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| The Tax Publishers2021 TaxPub(DT) 0776 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Where medical insurance premiums for family members of employees of assessee-company were paid in terms of employment rules framed by the company it could not be said that such expenditure was not incurred wholly and exclusively for the purpose of the assessee's business and accordingly, the same would be allowable.
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Business expenditure - Allowability - Medical insurance premium paid for family members of employees -
Assessee-company was engaged in business of designs and engineering, manufacturing and trading of vertical roller grinding mill systems of cement plants. AO made disallowance in relation to medical insurance premiums paid for family members of employees of the assessee on the ground that such expenditure could not be stated to have been incurred wholly and exclusively for the purpose of the business of the assessee. Held: Assessee-company paid medical insurance premiums for family members of its employees in terms of employment rules framed by the company, therefore, it could not be said that such expenditure was not incurred wholly and exclusively for the purpose of the assessee's business. Further, Revenue could not bring any evidence on record to substantiate that the payments so made by the assessee had no nexus with its business. Even otherwise, it is not necessary that all the payments/expenditure incurred by the assessee should have direct bearing on earning of income, but some payments are also made under certain business expediency. Accordingly, the disallowance made in relation to medical insurance premiums of family members of employees was deleted.
Followed:Loesche India Pvt. Ltd. v. Addl. CIT 2018 TaxPub(DT) 5329 (Del-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
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