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TMI Blog2013 (11) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... stionnaire. The assessee in addition to the other queries raised was asked to give clarification of the insurance expenses charged to the profit and loss account. The assessee in reply placed at pages 1 to 4 of the paper book vide paragraph 3 explained that out of the total charges of Rs. 33,16,223, sum of Rs. 30 lakhs was paid as premium of keyman insurance policy. Copy of the insurance expenses account was also enclosed to the said reply, which is placed at page 5 of the paper book. In reply to further query raised by the Assessing Officer in respect of the keyman insurance further reply was filed by the assessee claiming that the said expenditure is allowable as business expenditure in view of Circular No. 762 dated February 18, 1998 issued by the Central Board of Direct Taxes. Copy of the reply of the assessee and the circular of the Central Board of Direct Taxes are enclosed at pages 6 and 7 of the paper book. The assessment in the case was completed under section 143(3) of the Act vide order dated December 30, 2008 after making disallowance of car expenses and telephone expenses and adjustment of depreciation. The copy of the assessment order is available on record. Thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly. The learned authorised representative for the assessee pointed out that even the assessment relating to the preceding year, i.e., the assessment year 2005-06 was completed under section 143(3) of the Act and the nature of the said expenditure was enquired into and was allowed in the hands of the assessee. As per the learned authorised representative for the assessee the said order of the Assessing Officer had been passed after detailed enquiries and there was application of mind to the facts of the case. As the decision was taken as per law, there was no merit in the exercise of jurisdiction by the Commissioner of Income-tax under section 263 of the Act. The learned authorised representative for the assessee further pointed out that in the proceedings taken up under section 154 of the Act, the contention was already before the Assessing Officer, and the Commissioner of Income-tax could not have assumed the jurisdiction under section 263 of the Act. The learned authorised representative for the assessee placed reliance on the following decisions : (a) CIT v. B. N. Exports [2010] 323 ITR 178 (Bom) ; (b) Sunita Finlease Ltd. v. Deputy CIT [2008] 118 TTJ (Bilaspur) 263 ; (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court of Bombay in CIT v. Gabriel India Ltd [1993] 203 ITR 108 and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81 treated loss of tax as prejudicial to the interests of the Revenue. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT [1987] 163 ITR 129 interpreting 'prejudicial to the interests of the Revenue'. The High Court held (page 138) : 'In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration'. In our view, this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that in view of its following mercantile system of accounting, why the said expenditure should be allowed in totality. The explanation of the assessee was that part of the expenditure was disallowed in the preceding year, i.e., the assessment year 2005-06. If the same is considered to be allowed during the year, the said expenditure is fully allowable in the hands of the assessee. The proceedings initiated under section 154 of the Act were dropped by the Assessing Officer as per the letter dated March 7, 2011. The Assessing Officer accordingly computed the income in the hands of the assessee. We find that, similar issue of allowability of premium paid on lives of partners under the keyman insurance policy arose before the hon'ble Bombay High Court in CIT v. B. N. Exports [2010] 323 ITR 178 (Bom) and Sunita Finlease Ltd. v. Deputy CIT [2008] 118 TTJ (Bilaspur) 263 and the said expenditure has been allowed. In view of the above said judicial precedents on the issue, the order of the Assessing Officer allowing the claim of the assessee was based on a plausible view and the said view is not open for review by the Commissioner of Income-tax by way of invoking the jurisdiction under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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