Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 249 - ITAT DELHIDeletion on account of amount received from LIC on maturity of Keyman Insurance Policy u/s 10(10D)(b) of the Act – Held that:- Following Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] - once there is assignment of the employer in favour of the individual, the character of the insurance policy changes and it gets converted into an ordinary policy; that such assignment is duly permitted by law; that even the LIC accepted the assignment, itself clarifying that on assignment, the policy no longer remains a Keyman Policy and gets converted into an ordinary policy; that as such, it is not open to the Department to still allege that the policy is a Keyman Policy and when it matures, the advantage drawn therefrom is taxable - that on maturity of the policy, it is not the employer, but the individual, who is getting the maturity value of the insurance; that no doubt, the employer as well as the individual take huge benefit by such assignment, but it cannot be treated as a case of tax evasion, rather it is a case of arranging the affairs in such a manner as to avail the state exemption as provided in Section 10 (10D) of the Act. Benefit inured owing to the combined effect of a prudent investment and the statutory exemption provided u/s 10 (10D) of the Act does not call for any bifurcation in the amount received on maturity on any basis whatsoever - nothing can be read into Section 10 (10D) of the Act, if it is not specifically provided - any such attempt would tantamount to legislation and not interpretation - after assignment of the policy in favour of the assessee, it changes its character from that of a Keyman Insurance Policy to that of an ordinary policy and that once it has become an ordinary policy, the proceeds received thereunder would not be subject to tax in view of Section 10 (10D) of the Act, due to which nothing is taxable out of the maturity value received from the insurance policy – The order of the CIT(A) upheld – Decided against Revenue.
|