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2016 (5) TMI 1167 - PUNJAB AND HARYANA HIGH COURT

2016 (5) TMI 1167 - PUNJAB AND HARYANA HIGH COURT - TMI - Entitlement to deduction on account of premium paid on Keyman Insurance Policies of its partners - Held that:- As decided in Pr. Commissioner of Income Tax-I, Ludhiana v. M/s Ramesh Steels, Ludhiana [2016 (5) TMI 1155 - PUNJAB & HARYANA HIGH COURT] in the case of the assessee where it has been held that the Keyman insurance policy taken out in respect of partner of the firm would be admissible expenditure.

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ITTAL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 3.9.2015 (Annexure A-IV) passed by the Income Tax Appellate Tribunal, Chandigarh Benches, Chandigarh (hereinafter referred to as the Tribunal ) in ITA No. 295/Chd/2012, for the assessment year 2005-06, claiming the following substantial question of law:- 1. Whether upon facts and circumstances of the case, the Hon'ble ITAT was justified in law, .....

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d beyond 31.03.2005 and the same cannot be held allowable in the present year since the assessee maintains its books on accrual basis? 2. A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee is engaged in the business of merchant traders and filed its return of income on 31.10.2005 for the assessment year 2005-06 declaring the income at Rs. 55,70,194/-. The said return was processed under Section 143(1) of the Act on 8.1.2006. Subsequently .....

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ng Officer to decide the case in view of the directions given thereunder, who vide order dated 12.10.2010 (Annexure A-II) passed under Section 143(3) read with Section 263 of the Act framed the assessment by making addition of Rs. 84,68,494/- on account of disallowance of premium paid on keyman insurance taken on life of partners as the expenditure related to the period beyond 31.3.2005, i.e. beyond the purview of assessment year 2005-06. Feeling aggrieved, the assessee filed an appeal against t .....

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unsel for the revenue. 4. The following two issues arise for our consideration in this appeal:- (i) Whether the assessee is entitled to deduction on account of premium paid on Keyman Insurance Policies of its partners? (ii) Whether the premium paid by the assessee related to period beyond 31.3.2005 and thus, not allowable deduction for the assessment year 2005-06? 5. Taking up issue No. (i), in view of the judgment of this Court in ITA No. 437 of 2015 (Pr. Commissioner of Income Tax-I, Ludhiana .....

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not have been allowed during the assessment year 2005-06. 7. The assessee during the assessment for the assessment year 2004-05 had claimed that an amount of Rs. 90 lacs was paid during that year, out of which Rs. 5,31,506/- related to the assessment year 2004- 05 whereas the balance of Rs. 84,68,494/- was pertaining to assessment year 2005-06. Otherwise also, the case of the assessee was that it had paid Rs. 90 lacs on the Keyman insurance policies during the assessment year 2005-06 as well. A .....

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