GOING BY THE INTERPRETATION THAT THE TRIBUNAL HAS GIVEN, ONLY TERM INSURANCE POLICIES , WHICH ARE EXPLAINED AS P URE LIFE INSURANCE POLICIES, ARE ELIGIBLE FOR DEDUCTION AS CONTRIBUTION FOR KEYMAN INSURANCE POLICIES BUT THEN SUCH AN INTERPRETATION MAY PERHAPS BE WRONG BECAUSE EVEN AFTER THE IRDA CIRCULARS, THE ONLY CURATIVE AMENDMENT THAT HAS B EEN MADE IN THE STATUTE , BY INSERTING CLAUSE (D) TO SECTION 10(10D), IS A RESTRICTION OF 1 0% OF THE SUM ASSURED HAVING BEEN IMPOSED ON THE POLICY PREMIUM. WHETHER AN INSURANCE POLICY IS PURE INSURANCE POLICY, WHICH DOES NOT ENTITLE THE INSURED OR INSURER TO ANYTHING AT THE END OF THE POLICY TERM, OR WHETHER IT IS A SAVING OR INVESTMENT ORIENTED INSURANCE POLICY, WHICH INVOLVES PAYMENTS AT THE END OF THE POLICY TERM, IS NOT RELEVANT EVEN AFTER THE CURATIVE AMENDMENTS. 16. WE HAVE NOTED THAT IN THE WRITTEN SUBMISSIONS FILED BY THE ASSESSE DURING HE COURSE OF THE HEARING, THE ABOVE POINT WAS SPECIFICALLY RAISED BY THE ASSESSE AS FOLLOWS: KEYMAN INSURANCE POLICY HAS BEEN DEFINED IN SECTION 10(10D) AND READS AS UNDER: 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 M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 14 OF 15 MENTIONED PERSON OR WAS CONNECTED, IN ANY MANNER WHATSOEVER, WITH THE BU SINESS OF THE FIRST MENTIONED PERSON IT IS CLEAR FROM THE DEFINITION THAT KEYMAN INSURANCE POLICY IS ON THE LIFE OF ANOTHER PERSON. IN OTHER WORDS, THE PAYMENTS UNDER POLICY BECOMES DUE ON THE DEATH OF THE CONCERNED PERSON. NO FURTHER TESTS HAVE BEEN PRESCRIBED AND NOTHING MORE CAN BE READ INTO OR INFERRED EXCEPT BEING AN EMPLOYEE OR EX - EMPLOYEE OR IN CONNECTION WITH BUSINESS. (PAGE 1 OF WRITTEN SUBMISSION ) BEFORE PROCEEDING FURTHER, IT IS SUBMITTED THAT THE IRDA WAS ESTABLISHED WITH CERTAIN OBJECTIVES AND THESE HAVE BEEN MENTIONED BY THE CIT(A) HIMSELF IN PARA 2.9.1. IT IS VERY CLEAR THAT THE SCOPE O F IRDA IS CONFINED TO REGULATE, PROMOTE AND ENSURE ORDERLY GROWTH OF INSURANCE BUSINESS. THE IRDA HAS NO RELEVANCE SO FAR AS ALLOWABILITY OR PREMIUM UNDER INCOME TAX ACT OR TAXATION OF POLICY PROCEEDS IS CONCERNED. WHERE ANOTHER ACT IS TO BE CONSIDERED FOR THE PURPOSE OF INTERPRETATION, IT IS PROVIDED IN THE RELEVANT SECTION OF THE INCOME TAX ACT ITSELF. SOME EXAMPLES ARE AS UNDER: - SECTION 2(25A): REFERS TO TERRITORIAL WATERS, CONTINENTAL SHELF, EXCLUSIVE ECONOMIC ZONE AND OTHER MARITIME ZONES ACT 1976 - SECTION 2(29D): REFERS TO NATIONAL TAX TRIBUNAL ACT, 2005 - SECTION 2 (38): REFERS TO EMPLOYEES PROVIDENT FUND ACCT, 1952 - SECTION 2(42A) - EXPL 2 : REFERS TO SECURITIES CONTRACTS (REGULATIONS) ACT 1956 - SECTION 2(47): REFERS TO TRANSFER OF PROPERTY ACT, 18 82 SINCE IRDA 1999 HAS NOT BEEN REFERRED TO IN DEFINING KEYMAN POLICY OR LIFE INSURANCE, ITS CIRCULARS CANNOT BE RELIED UPON FOR INCOME TAX PURPOSES (PAGE 3 OF WRITTEN SUBMISSION) 17. THESE SUBMISSIONS WERE, HOWEVER, NOT DEALT WITH AT ALL WHILE PASSING THE ORDER WHICH IS SUBJECTED TO THIS RECTIFICATION PETITION. 18. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE TRIBUNAL DID SUFFER FROM MISTAKE APPARENT FROM RECO RD INA SMUCH AS, WITHOUT ADJUDICATING UPON THE SPECIFIC SUBMISSIONS OF THE ASSESSE, THE TRIBUNAL PROCEEDED TO DECIDE THE MATTER ON THE BASIS OF THE IRDA CIRCULARS. THE TRIBUNAL HAS HELD THAT THESE CIRCULARS ARE CLARIFICATORY AND, THEREFORE, RETROSPECTIVE IN EFFECT. THE ALTERNATE CONTENTION WAS PICKED UP FOR DISPOSAL WITHOUT DEALING WITH THE CORE CONTENTION. IT IS A WHOLLY ACADEMIC ISSUE AS TO WHETHER THESE M.A. NO.75/ASR/2014 (IN I.T.A. NO. 117 /ASR/201 0) ASSESSMENT YEAR: 200 6 - 07 PAGE 15 OF 15 CIRCULARS ARE PROSPECTIVE OR RETROSPECTIVE. THAT ASPECT OF THE MATTER COULD BE RELEVANT ONLY IN CASE T HE CIRCULARS ARE HELD TO BE BINDING AT ALL. 19. WE, THEREFORE, RECALL THE ORDER DATED 21 ST APRIL 2014 FOR THE PURPOSES OF ADJUDICATING UPON THE PLEA OF THE ASSESSE TO THE EFFECT THAT, ON THE FACTS OF THIS CASE, THE IRDA CIRCULARS HAVE NO ROLE TO PLAY IN D ECIDING WHETHER THE PREMIUM ON THE INSURANCE POLICIES PAID ARE COVERED BY THE SCOPE OF KEYMAN INSURANCE POLICY UNDER SECTION 10(10D) OF THE ACT, AND FOR DECIDING THE MATTER AFRESH IN THE LIGHT OF THE SAID ADJUDICATION . WE HAVE NOTED THAT AN EARLIER DECIS ION OF THIS TRIBUNAL, IN THE CASE OF SHRI NIDHI CORPORATION VS ADDITIONAL CIT [(2014) 151 ITD 470 (MUM)], WAS NOT TAKEN INTO ACCOUNT BY THE TRIBUNAL, WHILE DISPOSING OF THE MATTER, AS THE SAID ORDER, THOUGH PASSED EARLIER, WAS NOT IN PUBLIC DOMAIN BY THAT POINT OF TIME. NOW THAT THE MATTER IS GOING BACK TO THE TRIBUNAL FOR FRESH CONSIDERATION, NEEDLESS TO SAY, THIS DECISION WILL ALSO HAVE TO BE TAKEN INTO ACCOUNT. 20. AS WE HAVE RECALLED THE MATTER ON THE ABOVE SHORT GROUND, BUT THIS ASPECT GOES TO THE ROO T OF THE MATTER, WE SEE NO NEED TO DEAL WITH OTHER ISSUES RAISED IN THIS PETITION . 21 . IN THE RESULT, THE M ISCELLA NEOUS A PPLICATION IS ALLOWED IN THE TERMS AS INDICATED ABOVE . PRONOUNCED TODAY 31 ST DAY OF AUGUST, 2015. SD/XX SD/XX A D JAIN PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED THE 31 ST DAY OF AUGUST, 2015 PBN/* C OPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT( A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR