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TMI Blog2014 (6) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... is paid though wrongly claimed as an expenditure, which is not allowable as an expenditure - The Circular of IRDA has clarified the position and the arguments made by the ld. counsel that it is prospective in nature, cannot be accepted since the circular is clarificatory in nature - it is not a 'term Assurance Policy Plan" as per IRDA guidelines - A nominal amount is being charged for mortality charges for life cover and balance amount has been deployed to purchase Units as per assessee's choice. The claim shows that policy has not completed three years but in the present case the Policy has completed three years and the AO has rightly held that due to malafide intention of the assessee to evade payment of tax which has transferred two day before completion of three years - the assessee did not pay premium due on 31.03.2008 which shows that he intended to encash policy after completion of three years - there is assignment of policy for malafide purpose - the sum received under the policy is taxable in the hands of receiver of the sum - Since the firm could surrender policy at any time after retaining it atleast for three years - the assessee did not pay next premium due on 31.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol for the firm. 3. Whether on the facts circumstances of the case, the CIT(A) is justified in restricting the disallowance of expenses like petrol, car, business promotion expenses etc. incurred in by the assessee to Rs.40,000/- and not to 50% of the balance expenditure of Rs.1,76,408/- after allowing telephone expenses amounting to Rs. 2,16,216/- whereas the ld. CIT(A) himself observed that the assessee was engaged in the business commodity trading which is mainly done by sitting in the office on telephone. 4. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 2. The brief facts of the case as arising from the order of the AO at pages 2 to 7 are reproduced for the sake of convenience as under: 2. From the capital account of the assessee, it was noticed that an amount of Rs.59,14,702/- was credited to this account on 26.04.2008. There was no reference to this amount in the return of income or other details. Accordingly, vide letter dated 31.10.2011 the assessee was asked to intimate the nature and source of this amount. It was intimated vide letter filed on 14.11.2011 that M/s. J.V. Steel Traders , a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entry dated 01.12.2011, the assessee was asked to explain as to why the amount of Rs.59,14,702/- may not be treated as his taxable income and added to his income. The case was adjourned to 15.12.2011. On 15.12.2011, the case was attended by Sh. Janak Raj, father of the assessee, alongwith Sh. Yogesh Thakur, CA, Counsel and written reply was filed. The gist of the same is reproduced as below: As already submitted in our last reply that the assessee has received a sum of Rs.59,14,702/- on account of surrender value of unit link endowment policy no. 10197551 of HDFC, M/s. J.V. Steel Traders, Ludhiana where he was a key partner as on 29.03.2008. This policy was purchased by the firm in the name of the assessee under keyman insurance policy in the year 2005. The premium for the year ending 2005, 2006 and 2007 were paid by the firm amounting to Rs.15 lac each and deduction has been claimed by the firm u/s 37(i) of the Act on the premium so paid. In March, 2008, the keyman insurance policy was assigned by the firm in the favour of keyman. At the time of assignment of this policy, the surrender value of the policy was Nil. It is further submitted that assignment of the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvited to the recent decision of The Delhi Tribunal in the case of DR. Naresh Trehan v. Deputy CIT [2010-TIOL-418-ITAT-Del] in which it has been held that on assignment of Keyman insurance policy - total sum received on maturity (after reducing surrender value of the policy at the time of assignment) is exempt from tax. In a recent ruling of the above said case, the Delhi Tribunal held that upon assignment of the keyman insurance policy by the company to the individual assessee, the total amount of the maturity value, as reduced by the amount equivalent to the surrender value of the policy at the time of assignment is not to be taxed. 2.2 The case was discussed at length. The policy is claimed to have been assigned by the firm to the assessee as the former was not in a position to pay the premium due to losses. Another contention of the assessee is that, after the policy was assigned by the firm to the assessee, it was no more Keyman's Insurance Policy and it became the normal Life Insurance Policy. It has also been stated that, as per the terms of the policy, it could be assigned at any time. Hence, the action of the firm was legal. In support of these contentions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (11), [clause (12) [, clause (13)] or clause (13A)] of section 10), due to or received by an assessee from an employer or a former employer or from a provident or other fund [* * *], to the extent to which it does not consist of contributions by the assessee or [interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. The underlined portion of the above clause was inserted vide finance (No.2) Act, 1996 w.e.f. 01.10.1996. The provision was explained by the CBDT through circular No.762 dated 18.02.1998. Para 14.4 of this circular, which had been referred to by the counsel for the assessee also in the reply filed on 15.12.2011, is reproduced below: The act also lays down that the sums received by the said organization on such policies, be taxed as business profit' the surrender value of the policy endorsed in favour of the employee (Keyman), or the sum received by him at the time of retirement be taken as profits in lieu of salary for tax purpose; and in case of other persons having no employer-employee relationship, the surrender value of the policy or sum received under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended to encash the policy immediately after completion of three years. However, if it was encashed in its own hands the procee3ds would have been liable to income tax. To avoid the same, it chose this circuitous route. By doing so, it intended to kill two birds with one stone. One the one hand, it got the required funds and on the other hand, it would go away without paying the due tax. In these circumstances, the action of the assessee is a clear case of manipulation and adoption of colourful method to avoid the payment of due taxes. In these circumstances, the findings of the Hon'ble Supreme Court of India in the case of McDowell Co. 154 ITR 148 are squarely applicable. The gist of the same is that any action, which is otherwise legal, becomes illegal and sham, if done with malafide. By the same ratio, the whole affair is rendered sham and the assessee is liable to pay tax on the amount of Rs.59,14,702/-. Moreover, in view of the legal position discussed in para 3.1 above, the sum received under the policy is taxable in the hands of the assessee as he is the receiver of the sum. 4. Keeping in view the above discussion, the amount of Rs.59,14,702/- is treated as taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f brought to tax the amount of surrender value at the time of assignment subject to verification by the A.O. It also rejected the alternative argument of the assessee that in case the sum received on maturity was held to be taxable then deduction be allowed for the premium paid by the assessee after the assignment of the policy, which were embedded in the maturity amount and not claimed as a deduction in the tax assessments. (ii) Thus, the issue depends on the question as to whether on assignment of insurance policy to assessee, it changes its character from Keyman Insurance also to an ordinary policy. It is because of the reason that if it remains keyman insurance policy, then the maturity value received is subject to tax as per section 10(10D) of the Act. On the other hand, if it had become ordinary policy, the premium received under this policy, in view of the aforesaid section 10(10D) itself, the same would not be subjected to tax. (iii) Once there is no assignment of company/employer in favour of the individual, the character of the changes and it gets converted into an ordinary policy. Contracting parties also change in as much as after the assignment which is accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary decision on the issue, the addition made by the A.O. is directed to be deleted. 4. We have heard the rival contentions and perused the facts of the case. As regards the nature of the Policy whether it is Keyman Insurance Policy or is an investment policy , the issue is squarely covered by our decision in the case of M/s. F.C. Sondhi Co. (India) Pvt. Ltd. v. DCIT, Range-1, Jalandhar, in ITA No.117(Asr)/2010, dated 21.04.2014, the relevant portion of which is reproduced for the sake of convenience and better clarification as under: 2. The brief facts of the case are that the assessee has claimed deduction on account of Keyman Insurance in the profit loss account on the following policies : (a) Lifetime from ICICI Prudential - a regular premium - Unit Linked Insurance Plan of premium of Rs.20,00,000/- on the life of Mr. Rajeev Anurag Sondhi. (b) Premium Life from ICICI Prudential - a limited premium payment Unit Linked Insurance Plan of premium of Rs.20,00,000/- on the life of Mr. Rajeev Anurag Sondhi. (c) Jeevan Shree-I of Life Insurance Corporation of premium of Rs.19,96,355/- on the life of Mr. Rajeev Anurag Sondhi. The policy is with Guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account vide order sheet noting dated 31.10.2008 letter dated 03.11.2009. The assessee has stated vide letter dated 12.11.2008 that it is eligible for deduction of claim of Keyman Insurance and in this regard submitted that: As the Keyman Insurance Policies are concerned, these are on the life of a person and this is clearly mentioned on the face of the policies which have already been filed earlier. The mode in which the amount is to be invest the funds available wit them in debt/stock etc. and this cannot be the deciding factory in determining the allowability of the premium paid. The AO further by explaining the meaning of Keyman Insurance Policy vide para 4 of his order and after considering the Polices of Life Insurance revealed the following facts in para 6.1, 6.2 6.3 of his order, which for the sake of convenience are reproduced as under: 6.1. Life Time: The policy is a regular premium a unit linked life insurance policy. (a) The Plan: Life time is a regular premium unit linked insurance plan. The premiums net of all the charges are invested in a fund of the assessee's choice. (b) Being a unit linked life insurance policy, the Pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs.2,510/- in the policy document. (e) The assessee has option to increase/decrease in the premium and thus can invest in Units accordingly. Any increase or decrease in the premium shall not lead to any increase or decrease in the Death Benefits respectively (f) There are four plans and the investment objectives of all the tour plans alongwith indicate portfolio Allocation are given. (g) The policy document states that investment in the Units is subject to market risk. (h) The Insurance charge that includes the amount of Insurance Cover shall be (recovered out of premium amount and on each monthly due date by cancellation of Units. (i) Tax benefits would be available as per the prevailing Tax Laws. (j) Copy of first premium receipts shows Type of Policy as Keyman but there is no mention of Keyman Insurance Policy in the Policy document. 6.3. Jeevan Shree-I Life Insurance Premium: (a) This plan of Life Insurance Corporation is a plan with guaranteed additions for 5 years and with profits thereafter. (b) The premium of main plan is 19,91,265/- and sum assured for main plan is Rs.56 lacs. (c) The accident benefit premium is of Rs.4,250/- separately ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not lose sight of the basic principle that person purchasing life insurance can only do so to the extent of his insurable interest in the life assured, the circular said. An employer buying keyman insurance for his own benefit cannot prove insurable interest beyond a certain cover protecting against death of the key employee and similar is the position of a partner buying against death of the key employee and similar is the position of a partner buying insurance on the life of another partner, IRDA said. 2.4. The assessee was given show cause notice, which is reproduced at pages 9 10 of AO's order and the assessee submitted the reply vide letter dated 12.11.2008, which is available at pages 10 11 of AO's order, which is reproduced as under: 10. The assessee has submitted reply vide letter dated 12.11.2008:- (a) Regarding the Keyman Insurance Premium paid, it is submitted that the premium works out to Rs.59,96,365/- and not Rs.60,00,000/-. It has been suggested by you that since our keyman policies are unit linked insurance plans, these are not keyman insurance policies in view of the circular of IRDA. In view of the above, it has been stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the policy. But the assessee did not respond to the violation of the basic principle that a person purchasing life insurance can only do so to the extent of his insurable interest in the assured, the meaning of Keyman Insurance Policy as per explanation to clause (c) to section 10(10D) of the I.T.Act i.e. policy on life as asked and pointed out vide order sheet noting dated 31.10.2008. The scope of cover should not be wider than term assurance. Status of the policy, contents, terms conditions mentioned therein established that the plan is Unit Linked Insurance Plan and not Term Assurance Plan i.e. Policy on life as per definition of the I.T. Act as well as Circular issued by the IRDA. 2.6 The assessee further claims that policy has been issued prior to issue of Circular by the IRDA. The policy of Unit Linked Insurance Plan is not Keyman Insurance Policy as per the provisions of the I.T. Act as discussed above and these provisions of the I.T.Act are in place when the policy has been taken by the assessee. In the brochure also, the Insurance Company does not claim of any such benefit except tax benefit u/s 80C of the I.T.Act. The Circular issued by the IRDA warning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, terms conditions mentioned therein established that the plan is Unit Linked Insurance Plan Plan with Guaranteed Return and not Term Assurance Plan i.e. Policy on life as per definition of the I.T.Act as well as Circular issued by the IRDA. Only a fraction of the total premium is meant for risk premium, the balance is for the deployment of purchase of units i.e. Investment in Units which cannot be taken for business expenditure. The assessee did not reply to this vital specific issue