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Issues:
1. Allowability of deduction for Keyman insurance policy premium under section 37(1) of the Income-tax Act, 1961. Analysis: The case involved a partnership-firm engaged in manufacturing and sale of metallic salts of molybdenum, which filed a return declaring total income. The Assessing Officer disallowed the deduction claimed for the premium paid for Keyman insurance policy in the name of two partners, amounting to Rs. 82,48,725. The Assessing Officer held that partners cannot be termed as another person under section 10(10D) of the Act and likened it to a sole proprietor taking insurance in his name, which is not permissible. The Assessing Officer disallowed the premium paid, adding it to the firm's income. On appeal, the Commissioner of Income-tax (Appeals) allowed the deduction under section 37(1) of the Act, stating that the premium was incurred wholly and exclusively for the business purpose. The Revenue challenged this decision, arguing that the premium should be disallowed. The Departmental representative supported the Assessing Officer's decision, while the counsel for the assessee cited various decisions and circulars in favor of allowing the deduction. The Tribunal found that the firm had taken the insurance policy for the benefit of the firm, not the partners personally, to protect against potential setbacks due to partner's death. Citing the judgment in CIT v. B. N. Exports, it held that the insurance premium was deductible as it was incurred for business purposes. The Tribunal rejected the Revenue's arguments, upholding the Commissioner's decision to allow the deduction. The Tribunal dismissed the Revenue's appeal, affirming the allowance of the deduction for the Keyman insurance policy premium. In conclusion, the Tribunal upheld the deduction of Rs. 82,48,725 under section 37(1) of the Act, as the payment for the Keyman insurance policy was deemed to be wholly and exclusively for the purpose of business. The Tribunal's decision was based on the finding that the insurance was taken for the benefit of the firm, in line with previous judgments and consistent Tribunal views. The Revenue's appeal was therefore dismissed.
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