|QUERY:||A co-operative bank wants to take accident group insurance for its members. Whether premium paid on the insurance for members can be debited to Profit & Loss account of the bank? Will it be allowed by the Income Tax Department?|
|ANSWER:||The following conditions should be complied to claim deduction u/s. 37 of the Act.
i) The expenditure should not be of the nature described in sections 30 to 36.
ii) It should have been incurred in the accounting year.
iii) It should be in respect of business which was carried on by the assessee and the profits of which are to be computed and assessed and should be incurred after business is set up.
iv) It should not be in the nature of personal expenses of the assessee.
v) It should have laid out or expended wholly and exclusively for the purpose of such business.
vi) It should not be in the nature of capital expenditure,
Thus from the query it is not clear how the bank will establish that it is for the purpose of the business and incurred wholly and exclusively for the purpose of such business; even bank debits to its profit & loss account. See Meattles Ltd. v. CIT [68 ITR 79 (Del)] and CIT v. Khodidas Motiram Panchal [161 ITR 99 (Guj).
|EXPERT:||CA. H. N. Motiwalla|
|CATCH WORDS:||business expenditure, co-operative bank|
Opinion Of Eminent Legal Luminaries On Controversial Issues
Whether A Co-operative Society Is Entitle To Claim Group Insurance For Its Members?
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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