TMI Blog2021 (7) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in case of CIT v. Mr. Rajan Nanda [ 2011 (12) TMI 392 - DELHI HIGH COURT] wherein, the keyman insurance premium paid by the company is allowed as deduction to the company u/s. 37(1) of the act. The issue is squarely covered in favour of the assessee In view of this we find that the disallowances made by the ld. AO and confirmed by the ld. CIT(A) is not sustainable. Accordingly, the premium paid for keyman insurance policy is allowable to the assessee u/s. 37(1) of the Act. Similarly insurance premium of the employee is also allowable to the assessee u/s. 37(1). Accordingly, we reverse the order of the lower authorities and directed the ld. AO to delete the disallowance on account of insurance premium. Disallowance commission expenditure to two persons - AO disallowed the commission paid to Ms. Sonu Goyal as she could not be produced for verification and further commission paid to Mrs. Ayushi Goyal was also disallowed because in her statement recorded on 18.09.2014 she was found to be housewife and she did not do any business as well as not aware whether her income tax return was filed and for what reasons - HELD THAT:- Commission paid to the commission agent for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating the same as payment towards investment plan; c. ₹ 27,000/- being the amount of payment of insurance premium under employer/employee insurance scheme; d. ₹ 1,91,00/- on account of commission paid; e. ₹ 71,507/- on account of notional interest treating the same as non business expenses; 3. Brief facts of the case shows that the assessee is a company engaged in the business of trading in gold, silver and diamond jewellery under the franchise 'Tanishq' brand of Titan Industries Ltd. The assessee filed return of income 29.09.2012 if ₹ 92,08,930/-. The assessment was passed u/s. 143(3) of the Act on 27.02.2014 wherein, the ld. AO made the disallowance u/s. 14A of the Act amounting to ₹ 6,88,228/-, disallowances of ₹ 12,77,000/- being insurance paid for key man insurance policy for the director and employee employer insurance policy for the staff. The disallowance of commission paid of ₹ 1,91,500/- and disallowance of interest expenditure of ₹ 71,507/-. Other disallowances made by the ld. AO are not issue in this appeal. Consequently, the assessment order was passed at total income of ₹ 1,17,39,026/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the beneficiary of the keyman insurance policy is the company and therefore, the above insurance premium paid by the assessee is allowable. The ld. AO placing reliance on the decision of the coordinate bench in FC Sondhi Company India Pvt. Ltd. Vs. DCIT ITS 243 ITAT 2041 (ASR) made the disallowance. The ld. CIT(A) confirmed the above disallowances stating that these policies did not fall in the definition of keyman insurance policy as per section 10(10D) of the Act. It was also held that these are in the nature of investment plans. He further stated that the assessee is not able to controvert the above finding of the ld. AO. It was argued by the ld. AR that the above policy stood in the name of the company where the life of the director Mr. Sumit Goyal was insured and in fact the maturity proceeds of the policy of ₹ 85 lakhs was received in FY 2019 - 20 which was also offered for taxation. It was further noted that except in this year in all subsequent year starting from Assessment Year 2013-14 the ld. AO has consistently allowed the insurance premium paid till the year of maturity. We find that the identical issue has been decided by the Hon'ble Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, should be allowed. However, we find that identical issue has been dealt by the ld. CIT(A) for Assessment Year 2010-11 in the case of the assessee wherein, the commission paid has been disallowed. Even before the ld. CIT(A) except filing the confirmation and the return of the recipient, assessee could not produce anything. The ld. AR has infact relied upon the decision of Hon'ble Gujarat High Court in PCIT vs. Vishal Engineering and Galvanizers in Tax Appeal No. 8/2019 dated 13.01.2020. 10. On careful perusal of the above decision it was held that commission paid to the commission agent for introducing potential customers to the assessee is allowable u/s. 37 of the Act. In the present case in case of Ms. Ayushi Goyal she has stated that she has introduced 25 to 26 people to the assessee in her statement and also named four to five peoples. Therefore, it is apparent that she has referred the customers to the assessee. Therefore, we direct the ld. AO to delete the disallowance of ₹ 1,10,700/- in case of commission paid to Ayushi Goyal as allowable expenditure u/s. 37(1) of the Act. However, in case of Ms. Sonu Goyal no such information is forthcoming before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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