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2015 (8) TMI 1464 - AT - Income TaxEntitlement for deduction on account of Keyman insurance policy taken on the life of two partners - allowable deduction u/s.37(1) - Held that:- This issue has been settled by the Hon’ble jurisdictional High Court in CIT vs B.N. Exports (2010 (3) TMI 186 - BOMBAY HIGH COURT) by holding that, for claiming business expenditure u/s 10(10D) read with section 37 of the Act, insurance premium on Keyman insurance policy to ensure life of a partner and effect of Circular No.762 (supra), is an allowable deduction. The object and purpose of Keyman insurance policy is to protect the business against a financial setback which may occur as a result of premature death, to the business or professional organization and further a Keyman Insurance Policy is obtained on the life of a Keyman including partner to safeguard the firm against disruption of business. - Decided in favour of assessee Disallowance of interest should be made u/s 14A with reference to net interest only - Held that:- the assessee duly explained its version with the help of the documentary evidence. It is noted that while computing the disallowance u/s 14A read with Rule-8D of the Rules, the Assessing Officer considered the payments to partners. The term ‘interest’ has been defined u/s 2(28A) which means, interest payable in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. The capital contributed by the partner is neither money borrowed nor debt incurred by the assessee, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals), resultantly. - Decided against revenue
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