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TMI Blog2014 (5) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... payment – Held that:- There was an agreement between assessee and M/s. R.B. Steel & Alloys and the commission was paid by the assessee to the said concern as per terms and agreement - The commission was paid after deducting tax and also after effecting service tax payment - Similar commissions paid in the preceding years were allowed by the Revenue - There is no case for the Revenue that M/s. R.B. Steel & Alloys was in any way related to the assessee - Commission of @ Rs.25/- per MT on sponge iron sold, and could not be considered as excessive payment - There was nothing on record to show that commission incurred was not for the purpose of business of the assessee –CIT(A) was justified in deleting the disallowances – Decided against Revenue. Allowability of keyman insurance premium – Held that:- Keyman’s Insurance policy was on the Directors of the assessee-company - Premium paid was for their life insurance - Relying upon CIT -vs. - B.N. Exports [ 2010 (3) TMI 186 - BOMBAY HIGH COURT] - Keyman’s Insurance Policy premium paid on persons who are instrumental for the effective functioning of a business, is an allowable deduction – thus, there was no infirmity in the order of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, in the same location where it was manufacturing sponge iron and M.S. Ingot. Assessee claimed depreciation on this new Unit. According to the assessee the said Unit was commissioned during the relevant previous year. 6. Assessing Officer required the assessee to produce evidence showing that the Pelletization Plant has come into existence during the relevant previous year and had started production. Assessee thereupon furnished copy of a letter from Project Manager, District Industry Centre, Rourkela addressed to the Banking Authority, wherein it was stated that firing of the Unit was successfully undertaken on 19.10.2006. Assessee also produced copy of a certificate from the State Pollution Control Board in support of its claim that the Pelletization Plant started functioning during the relevant previous year. A certificate dated 23.11.2006 from Registered Valuer was also filed. Assessing Officer however was of the opinion that the certificate of Pollution Control Authority only granted a consent for construction/erection of the Unit and was not a clearance for commissioning. As for the certificate from Registered Valuer, Assessing Officer was of the opinion that assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced stock register of Bentonite Powder wherein purchases of 50 MT on 15.08.2006 was recorded, which was issued for trial production during the period 26.11.2006 to 15.02.2007. As per the assessee, Director s report for the relevant previous year also clearly mentioned that commercial production in the iron pelletization plant had started on 27.02.2007. The quantity of finished product from such pelletization plant being pellets 1198.16 MT was reflected in the closing stock appearing in Schedule 6 of its audited accounts. 8. Ld. CIT(Appeals) sought a remand report from the Assessing Officer on the above submissions. As per ld. CIT(Appeals) in the remand report Assessing Officer simply reiterated what was stated by him in the assessment order. Considering all the documents furnished by the assessee, ld. CIT(Appeals) was of the opinion that incontrovertible evidence was produced by the assessee to prove that commercial production of the new pelletization plant had started during the relevant previous year. Taking this view of the matter, the claim of depreciation was allowed. 9. Now before us, ld. D.R. strongly assailing the order of ld. CIT(Appeals) submitted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty Director of Factories and Boilers, Rourkela Division, Uditnagar, Rourkela, which all pointed out clearly that assessee had commenced commercial production at least on 27.02.2007. Assessee had also shown consumption of Bentonite Powder, Furnace Oil and C.P. Coke in its stock register during the relevant previous year. Assessee also showed that there was purchase of Bentonite Powder which was one of the raw material required for pelletization. Assessing Officer had not made any comments on these aspects in his remand report noted by the ld. CIT(Appeals). This position has not been rebutted by the Revenue. We are, therefore, of the opinion that the ld. CIT(Appeals) took a correct view when he directed depreciation to be allowed on the pelletization plant. We do not find any reason to interfere with this direction of ld. CIT(Appeals). Ground No. 1 of Revenue stands dismissed. 12. Vide Ground No. 2, Revenue is aggrieved on the deletion of a disallowance of Rs.11,43,809/- under head commission payment . 13. Facts apropos are that assessee had paid commission of Rs.11,43,809/- to one M/s. R.B. Steel Alloys @ Rs.25/- per ton for it s overall sales. In addition there were payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys was in any way related to the assessee. Commission of @ Rs.25/- per MT on sponge iron sold, and could not be considered as excessive payment. There was nothing on record to show that commission incurred was not for the purpose of business of the assessee. Ld. CIT(Appeals) was, therefore, justified in deleting the disallowances. Ground No. 2 of Revenue stands dismissed. 18. Vide it s Ground No.3, grievance of the Revenue is that ld. CIT(Appeals) directed allowance of Keyman s Insurance Premium of Rs.54,65,175/-. 19. Assessee s claim for Keyman s Insurance Premium was disallowed by the Assessing Officer. However, ld. CIT(Appeals) relying on the decision of the Hon ble Mumbai High Court in the case of CIT -vs. - B.N. Exports (2010) 323 ITR 178 held that the premium on Keyman s Insurance policy was an allowable expense. 20. Now before us, ld. D.R. strongly assailing the order of ld. CIT(Appeals) submitted that purpose of the expenditure was only personal and not for business. Per contra, ld. A.R. supported the order of ld. CIT(Appeals). 21. We have heard the rival submissions. There is no dispute that Keyman s Insurance policy was on the Directors of the assessee-company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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