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2014 (4) TMI 1000 - AT - Income TaxAssignment of Keyman insurance policy by the firm to its employee Nature of Keyman insurance policy Taxability of income u/s 2(24)(xi) r.w. section 10(10D) of the Act Held that:- Following Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] - once there is an assignment of the employer in favour of the individual employer, then the character of the insurance policy changes and it gets converted into an ordinary policy, that such assignment is duly permitted by law - even the LIC accepted the assignment, then on assignment the policy no longer remains the keyman policy and gets converted into an ordinary policy - as such it is not open to the department to still take a stand that the policy is a keyman policy and when it matures, the advantage drawn therefrom is taxable - on maturity of the policy, it is not the employer but the individual employee who is getting maturity value/benefits of the insurance policy and no doubt the employer as well as the individual take huge benefit by such assignment and at the same time, it cannot be treated as a case of tax evasion - It is a case of arranging the affairs in such a manner as to avail the exemption as per provisions of section 10(D) of the Act thus, nothing is taxable out of the maturity value of the policy received from the insurance company by the assessee employee Decided in favour of Assessee.
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