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TMI Blog2014 (2) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... premium thereupon, has been assigned to the partners, then also the payment of such a premium has to be allowed as deduction – Relying upon Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] – thus, the order of the CIT(A) set aside and the assessee is eligible for claiming deduction towards premium paid in respect of Keyman insurance policy and should be allowed accordingly – Decided in favour of Assessee. - ITA No. 961/Mum./2012 - - - Dated:- 12-2-2014 - Shri N. K. Saini And Shri Amit Shukla,JJ. For the Petitioner : Mr. V. G. Ginde For the Respondent : Mr. Pitambar Das ORDER Per Amit Shukla, J.M. The present appeal has been preferred by the assessee challenging the impugned order dated 30th November 2011, passed by the Commissioner (Appeals) XI, Mumbai, for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2006 07, on the following grounds: 1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the disallowance of Rs. 10,00,481 being the premium paid by the appellant on the Keyman Insurance Polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yman/Partnership insurances". 3. Thus he held that none of the conditions as per the aforesaid circular has been satisfied by the partners and the firm. Moreover, the CBDT circular no.762 dated 18th February 1998, states that Keyman is an employee or a director and there is no reference of a partner. The assessee has taken two polices, one from Bajaj Allianz and the other from Tata AIG life insurance in the name of two partners. With regard to these two policies, the Assessing Officer noted that the policy from Bajaj Allianz have been assigned to two partners in March 2007 and when they were required to produce evidence regarding amount offered for taxation in the individual capacity in that particular year, it was stated that since three years from the date of policy have not been lapsed, no surrender value has been received by them. After examining the policy, he noted that the assessee has taken two policies worth Rs. 12.50 lakhs each, from Bajaj Allianz in the name of two partners and the name of the policy is Allianz Bajaj Gain Plus. Thus, the assessee becomes only a non participating beneficiary. This policy allocates premium and units and is not primarily for life of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had purchased these policies prior to 31st March 2005 and these policies specifically provided for Keyman Insurance Policy. Thus, the assessee has taken the policies for its two partners under Kayman Insurance Policy only and any payment made towards premium is allowable in the hands of the assessee. Insofar as reference to the IRDA circular or guidelines by the Assessing Officer is concerned, the same has been issued much after the assessee has taken the policy. Thus, such IRDA guidelines will not be applicable in assessee s case. Moreover, the decision of the Hon'ble Jurisdictional High Court in CIT v/s B.N. Exports, [2010] 323 ITR 178 (Bom.) held that even if the Keyman Insurance Policy is obtained on a life of a partner to safeguard the firm, then the payment of premium of such policy by firm is allowable as business expenditure. As regards the observations of the learned Commissioner (Appeals) that these policies are only capital appreciation scheme for the purpose of investment under the grab of insurance, he submitted that first of all the Tata AIG life insurance policy was purely a LIC policy, which is evident from the policy document and so is the Bajaj Allianz polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al available on record. It is seen that the assessee has bought two Keyman Insurance Policies viz., Tata AIG life insurance policy and and Bajaj Allianz on 28th March 2005, in favour of two partners. These policies are life insurance policies which are evident from the clause mentioned in the policy documents placed before us in the paper book. The premium of these policies has been paid by the assessee firm and the same has been claimed as deduction under Keyman Insurance Policy. It appears that after the assessee has purchased these policies, IRDA came up with circular dated 27th April 2005 that partnership insurance in the name of partner will not be covered under Keyman insurance but as a term insurance cover. Thus, such IRDA circular cannot be adversely viewed in case of the assessee as when the assessee has taken the policy under Keyman Insurance Scheme from two reputed insurance companies there was no such regulation. The other objections of the Revenue are that the deduction of the premium under Keyman insurance cannot be allowed in the case of partnership firm, is not tenable in view of the decision of the Hon'ble Jurisdictional High Court in B.N. Exports (supra), wherein, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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