of nominal mortality charges for life cover and balance huge amount in the investment in units. The assessee firm has been asked to prove that the policy taken is Keyman as per definition given in I.T.Act i.e. policy taken by a person on the life of another person also fulfilling the terms and conditions laid down by the IRDA in this regard, necessity and expediency of the person being Keyman and the policy taken for the benefit of the assessee company but the assessee failed to prove that. (iv) It does not fulfill the condition of policy taken by a person on the life of another person as per definition of Keyman in the I.T. Act, i.e. pure life insurance as also admitted by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than (a) any sum received under sub-section (3) of section 80DD or subsection (3) of section 80DDA; or (b) any sum received under a Keyman insurance policy; or (c) any sum received under an insurance policy issued on or after the 1st day of April, 2003 [but on or before the 31st day of March, 2012] in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured Provided that the provisions of [sub-clauses (c) and (d)] shall not apply to any sum received on the death of a person: Provided further that for the purpose of calculating the actual capital sum assured under [sub-clause (c)], effect shall be given to the Explanation to sub-section (3) of section 80C or the Explanation to sub-section (2A) of section 88, as the case may be. Explanation .- For the purposes of this clause, Keyman insurance policy means a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person [and includes such policy which has been assigned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of retirement be taken as 'profits in lieu of salary' for tax purposes; and in case of other persons having no employer-employee relationship, the surrender value of the policy or the sum received under the policy be taken as income from other sources and taxed accordingly. The premium paid on the Keyman Insurance Policy is allowed as business expenditure. 14.5 The amendments take effect from the 1st day of October, 1996. 2.7. As is obvious from the definition given in the Explanation below section 10(10D), Keyman Insurance Policy is a life insurance policy taken by a person on the life of another person where the other person is or was the employee of the first person or is or was connected in any manner with the business of the first person. To be eligible to the classified as a Keyman Insurance Policy the essential ingredients are that the life insurance policy must be taken by one person for coverage of the risk on the life of another person who is either an employee or is connected is with the business of the first person. It should also be a 'life insurance' policy. 2.8. The AO has held that the Life Insurance Policy for the purpose of Keyman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tner. It was stated that the scope of cover in Keyman Policies should not wider that that under Term Assurance . 2.9.1 The IRDA has been established through the Insurance Regulatory and Development Authority Act, 1999. Under section 14(1) of this Act, the IRDA has the duty to regulate, promote and ensure orderly growth of the insurance business. Circulars issued by the IRDA are, thus, in exercise of its statutory functions. The AO's observations, therefore, that the cover under Keyman Policies could not be wider than that under Term Assurance has the backing of interpretation by the concerned statutory body entrusted with regulating the insurance business in India. The Authority noted that certain insurers had issued or were issuing Keyman insurance policies which were aberrations , as noted above. They clarified that the cover under Keyman Policies could not be wider than that in 'term insurance' and directed insurers to follow their directive. The IRDA Circular dated 30.1.2006 is, thus, clarificatory in nature and states that a Keyman Insurance Policy should not have cover more than a term assurance policy because that was the essence of a keyman insurance poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture or of taxing a receipt as income. However, in my humble opinion, if allowance has been provided in the Act for certain payments and the nature of the payment is not clearly defined in the Act but it is so defined in the other Act or explained by the Statutory Regulatory Authority for that Act, the interpretation in the other Act should be followed, especially when IRDA specifically noted that there had been misused of the Keyman Insurance Policy. There is nothing on record to show that any of the insurance companies has challenged the interpretation of the term Keyman Insurance Policy given by IRDA in any Court of Law. They have on the other hand, decided to abide by the interpretation given by IRDA. Once this is so, and it is taken that the Keyman Insurance Policies were being misused and a Keyman Insurance Policy, as explained by the IRDA, was only a term insurance policy, in my opinion, cognizance needs to be taken of such interpretation by the Regulatory Authority and affect should be given to such explanation while implementing the provisions of I.T.Act. The appellant's contention in this regard is, therefore, rejected. 