S.K. EXPORTS, MUMBAI v. JCIT RG 12(2),

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI. BEFORE SHRI SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMB ER AND SMT. ASHA VIJAYRAGHAVAN JUDICIAL MEMBER. I.T.A. NO. 72 65/MUM/2008 ASSESSMENT YEAR : 2005-06. M/S S.K. EXPORTS JT. COMMISSIONER OF 11 CHURCHGATE CHAMBERS VS. INCOME TAX 5 NEW MARINE LINE RANGE-12(2) MUMBAI. CHURCHGATE MUMBAI-400 020. PAN : AAAFS3572R APPELLANT RESPONDENT APPELLANT B Y : SHRI ANIL SATHE. RESPONDENT BY :SHRI MOHAMED USMAN & SHRI AJ AY SRIVASTAVA. O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-XII MUMBAI DATED 21-11-2 008 FOR THE ASSESSMENT YEAR 2005-06. 2. FACTS IN BRIEF: THE ASSESSEE IS A FIRM AND IS ENGAGED IN THE BUSI NESS OF EXPORT OF LEATHER ITEMS. IT FILED ITS RETURN OF INC OME ON 28-10-2005 DECLARING A TOTAL INCOME OF RS.1 38 83 483/-. THE A O COMPLETED THE ASSESSMENT U/S 143(3) WHEREIN INTER ALIA HE DISALL OWED KEYMAN INSURANCE FEE PAID ON THE LIFE OF THE PARTNERS OF THE FIRM ON THE GROUND THAT THEIR PERFORMANCE WAS CRITICAL TO THE WORKING OF THE FIRM . FURTHER DISALLOWANCES WERE MADE ON ACCOUNT OF FOREIGN TRAVE L AS THE PARTNERS 2 WERE ACCOMPANIED BY THEIR WIVES ON TOURS. CERTAIN O THER DISALLOWANCES WERE MADE U/S 40A(2)(B) AS WELL AS SECTION 40(A)(IA ). AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL WITHOUT SUCCE SS. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWIN G GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE DISALLOWANCE OF FOREIGN TRAVELLING E XPENSES OF RS.5 33 980/- HOLDING THE AID SUM TO BE NOT PERTAIN ING TO THE BUSINESS OF THE ASSESSEE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF D ISALLOWANCE OF KEYMAN INSURANCE PREMIUM OF RS.50 00 000/- PAID ON THE LIFE OF THE PARTNERS OF THE FIRM. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF D ISALLOWANCE OF RS.1 39 537/- OUT OF PAYMENTS MADE TO SISTER CONCER N BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B). 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF D ISALLOWANCE OF RS.1 20 015/- UNDER SECTION 40(A)(IA). 3. WE HAVE HEARD MR. ANIL SATHE LEARNED COUNSEL F OR THE ASSESSEE AND MR. MOHD. USMAN ALONG WITH MR. AJAY SR IVASTAVA LEARNED DR. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE SMALLNESS OF THE AMOUNT HE IS NOT PRESSING GRO UND NOS. 1 3 AND 4.IN VIEW OF THE ABOVE SUBMISSION WE DISMISS THESE GROU NDS AS NOT PRESSED. 5. COMING TO GROUND NO. 2 WHICH IS ON THE ISSUE OF ALLOWANCE OF PREMIUM PAID ON KEYMAN INSURANCE OF PARTNERS OF THE FIRM WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY NUMBER OF DECISIONS OF THIS BENCH OF THE TRIBUNAL. FURTHER WE FIND THAT THE RATIO OF THE JUDGMENTS DECIDED IN THE FOLLOWING CASE LAWS SUPPORT THE CLAIM OF THE ASSESSEE: 3 1. CIT VS. CHANDULAL KESHAVLAL & CO. (1960) 38 ITR 601 (SC). 2. HINDUSTAN PETROLEUM CORPN. LTD. VS. DY. CIT ITA NO . 3267/1992. 3. ITO VS. THAKUR VAIDYANATH AIYER & CO. 7 ITD 9(BOM). 6. THE AFORESAID DECISIONS WERE FOLLOWED BY THE TR IBUNAL B-1 BENCH MUMBAI IN ITS ORDER DATED 29 TH JAN. 2009 IN ITA NO. 4453/MUM/2007 WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING SAME W E ALLOW THIS ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. ORDER PRONOUNCED ON THIS 19 TH DAY OF JANUARY 2010. SD/- SD/- (ASHA VIJAYRAGHAVAN) (J. SUDHAKARY REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 19 TH JANUARY 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR I-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES