The Commissioner Of Income Tax-Ii, Ludhiana v. M/S Big Ben Exports

IN THE HIGH COURT OF PUNJAB & HAR YANA AT CHANDIGARH. Income Tax Appeal No.628 of 2010 Date of Decision:-26.09.2011 The Commissioner of Income Tax-II, Ludhiana. ......Appellant. Versus M/s Big Ben Exports. ......Respondent. CORAM:-HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MR. JUSTICE JASWANT SINGH Present:-Ms. Savita Saxena, Advocatefor the Appellant. *** HEMANT GUPTA, J.(ORAL) The Revenue is in appeal under Section 260A of the Income Tax Act, 1961(for short the Act) claiming the following substantial questions of law:- 1.Whether on the facts and in the circumstances ofthe case, the Tribunal was legally justified in dismissingthe appeal of the department though the said disallowancewas made by the assessing officer under Section 36(ib) ofthe Income Tax Act, 1961? 2.Whether on the facts and in the circumstances ofthe case, the Tribunal was legally justified in dismissingthe appeal of the department by holding that the partner isan employee for the purpose of Keyman Insurance? 3.Whether on the facts and in the circumstances ofthe case, the Tribunal was legally justified in dismissingthe appeal of the department regarding computation ofdeduction under Section 80HHC of the Income Tax Act1961 and confirming the order of the CIT(A) directing theA.O. to consider the cost of trading goods exportedattributable to export turnover excluding the turnover ofRs.15,71,637/-, the sale proceeds in respect of whichpayments were not realized in stipulated time? During the course of arguments learned Counsel for the revenue pressed questions no.1 & 2 as arising out of the order of the Tribunal. The assessee firm is engaged in exports and declared income of Income Tax Appeal No.628 of 2010 Rs.57,63,520/- in its return filed on 30.10.2004. The assessee debitedRs.10,00,000/- as Keyman Insurance and claimed expenditure in terms of Section37(1) of the Act. The Keyman Insurance Policy in terms of Section 10(10D) of theAct means a Life Insurance Policy taken by a person on the life of another personwho is or was the employee of the first mentioned person or is or was connected inany manner whatsoever with the business of the first mentioned person. The assessing officer allowed such deductions. The said finding hasbeen affirmed by the Commissioner and later by the Income Tax AppellateTribunal. Learned Counsel for the revenue has argued that the insurancepremium was paid not in respect of the employee but in respect of a partner,therefore, the deduction under Section 36(ib) is not available as the amount ofpremium paid by an assessee as an employer to avail or get insurance for the healthof his employees alone is allowable deduction. Having heard learned Counsel for the revenue we do not find anysubstantial question arises for consideration. Section 36(1)(ib) of the Actcontemplates deduction of the amount of premium paid on the insurance policy ofan employee by the employer. A partner can also be an employee when hemanages the affairs of the firm on whole time basis and get salary. It is not a caseof the revenue that such partner on whose life premium is being paid was not awhole time employee of the firm. In view of the said fact we do not find any substantial question oflaw arises for consideration. Dismissed. ( HEMANT GUPTA )JUDGE ( JASWANT SINGH )JUDGE