2.10 Moreover, the AO has examined the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy. Circular No.762 (supra) clarifies that a Keyman Insurance Policy is that which is taken for the benefit of the employer or of the Company which is likely to occur on the death of the person insured. Thus, it is the benefit to a business on the death of the person insured which is one of the paramount features or the key ingredients to determine whether a policy is of the nature covered under the Explanation to section 10(10D). Insurance policies which carry inherent risk of return cannot provide such benefit to the business. 2.11 As regards the policy taken from the Life Insurance Corporation of India (LIC), it is seen that the policy is for a period of five years, though the premium paying term is three yeas only. As per the policy document, the sum assured for main plan is Rs.56 lacs, whereas the Term Assurance sum assured is Nil. The premium for the main plan is Rs.19,91,265/-which is 35.5% of the sum assured. Thus, the appellant gets approximately all the amount invested as an assured return, after including the guaranteed additions, with mortality charges built into the policy. In addition, the assessee has an accident benefit sum assured of Rs. 25 lacs with the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olicy or not. An Insurance Policy, which is designed to insure against the risk of death should not normally be subject to the vagaries of the stock market or investment decisions. 2.14 For the reasons discussed above, I uphold the action of the AO in denying deduction of the premium paid as Keyman Insurance Policies. Ground No.2 of appeal is rejected. 4. The Ld. counsel for the assessee, Mr. Sandeep Vijh, CA, at the outset, argued that the definition of Keyman Insurance Policy has been given in Explanation to Section 10(10D), which has been read as under: For the purposes of this clause, Keyman Insurance Policy means a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person. He argued that the AO has derived support from two circulars issued by IRDA dated 27.04.2005 30.01.2006. He argued that the artificial restriction placed by the A.O. and Ld. CIT(A) with reference to Keyman Insurance as being term insurance only is thus not justified and a keyman insurance policy may be a non-term i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars of IRDA as under: Smt. Tarulata Shyam Ors. v. CIT 108 ITR 345 (SC) Orissa State Warehousing Corpn. v. CIT 237 ITR 589 (SC) Dilharshankar C. Bhachech v. CED 158 ITR 238 (SC) Elel Hotels Investment Ltd. v. UOI 178 ITR 140 (SC) Mittal Cold Storage v. CIT 159 ITR 18 (MP) 4.2. He further argued that the Ld. CIT(A) has observed that the policies were investment plans with insurance cover thus accepted the concept of life insurance. He has also stated that the policies are unit linked plans that combine benefits of insurance and capital market into one. He has further observed that it is apparent from the policies that these are investment vehicles in which money is paid in regular intervals by the policy holder and the policy holder can ask the insurance company to invest in different funds depending upon the risk appetite of the policy holder. This is like insurance company acting as Mutual Fund. He has also stated that the company is levying charges ( which are deducted from premium) which are similar to those levied by Mutual Fund. The CIT(A) has concluded that the policies are predominantly investment policies and the intent and purpose of Keyman Insuranc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and life insurance and wrongly concluded that the policy does not fall within the definition of Keyman as explained by IRDA. The premium of Rs.4,250/- relates to accidental insurance. The Ld. CIT(A) has in para No.2.12 accepted that the IRDA circular had prohibited the issue of Keyman Insurance Policies unless they were term insurance policies only after 10.05.2005 and that all the policies in this case were issued on or before 10.05.2005. This date is even prior to the circular dated 30.01.2006 which was to give guidelines. The Ld. CIT(A) then proceeds to go beyond the circular of IRDA and in view of the circular intimating misuse of Keyman Policies issued earlier has held that it will affect the policies issued prior to 10.05.2005. This clearly shows that the CIT(A) was bent upon taking a view against assessee and does not even accept the views of IRDA. At worst, the CIT(A) could have taken an adverse view for the policies issued after 31.01.2006. In para 2.13, the ld. CIT(A) has observed that the manner of investment of life insurance policy significantly effects the issue at hand. He is of the view that if risk is involved in investment, it is not going to benefit