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2016 (5) TMI 353 - AT - Income TaxAddition of insurance premium - Held that:- Payment towards insurance premium under keyman policy is for the benefit of assessee’s company from any risk that it may sustain by losing the valuable services of their directors and its senior staff from any eventuality by any accident or death made by the AO and as held by the Hon’ble High Court Bombay in the case of COMMISSIONER OF INCOME TAX vs. B.N. EXPORTS reported [2010 (3) TMI 186 - BOMBAY HIGH COURT] it is an expenditure which is laid out for the payment of premium on such a policy is incurred wholly and exclusively for the purposes of business. Therefore, the order of the CIT-A is justified in deleting the addition made by the AO.- Decided in favour of assessee Disallowance towards excess remuneration paid to one of the directors of the assessee company - Held that:- The said Sunil Kumar being one of the directors of assessee company is directly covered under the persons referred in clause (b) 40A(2) of the Act and hence therefore, whatever may be the payment is in the opinion of AO in excessive or unreasonable shall not be allowed as a deduction. However, keeping in view that the services rendered by Sunil Kumar resulted in the business worth ₹ 614.86 lakhs, we find ourselves in agreement with the ld. CIT(A) that the remuneration paid to him cannot be considered as excessive or unreasonable to attract the provision of section 40A(2)(b). - Decided in favour of assessee Disallowance of expenditure incurred towards club memberships - Held that:- The expenditure paid to club and did not bring into existence an asset or advantage for the enduring benefit of the business of assessee to treat the same as capital expenditure. The club expenditure, it only facilitates smooth and efficient running of a business of the assessee. Therefore, club expenditure paid for staff is an allowable expenditure.- Decided in favour of assessee Addition on account of cesstion of the liability u/s 41(1) - Held that:- In the present the AO noted that the assessee admitted that the amount of ₹ 43,571/- has remained as unclaimed by creditors for a considerable period of time. Therefore the fact remains undisputed that the liability carried forward for many years and there was no cessation or remission in the case on hand. There are two conditions are to be fulfilled in order to attract provisions of Section 41 (1) of the Act, i.e cessation or remission and it should be of previous year and that those two conditions were missing in this case under consideration.- Decided in favour of assessee
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