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2014 (6) TMI 431 - AT - Income TaxDisallowance of partnership insurance premium Policies to be qualified as keyman insurance policies Held that:- The assessee has paid the premium to the various insurance companies under the policy taken in the name of its two partners namely Mr. Nilesh K. Patel and Mrs. Jigna N. Patel - the assessee has filed only the receipt of premium paid towards the policies and in the absence of policy documents it is not possible to give a conclusive finding whether the policies in question are truly Keymen policies or not - It makes no difference if the policies are Keymen policy at the time when it was taken and subsequently if the policies are assigned in the name of Keymen/partners - the benefit received by the partners will be treated as income in the hands of the partners otherwise the benefit received by the firm is always taxable and that is why the expenditure of premium paid towards the Keymen policy is allowable u/s 37(1) of the Act being the expenditure incurred for the purpose of business of the assessee - the relevant record i.e. policy document has not been placed thus, the matter is required to be remitted back to the CIT(A) for examination Decided in favour of Assessee. Disallowance of transport charges Relevant details not properly appreciated Held that:- The AO has disallowed 20% of the expenses made in cash to one party namely M/s Anil Bulk Mover India Pvt. Ltd. - the assessee has placed the details of transport expenses paid to M/s M/s Anil Bulk Mover India Pvt. Ltd and no such cash payment was made to this party - All the payments were made to the party after deduction of TDS - the AO has disallowed 20% of the expenses under wrong assumption of facts, whereas these expenses pertains to the payment made to various parties in small amounts ranging from few hundreds to thousands thus, the addition of transport charges is to be set aside Decided in favour of Assessee. Disallowance made u/s 36(1)(iii) of the Act - Interest on vehicle loan Held that:- Interest expenditure on loan for purchase of car is an allowable business expenses - The interest expenses on loan is relating to the purchase of car and not actual use of car - The expenses which are for the purpose of acquiring a business asset and not incurred for actual use of the asset as it remained constant irrespective of the fact whether the business asset is also use for personal purposes - The assessee has already disallowed the other running expenses of the car at the rate of 20% on account of personal use and the disallowance of 20% of the interest paid on the loan taken for acquisition of car cannot be disallowed on account of personal use of the car because the interest expenditure is pre determined and it does not vary by the reason of actual use of car thus, the addition of interest expenses on loan for purchase of car is to be set aside Decided in favour of Assessee.
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