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TMI Blog2015 (9) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that, on the facts of this case, the IRDA circulars have no role to play in deciding whether the premium on the insurance policies paid are covered by the scope of ‘keyman insurance policy’ under section 10(10D) of the Act, and for deciding the matter afresh in the light of the said adjudication. We have noted that an earlier decision of this Tribunal, in the case of Shri Nidhi Corporation Vs Additional CIT [2014 (2) TMI 1022 - ITAT MUMBAI], was not taken into account by the Tribunal, while disposing of the matter, as the said order, though passed earlier, was not in public domain by that point of time. Now that the matter is going back to the Tribunal for fresh consideration, needless to say, this decision will also have to be taken into account. - M.A. No.75/Asr/2014 (In I.T.A. No.117/Asr/2010 - - - Dated:- 31-8-2015 - Pramod Kumar and A.D. Jain, JJ. For The Appellant : Sandeep Vijh For The Respondent : Tarsem Lal Per Pramod Kumar : 1. By way of this rectification petition, the assessee applicant seeks recall of order dated 21st April, 2014 on the ground, inter alia, (i) that the core arguments advanced by the assessee have been simply brushed aside, wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated towards the bottom of page no.33 that: Accordingly, the cases of various courts of law, which have been carefully perused by us are not at all applicable. In the facts and circumstances, the arguments made by the ld. Counsel for the assessee, cannot help the assessee for the reasons mentioned hereinabove. It is clear from the order itself that none of the case laws has been specifically distinguished except for a general observation. It is not at all clear from the order as to why the case cited are not applicable and do not support the case of the assessee. Where case laws have been cited, these have to be considered and distinguished and a general comment will not serve the purpose. The various case laws including many of the Supreme Court which are the law of the land and are binding in nature had to be followed for determining as to how the above referred terms used in the Income Tax Act are to be interpreted. By giving a general comment, numerous relevant case laws have been ignored. This also constitutes a mistake apparent from record. The cases cited included the decision of the Supreme Court in the case of Southern Technologi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e phrase post 10 th May . It has also been observed that at page no.33 of the order that only a nominal amount has been charged for mortality charges. This has also been conveyed at page no.30 of the order by referring to the accident benefit premium of ₹ 4,250/-. The explanation that the CIT(A) has failed to appreciate the difference between accident insurance and life insurance has also not been considered at all [please see the second last pa at page no.5 of the synopsis]. 3. When we asked learned Counsel whether the order so passed by the Tribunal has been carried in appeal before Hon ble High Court, he did accept that appeal is pending before Hon ble Punjab Haryana High Court since 29.11.2014. He, however, hastened to add that pendency of appeal before Hon ble High Court does not come in the way of our exercising powers under section 254(2) of the Act. In support of this proposition, he invited our attention to the following observations made by Hon ble Bombay High Court, in the case of R.W. Promotions Pvt. Ltd. vs. ITAT [WP No.2238 of 2014, judgement dated 8th April, 2015; now reported as 277 CTR 401 (Bom) ]; 9. After hearing both sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or the Assessing Officer calls upon the Tribunal to undertake an exercise which is not permissible within the meaning of section (2) of section 254 that the Tribunal can rely on the principle of judicial propriety or its reluctance or refusal to take upon itself the powers of the higher Court of Appeal. We can understand if the Tribunal had passed an order after considering the application made by the petitioner-assessee on its merits and in accordance with law. However, the refusal of the Tribunal to go ahead and reject the application only on the ground that the petitioner-assessee has invoked the appellate powers of higher Court cannot be sustained. That is contrary to the plain language of the two statutory provisions and which have been brought to our notice. Nothing contrary having been pointed out and such a view of the Tribunal may affect and prejudicially the interest of the revenue that all the more we cannot sustain the impugned order. The Writ Petition is allowed. The petitioners misc. Application seeking to invoke the powers under sub-section (2) of section 254 of the Income Tax Act, s 1961 being Misc. Application No.194/M/2013 shall now be heard by the Tribunal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 and 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 fulfil 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 in its submission. The IRDA was aware of manipulation by the Insurance Agencies of selling Unit Linked Insurance Plan under Keyman Insurance Policy instead of Term Assurance Plan under Keyman as per Income Tax Act and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policies have been taken from Unit Linked Investment Plan is investment plan, premium of which has been put into growth fund and it is not a Pure Life Insurance Policy on the life of another person. Therefore, the policy itself does not fall under the definition of Keyman Insurance Policy as defined under explanation to clause (c) of section 10(10D) of the Act. The findings of the ld. CIT(A) and that of the A.O. in this regard are reasoned one and we find no infirmity in the orders of both the authorities below, in particular, the findings of the A.O. which have been confirmed by the ld. CIT(A) i.e. the findings of the AO in paras 6.1, 6.2 6.3, with reference to the Circular of IRDA and the order of the A.O. in para 11, which are well reasoned one and we concur with the views of