the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al (Premium Life ) and third from Jeevan Shree-I. As stated in para 2 of AO's order reproduced hereinabove, there is no dispute to the fact that the assessee-company has given option of choosing the investment plan out of four investment plans offered by the Insurance Company. In the case of Jeevan Shree-I issued by L.I.C. of India, which is the policy with guaranteed additions for 5 years and with profits thereafter. Therefore, it cannot be denied that such policies are for the investment plan and are having guaranteed return and the premium paid by the assessee company to such Insurance Company after deducting for mortality cover and other administrative charges are to be put into investment plan as selected by the assessee company as far as the policies taken from ICICI Prudential are concerned. Whereas LIC has undertaken guaranteed addition for 5 years and later on with profits. These findings of the AO have been found to be correct and no cogent explanation to rebut or reverse such findings of the A.O.has been given before any of the authorities below or even before us. The findings of the AO are also found to be correct and has not been rebutted with cogent explanation be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld. CIT(A) in this regard, who has rightly confirmed the action of the A.O. The arguments of ld. counsel for the assessee before the authorities below were mainly that the Insurance Policies are Keyman Insurance Policies taken on the life of a person and even otherwise also invest the funds available with them in debt/stock etc, which cannot be the deciding factor in determining the allowability of the premium paid. But at the same time, the assessee has admitted vide letter dated 12.11.2008 and on perusal of record, it is found that these policies are not in the nature of Life Insurance Policies exactly. 6.1 On perusal of facts on record and arguments of both the parties and legal position and interpretation of the Act, we are of the view that the arguments made by the Ld. DR are found to be convincing and findings of the Ld. CIT(A), who has rightly confirmed the action of the A.O. that the assessee-firm has taken policy, which is, in fact, Unit Linked Insurance Plan, an Investment Plan, the purpose of which is guaranteed returns on the premium amount through investment in Units and Unit Linked Insurance Plan for which the premium is paid though wrongly claimed as an expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that policy has no surrender value. The said claim shows that policy has not completed three years but in the present case the Policy has completed three years and the AO has rightly held that due to malafide intention of the assessee to evade payment of tax which has transferred two day before completion of three years. This contention of the assessee is further strengthened by the fact that the assessee did not pay premium due on 31.03.2008 which shows that he intended to encash policy after completion of three years. In the present case, there is assignment of policy for malafide purpose as observed by the A.O. Accordingly, the contention of the assessee is not valid in the given circumstances. The action of the firm in assignment of policy was not legal which was there to evade payment of tax due. Moreover, in view of the legal position, the sum received under the policy is taxable in the hands of receiver of the sum. Since the firm could surrender policy at any time after retaining it atleast for three years. It was stated by the assessee that to overcome shortage of funds, it surrendered and encashment of policy was made a handy tool. In fact, after assignment, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the expenses claimed by the assessee are too much on the higher side and are not at all justified. However, incurring of some expenses on telephone and traveling etc. Cannot be totally ruled out. Keeping in view all the facts and circumstances, it is held that 50% of the expenses claimed are over stated and are that personal expenses of the assessee. It may not be out of place to mention here that in addition to these expenses, no further expenses under these heads have been shown for personal purposes. It cannot be accepted that the assessee has no expenses on these heads for his personal purposes. Accordingly, the claim of the assessee is restricted to the 50% of the amount of Rs.3,92,624/- which comes to Rs.1,96,312/-. The balance amount of Rs.1,96,312/- is disallowed and added back to the income of the assessee. Penalty proceeding for filing inaccurate particulars of this income are being initiated. 7. The Ld. CIT(A) restricted the disallowance at 10% i.e. at Rs. 40,000/- approximately. 8. We have heard the rival contentions and perused the facts of the case. We concur with the views of the ld. CIT(A) that the assessee was engaged in the business of commodity trading w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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