Admissibility of expenditure incurred by a Firm on Keyman Insurance Policy in the case of a Partner- Reg.

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..... rm on Keyman Insurance Policy in the case of a Partner- Reg. The issue relating to admissibility of expenditure incurred by a firm on Keyman Insurance Policy premium in the case of a partner has been a contentious one. 2. CBDT Circular no. 762/1998 dated 18.02.1998 clarifies that the premium paid on the Keyman Insurance Policy is allowable as business expenditure. However, in case of such expen .....

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..... 10 of the Income-tax Act, 1961 and the CBDT Circular no. 762/1998 dated 18.02.1998, Courts have held that a Keyman Insurance Policy is not confined to a policy taken for an employee but also extends to an insurance policy taken with respect to the life of another person who is connected in any manner whatsoever with the business of the subscriber (assessee). 4. The High Court of Punjab and Haryan .....

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..... of a partner, to safeguard the firm against a disruption of the business, is an admissible expenditure under section 37 of the Act. 7. Accordingly, henceforth, on this settled issue, appeals may not be filed by the department and those already filed, may be withdrawn/not pressed upon. 8. The above may be brought to the notice of all concerned. (K Vamsi Krishna) ACIT (OSD)(ITJ), CBDT, New De .....

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