the ld. CIT(A) and that of the A.O. We find no infirmity in the order of the ld. CIT(A) in this regard, who has rightly confirmed the action of the AO. The argument 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., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal had not dealt with his core contention that so far as deduction for premium paid on Keyman Insurance is concerned, all that is required to be seen is whether it is for life insurance policy on the life of another person who is, or was, an employee of the assessee, and that no further tests, i.e. whether it is a term insurance policy or not, were envisaged by the statute. It is also pointed out that the contention of the assessee that circulars of the IRDA have no decisive bearing on the definition of what constitutes, Keyman Insurance Policy has also not been disposed of by the Tribunal. It is submitted that these aspects not having been decided, which were specifically raised in page nos. 1 and 3 of the written submissions filed by the assessee, the order should be recalled for the purpose of deciding these issues. Learned Counsel for the assessee also raised several other connected issues but, for the reasons we will set out in a short while, it is not really necessary to go into those issues. 8. Learned Departmental Representative vehemently opposes the rectification petition. He submits that it is considered decision of the Tribunal that insurance policies in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), a Full Bench of Hon ble Punjab Haryana High Court, in the case of R. A. Boga vs. AAC (1977) 110 ITR 1 (P H)(FB), has observed : The basic principle is thus clear. A mistake apparent from record means an obvious or patent mistake or a glaring and obvious mistake . Hotly debatable issues are excluded; hardly debatable issues are included. The issue may be complicated, yet the mistake may be simple. It is a mistake apparent from record. The test is not complexity of the issue but simplicity of the mistake. The question whether dividend income can be taxed as income under the head Income from business , in our considered view, is hardly debatable. 9. The next issue raised before us is whether a considered view of the Tribunal can be subjected to rectification of mistake. It is Revenue s contention that the mistake, even if there be any, is a conscious one inasmuch as the Tribunal duly considered all aspects of the matter and then came to a particular conclusion. Whatever be the merits of such a conclusion, the conclusions so arrived at by the Tribunal cannot be unsettled as it would amount to reviewing the order of the Tribunal. We are not persuaded by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication for perpetuating an error. In his inimitable words, Justice Bhagwati, in the case of Distributors (Baroda) (P) Ltd. vs. Union of India (1985) 47 CTR (SC) 349 : (1985) 155 ITR 120 (SC), had observed thus : To perpetuate an error is no heroism. To rectify it is the compulsion of judicial conscience. In this, we derive comfort and strength from wise and inspiring words of Justice Bronson in Pierce vs. Delameter : a Judge ought to be wise enough to know that he is fallible, and, therefore, ever ready to learn; great and honest enough to discard all mere pride of opinion and follow the truth wherever it may lead; and courageous enough to acknowledge his errors. We are, therefore, unable to accept Revenue s contention that a considered opinion expressed by the Tribunal, after applying its mind to an issue in appeal, cannot be unsettled even if the mistake in the process of reasoning is a simple mistake apparent from record on which no two views are possible . (Emphasis, by underlining, supplied by us) 10. Everything, thus, hinges on whether the process of reasoning adopted by the Tribunal, in relying upon the IRDA guidelines which find no mention in the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the statute. It will be well to recall the words of Rowlatt. J. in Cape Brandy Syndicate vs. IRC (1921) 1 KB 64 (KB) at p. 71, that : ........... in a taxing Act one has to look at merely what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Once it is shown that the case of the assessee comes within the letter of law, he must be taxed, however great the hardship may appear to the judicial mind to be. Even in the case of CIT vs. National Taj Traders (supra), relied upon by the assessee, Their Lordships of Hon ble Supreme Court have referred to, with approval, Maxwell on Interpretation of Statutes observation that A case not provided for in a statute is not to be dealt with merely because there seems no good reason why it should have been omitted, and that the omission appears in consequence to have been unintentional . Their Lordships then observed that In other words, under the first principle, a casus omissus cannot be supplied by the Court except when reason for it is found to be in the four cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing, the above point was specifically raised by the assesse as follows: Keyman Insurance Policy has been defined in section 10(10D) and reads as under: 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 was connected, in any manner whatsoever, with the business of the first mentioned person It is clear from the definition that keyman insurance policy is on the life of another person. In other words, the payments under policy becomes due on the death of the concerned person. No further tests have been prescribed and nothing more can be read into or inferred except being an employee or ex - employee or in connection with business. (Page 1 of written submission) Before proceeding further, it is submitted that the IRDA was established with certain objectives and these have been mentioned by the CIT(A) himself in para 2.9.1. It is very clear that the scope of IRDA is confined to regulate, promote and ensure orderly growth of insurance business . The IRDA has no relevance so far as allowability or premium under Income Tax Act or taxation of policy pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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