COMMISSIONER OF INCOME TAX Vs. B.N. EXPORTS

JUDGEMENT

(1.) The appeal by the Revenue under Section 260A of the Income-tax Act, 1961, raises the following question of law:

(2.) The issue before the court pertains to the assessment year 2004-05.

(3.) By its order dated January 29, 2009, the Income-tax Appellate Tribunal confirmed the findings of the Commissioner of Income-tax (Appeals). The Tribunal held that the expenditure incurred by the assessee, which is a partnership firm, in paying the premium for a Keyman insurance policy obtained by the firm on the life of its partner must be regarded as expenditure incurred wholly and exclusively for the business of the firm. In holding thus, the Tribunal relied upon a circular issued by the Central Board of Direct Taxes on February 18, 1998 (Circular 762--[1998] 230.HR (St.) 12) and on its decision in the case of TTO v. Thakur Vaidyanath Aiyer and Co.,1984 7 ITD 9. Accordingly, the Tribunal deleted an addition of Rs. 31,68,775 towards the insurance premium paid by the firm on a Key-man insurance policy.