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TMI Blog2014 (2) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... 461/- made by A.O. on account of disallowance of payment of premium of keyman insurance policy of partner's life. [2] On the facts and in the circumstances of the case, and in Law, the Ld.CIT(A), Surat ought to have upheld the order of the Assessing Officer. [3] It is, therefore, prayed that the order of the Ld.CIT(A)-II/Central Circle/AHD may be set-aside and that of the Assessing Officer restored. 2. Brief facts of the case are that the assessee is engaged in the business of dyeing & Printing of cloth on job-work basis. The assessee filed its return of income declaring total income at Rs.23,56,714/- was filed by the assessee on 30/12/2006. Audit Report u/s.44AB, copy of final accounts, balance-sheet and releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of partner of the appellant firm is deleted." 4. The ld.Sr.DR supported the order of the Assessing Officer, whereas ld.counsel for the assessee relied upon the decision of ld.CIT(A). The ld.counsel for the assessee also relied upon the decision of Hon'ble ITAT "C" Bench Ahmedabad rendered in assessee's own case (ITO vs. M/s. Ashoka Dyeing & Printing Mills) in ITA No.3691/Ahd/2008 for AY 2005-06, dated 30/09/2010. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. In the instant case, the AO has disallowed the claim of the assessee for deduction of premium of Rs.13,61,461/- under "Keyman Insurance Policy" for the reason that the expenses were inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insurance Policy. The circular which has been issued by the Central Board of Direct Taxes clarifies the position by stipulating that the premium paid for a Keyman Insurance Policy is allowable as business expenditure. In the present case, on the question whether the premium which was paid by the firm could have been allowed as business expenditure. There is a finding of fact by the Tribunal that the firm had not taken insurance for the personal benefit of the partner, but for the benefit of the firm, in order to protect itself against the set back that may be caused on account of the death of a partner. The object and purpose of a Keyman Insurance Policy is to protect the business against a financial set back which may occur, as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also like to observe that the Learned Assessing Officer has relied upon the decision of the Hon'ble Gujarat High Court in the case of Khodidas Motiram, Panchal (supra) for disallowing the claim of the assessee firm. We find that in the aforesaid decision the Hon'ble High Court has disallowed the claim of the assessee by treating the amount of premium paid in respect of Keyman's Insurance Policy as capital expenditure. However, in view of the subsequent position admitted by the Hon'ble C.B.D.T. which is the highest body for tax administration in the country that Keyman's Insurance premium can be treated as an allowable expenditure the benefit given by the Circular to the assessee cannot be taken away on the basis of earlier legal pronounceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; On the basis of above facts and judicial pronouncements, the claim of Keyman insurance payment may be treated as business expenditure. Therefore, the assessee firm had allowed to deduction for expenditure of Rs.14,38,100/- made as Keyman Insurance Policy premium in the name of partners as revenue expenditure. Hence, the claim of deduction of Rs.14,38,100/- with regard to keyman insurance policy on life of partners is allowed." 6. Since no change in the facts and circumstances is pointed out by the ld.Sr.DR, therefore, respectfully following the aforesaid decision of Hon'ble Coordinate Bench rendered in assessee's case in A.Y. 2005-2006, we dismiss the appeal of the Revenue. 7. In the result, Revenue's appeal stands dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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