2010 (3) TMI 1139 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against deletion of addition for Keyman Insurance Policy premium and Cross Objection by assessee against disallowance of staff welfare, foreign travel, and telephone expenses.

Revenue's Appeal - Keyman Insurance Policy Premium:
The appeal challenged the deletion of addition made by the Assessing Officer on account of disallowance of premium paid for Keyman Insurance Policy. The Tribunal noted that the issue was identical to a previous case and referred to circulars regarding the tax treatment of Keyman Insurance Policy premiums. The Tribunal held that the premium paid on the Keyman Insurance Policy should be allowed as a business expenditure, as clarified by circulars issued by the CBDT. The Tribunal dismissed the Revenue's appeal based on the previous decision and upheld the allowance of the premium as a deduction.

Assessee's Cross Objection - Expenses Disallowance:
The Cross Objection by the assessee contested the disallowance of staff welfare, foreign travel, and telephone expenses. Regarding foreign travel expenses, the Assessing Officer had disallowed 10% due to possible personal use, which was upheld by the CIT(A) at a token amount. The Tribunal confirmed this disallowance. For staff welfare expenses, the AO disallowed 25% due to lack of vouchers, and the CIT(A) made an ad hoc disallowance, which the Tribunal upheld. Similarly, for telephone expenses, the AO disallowed 25% for possible personal use, which the CIT(A) restricted to 1/6th, and the Tribunal confirmed this disallowance. The Tribunal dismissed the Cross Objection, upholding the disallowances made by the authorities.

In conclusion, the Tribunal dismissed both the Revenue's appeal and the Cross Objection of the assessee, maintaining the decisions regarding the Keyman Insurance Policy premium and the disallowance of various expenses.