2010 (4) TMI 805

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.... (Appeals) has erred in law and on the facts in deleting the addition of Rs. 2,40,30,424 made by the Assessing Officer by invoking rule 8D read with section 14A of the Income-tax Act, 1961.  2.  On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in law and on the facts in directing the Assessing Officer to allow the insurance premium amounting to Rs. 2,40,92,736 under the head "Sankat Haran Bima Yojana" created for the welfare of farmers which is not directly related to the sale or consumption of fertilisers. Further, the insured are not the members of the assessee. 3. The learned Departmental representative relied on the order of the Assessing Officer. 4. Learned....

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....ervations of the Bench are reproduced hereunder : "8. We have duly considered the contention and gone through the record carefully. The main reason assigned by the Assessing Officer while disallowing the claim of the assessee is that purchasers of the urea are neither primary members of the assessee nor the insurance cover promotes sales of urea. Thus it cannot be said expenses were incurred for promoting the sales. In his opinion the assessee has just formulated a plan by which it has extended undue benefit to the sister concern in whom it is holding equity at 20 per cent. voting rights. On perusal of the Commissioner of Income-tax's order, we find that the learned first appellate authority has gone through the sample copy of the agreem....