9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 615 - AT - Income TaxAddition on account of payment of premium of Keyman s Insurance Policy - Held that - As for the statement made by the employees of the insurance companies, nothing turns on these statements. What constitutes a keyman insurance policy under section 10(10D) is not dependent on what is it treated even by the insurer; as long as the assessee is allowed to take life insurance policy on its keymen, as have been undisputedly taken in this case, the same satisfies the requirement of Section 10(10D). In view of these detailed discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and delete the impugned disallowance - Decided in favour of assessee.
Issues Involved:
1. Allowability of premium paid on Keyman Insurance Policy. Issue-wise Detailed Analysis: 1. Allowability of Premium Paid on Keyman Insurance Policy: The only issue in this appeal is the action of the learned CIT(A) in upholding the addition of ?3,00,000/- on account of payment of premium for a Keyman Insurance Policy. At the outset, the learned AR argued that the learned CIT(A) dismissed the appeal by following an earlier order in the case of M/s Suri Sons. He pointed out that the Hon’ble Tribunal had reversed the CIT(A)’s order in the case of Suri Sons, deciding in favor of the assessee. Consequently, the assessee's case, dismissed by following the Suri Sons case, should also be decided as per the Tribunal's order dated 31st August 2015. The learned DR relied on the orders of the authorities below. The Tribunal noted that the only issue to be decided was the allowability of the premium paid on the Keyman Insurance Policy. The Tribunal found that this case had been previously decided in favor of the Revenue but was recalled and reconsidered. The CIT(A) had dismissed the appeal by following his order in the case of Suri Sons, which was subsequently decided in favor of the assessee by the Tribunal. The Tribunal in the case of Suri Sons had observed that a Keyman Insurance Policy, as defined under Section 10(10D), is a life insurance policy taken by a person on the life of another person connected with the business of the first-mentioned person. The Tribunal emphasized that the policy must meet two criteria: it should be a life insurance policy and it should be taken on the life of a person connected with the business of the assessee. The Tribunal also referred to the case of Shri Nidhi Corporation, where it was held that the objections raised by the Revenue regarding the nature of the policy and its assignment to partners were not tenable. The Tribunal disagreed with the conclusions of the learned Commissioner (Appeals) and upheld the view that as long as the policy was a life insurance policy, it met the requirements of Section 10(10D). The Tribunal further noted that the requirement of a pure insurance policy is not laid down by the statute, and such an inference cannot be supplied by judicial interpretation. The Tribunal cited the Hon’ble Supreme Court’s judgment in the case of Tarulata Shyam Vs CIT, emphasizing that courts cannot supply omissions in the statute. The Tribunal also addressed the impact of IRDA guidelines, stating that these guidelines regulate the conduct of insurance companies and not policyholders. The Tribunal held that IRDA guidelines do not alter the requirements of Section 10(10D) and cannot be used to interpret the provisions of the Income Tax Act. The Tribunal rejected the Assessing Officer’s objections regarding the commercial expediency of the Keyman Insurance Policy, citing the Hon’ble Delhi High Court’s decision in the case of CIT Vs Rajan Nanda. The High Court had held that the premium paid for a Keyman Insurance Policy is allowable as business expenditure, and the principle of consistency applies if the Department had allowed such expenditure in previous years. Following the Tribunal’s decision in the case of Suri Sons, the Tribunal in the present case found that the facts and circumstances were similar and allowed the appeal filed by the assessee. Order pronounced in the open Court on 22nd March, 2016.
|
