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TMI Blog2011 (11) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of shares and bonds. Ground No. 1 2. The relevant facts are that the assessee engaged in the business of purchase and sale of securities and investment in capital market claimed expenditure of ₹ 1,38,19,600/- under the head Keyman Insurance premium on the life of 2 partners Shri Dinesh Gupta and Shri Satish Gupta. Before the A.O, the assessee explained that this expenditure was deductible u/s. 37(1) of the Act since it was incurred by the firm to protect the business from loss which may arise due to death of partner, for which certain documents and literature issued by LIC was also submitted before the A.O. It was submitted that the beneficiary of the insurance policy was the firm itself, and not the individual part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the premium payment of keyman insurance policy of the partners along with the taxation of sums received under the keyman insurance policy. It has been made clear in that circular that the premium paid on the keyman insurance policy is allowable as business expenditure whereas the sum received later by the organization taking such policy as a result thereof, is to be taxed as business profit. The Ld CIT(A) has also referred the explanation given below Section 10(10D) giving the definition of keyman insurance policy as under : 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business would be deductible under this section. The first appellate order on the issue as discussed is reasoned one and supported with the CBDIT Circular No. 762 dated 18.2.98 as well as the above referred decisions, hence we are not inclined to interfere therewith. The same is upheld. Ground No. 1 is accordingly rejected. Ground No. 2 6. The A.O noticed that in the Trading Account, closing stock of shares and bonds shown at ₹ 14,80,27,012/- were valued at cost of the market price whichever is lower. However, many scripts were valued at figures which were neither purchase price nor the market value. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate order, Ld CIT(A) has deleted the disallowance. The Ld CIT(A) has noted a finding on the issue in para Nos. 4.4 to 4.8 of the first appellate order. 8. Before us, the ld. D.R. has placed reliance on the assessment order whereas the Ld. A.R., on the other hand, tried to justify the first appellate order on the issue. The Ld. A.R. has also placed reliance on the following decisions: 1) Concordia Corporation Ltd. Vs. CIT 22 ITR 344 (TRV-Cochin) 2) CIT Vs. J.S. Electronic Ltd, 213 CTR 138 (Delhi High Court) 3) CIT Vs. H.P. State Civil Supplies Corporation Ltd., 309 ITR 102(HP) 4) CIT Vs. Rameshwar Prasad Kejarewal and Sons P. Ltd, 76 Taxman 124, Calcutta High Court. 5) DCIT V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be determined by following the FIFO method or the weighted average cost method. It was explained by the assessee that in respect of stocks and shares which are held in Demat form, the physical identity of the scripts is lost, therefore, actual cost method cannot be applied at all. When the scripts or the securities are held in Demat form, there is no individual identification like the distinctive nos. etc., which would have been there in case the securities were existing in a physical form. Undisputedly, it is not a case of change of method of valuation in the case of assessee but the method of valuation which has consistently been followed for the last so many years. Under these circumstances, we fully concur with the finding of the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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