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TMI Blog1996 (10) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure was to be borne by the owner of the entire building. The assessee's 1/5th share worked out to Rs. 2,000, which was paid by him. The other four co-owners also paid their respective 1/5th share. The assessee claimed deduction of Rs. 2,000 under section 24(1)(ii) of the Act while computing income from property. The AO disallowed the claim on the ground that the assessee's case did not fall under the said provision because the amount paid could not be said to be the premium which expression is directly related to the contract of insurance. On appeal, the action of the AO was confirmed by the first appellate authority. He held that the expenditure was in the nature of capital expenditure and was not covered under section 24(1)(ii) and even if one were to take a liberal view, the said expenditure at best fall under the head 'Repairs' and since 1/6th has already been allowed, no further relief can be granted on this account. 3. The learned counsel for the assessee has contended that the expenditure was incurred to ensure safety against the risk of damage and destruction by fire under the instructions of Chief Fire Officer pursuant to Notification of the Delhi Administration; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" has been defined as "to guarantee against the risk of loss or harm, to secure indemnity to or on in the case of loss, damage or death". Keeping in view the meaning of these expressions as above, it cannot be said that the amount paid was premium to insure property in question against the risk of damage or destruction. The said payment was made to provide fire safety measures in the building, the ultimate aim of which might be to ensure the safety of the property against fire. But, in our view, the payment made cannot be regarded as premium for securing the contract of insurance against the risk to the property because in the event of any damage, even after providing safety measures, the assessee will not be entitled to any compensation for the damage to the property in consideration of the amount paid. In the facts and circumstances of the case, the payment in question does not qualify for exemption under section 24(1)(ii) of the Act. 6. However, having regard to the fact that deduction has been allowed by the tax authorities to the other co-owners, coupled with the fact that the amount involved is very small, we allow the assessee's claim for deduction of Rs. 2,000. 7. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The following point of difference is referred :--- "Whether, on the facts and circumstances of the case and in accordance with the provisions of law the sum of Rs. 2,000 paid on account of fire fighting charges by the assessee was an allowable deduction under section 24(1)(ii) of the Income-tax Act, 1961?" ORDER UNDER SECTION 255(4) OF I.T. ACT Per Vimal Gandhi, J.M. --- The Hon'ble President on account of difference in opinion between two Id. Members has referred this case to me for disposal in terms of section 255(4). 2. The facts about which there is no dispute are that assessee claimed deduction of Rs. 2,000 under section 24(1)(ii) of the Income-tax Act in respect of amount paid by the assessee as fire safety charges. It is stated that flat in question is situated at 16, K.G. Marg,New Delhiand is maintained by Ansal Bhawan Maintenance Society. A part of building caught fire on29th June, 1987which led to ceiling of entire building. The administration then directed that fire safety measures should be taken to prevent future occurrence of fire. For providing above measures, the amount in question was charged from the assessee. The total amount charged was Rs. 10,000. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that appeal of the assessee should be dismissed. 6. Both the Members framed the following question under section 255(4) which has been referred to me by the Hon'ble President :--- "Whether, on the facts and circumstances of the case and in accordance with the provisions of the law the sum of Rs. 2000 paid on account of fire fighting charges by the assessee was an allowable deduction under section 24(1)(ii) of the Income-tax Act, 1961 ?" 7.1 have heard the parties on above question. The written submissions submitted by the parties have also been considered. The assessee had emphasized that the scope of the words "premium to insure" in clause (ii) of section 24(1) cannot be restricted to premium paid to an insurance company but are entitled to a wider connotation. Thus, any payment made to ensure safety of property against risk of damage or destruction is a permissible deduction. The ld. D.R. on the other hand has contended that under provision of section 24(1)(ii), only premium paid to "insure the property' is entitled to deduction. The meaning of word "premium" cannot be enlarged and has to be construed strictly. 8. After considering the question referred as also the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium (Savings) Bond a Government bond, the holder of which gains no interest, but eligible for a money prize allotted by draw held at stated intervals--at a premium above bar. [L. premium--prae, above, emere, to buy] insure v.t. to make sure or secure: to guarantee: to make an arrangement for the payment of a sum of money in the event of loss or injury to: to make such an arrangement for the payment of (a sum of money) (arch.) --- v.i. to effect or undertake insurance.---n. insurability.---adj. insurable that may be insured---ns. insurance the act or system of insuring : a contract of insurance, a policy: the premium paid for insuring: the sum to be received; insurancer (obs.); insurant an insurance policy holder; insurer either party to a contract of insurance (now, strictly the insurance company) [O.Fr. enseurer ---en, and seur, sure; see ensure, sure'.] 12. It is clear from above that the word "premium" is commonly used to convey "anything more or above par". The shares, debentures and bonds of Blue Chip Companies are sold at "premium". The word premium, therefore, in common parlance means something more than a regulated price or the face value. The word premium does not alwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the above situation, a Bench considering application of above clause relating to a paltry sum of Rs. 2,000 should take a view different from the one followed in cases of other co-owners. On this point, the two Id. Members have differed. The difference of opinion has already been recorded and need not be repeated. In my considered opinion, the Appellate Tribunal, which is second appellate authority and highest fact-finding body, should not interfere where the amount involved is insignificant and view taken on similar facts and circumstances is a possible view. The above equally applies to the Two Members constituting a particular Bench. This is necessary for proper and efficient working of the Appellate Tribunal and is also necessary for saving precious time and avoidable litigation particularly when all Courts and Tribunals in the country are overburdened. Further, for the aforesaid reasons, I agree with the view taken by ld. Judicial Member and in line with the view that deduction has already been allowed in case of other co-owners, the deduction be allowed to the assessee. In above approach, the Tribunal is not following order of Assessing Officer in other cases but is tryin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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