Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2009 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (10) TMI 597 - AT - Income TaxAssessment framed under section 43(3) of the Income-tax Act, 1961 (the Act). - The assessee is a reputed heart care institute and consisted on its panel of directors consisted of eminent persons - to cover risk, assessee purchased keyman insurance policies on these persons and paid premiums thereon – Hence, AO disallowed the expenses incurred on these keyman policies Assessee preferred first appeal and represented before CIT(A)- the health of any company, it is not only the turnover that is relevant but also its profitability - Achieving higher turnover, one does not gain anything unless the same is to result in profits - A sound businessman can make the organization profitable - The business is always carried on for the purpose of earning income and if profit is not the guiding factor, what else can be a guiding factor as to whether business is well run or not. If a person is always to incur loss even though it may result into achieving higher turnover, the same will never be carried on for long and no one can incur losses for ever and there cannot be an intention for carrying on such business also - The profitability for subsequent year has shown that when these persons left, the assessee reduced its earning capacity and ended in loss in financial year – Keypersons are also equally involved in carrying on the business of the assessee and insurance premium paid on the keyman insurance policy taken on their lives qualifies for deduction under section 37(1) of the Act Disallowance of Rs. 1,77,028 out of software development expenses- These are not the acquisition of any new software but consultancy charges for software maintenance - since no new software was brought in, the expenses are allowable as revenue expenditure - The appeal of the assessee is allowed
|