CHOLA BUSINESS SERVICES LTD.,CHENNAI vs. DCIT CORPORATE CIRCLE 1(2), CHENNAI

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ITA 2299/CHNY/2018Status: DisposedITAT Chennai14 November 2019AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue to the Assessing Officer for re-adjudication. The assessee must produce the insurance policies to prove they are group policies and not Keyman policies.

What were the facts?

The assessee claimed a deduction for insurance premium paid for employees. The Assessing Officer and CIT(A) disallowed this, treating it as Keyman Insurance and invoking Section 40(a)(ia) for non-deduction of TDS. The assessee argued these were group insurance policies, not Keyman policies, and thus not perquisites requiring TDS.

What were the issues?

Whether insurance premiums paid for employees constitute perquisites requiring TDS deduction under Section 192, and if disallowance under Section 40(a)(ia) is justified.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 192,Section 17(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN

Hearing: 14.11.2019

आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER:

1.

This is an appeal filed by the Assessee against the order of the learned Commissioner of Income Tax (Appeals)-1, Chennai in appeal No.ITA No.45/CIT(A)-1/2017-18 dated 30.05.2018 for the Assessment Year 2015-16.

2 -: 2. Shri R. Viyayaraghavan, Advocate represented on behalf of the Assessee and Shri A.R.V. Sreenivasan, JCIT represented on behalf of the Revenue.

3.

It was submitted by the learned Authorized Representative that the only issue in the assessee’s appeal was against the action of the learned Commissioner of Income Tax (Appeals) in confirming an addition by invoking the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 (hereinafter referred as “the Act”) to disallow the assessee’s claim of payment of insurance premium in respect of the employees of the assessee’s company for non- deduction of TDS u/s.192 of the Act. It was submitted by the learned Authorized Representative that the assessee had made payment for various insurance organizations for Group Term Life Policy and Group Accident Policy and Group Health Policy, Group Medi-claim Policy, Group Gratuity Scheme Policy and Group Gratuity Cash Accumulation Plan.

It was submitted that both the Assessing Officer and the learned Commissioner of Income Tax (Appeals) has understood the payment of the insurance premium as being towards Keyman Insurance Policy. It was a submission that the insurance policy which has been paid for by the assessee were not Keyman Insurance Policy but were group policies in relation to all the employees of the assessee’s company. It was a submission that the said insurance premium paid did not fall with the provisions of Section 17(2) of the Act and consequently was not perquisite in the hands of the employees which require the deduction of TDS u/s.192 of the Act. It was the prayer that as the 3 -: insurance premium paid was not perquisite u/s.17(2) of the Act, the disallowance was not called for.

4.

In reply, the learned Departmental Representative submitted that the learned Commissioner of Income Tax (Appeals) has called for the details of the insurance policies which were not produced before him. It was a submission that he has no objection if the issue was restored to the file of the Assessing Officer for verification as to whether the insurance premium paid was towards the Keyman Insurance or whether it was towards Group Insurance.

5.

We have considered the rival submission and perused the materials available on record.

6.

The perusal of the order of the learned Commissioner of Income Tax (Appeals) clearly shows that before the learned Commissioner of Income Tax (Appeals), the assessee was specifically requested to produce all the insurance policies and evidences for the premium amounts paid to support the contention that the premium was not in the nature of perquisites in the hands of the employees. The insurance policies that were requested for, were not placed on record. This being so, we find substance in the submissions of the learned Departmental Representative and the issue in this appeal is liable to be restored to the file of the Assessing Officer for re-adjudication. The assessee is to produce copies of the insurance policies to prove his claim that the insurance policies are not in the nature of Keyman Insurance Policies but,

4 -: are for the Group Insurance of his employees. If, the assessee is able to show that the policies are Group Insurance policies, then obviously the same would not fall within the terms of Section 17(2) of the Act and would not be perquisites and consequently would not require the deduction of TDS u/s.192 of the Act. However, if the insurance premium paid is in respect of the Keyman Insurance Policy, admittedly the same would be the perquisite and the disallowance stands confirmed.

7.

Hence, the issue is restored to the file of the Assessing Officer for re- adjudication in line with the directions given above and after granting the assessee adequate opportunity to substantiate its claim.

8.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

Order pronounced in the open Court on 14th November, 2019 in Chennai.

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