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2023 (8) TMI 879 - ITAT DELHICharacterization of receipts - exemption u/s 10(10D) - Amount received on redemption/maturity of unit linked insurance scheme - to be taxed under the head “income from other sources” or "capital gain" as claimed by the assessee - HELD THAT:- Lower authorities have mis-directed themselves by not considering the distinction between the ordinary life insurance scheme and ULIP. In the assessee’s case, it is unit linked insurance scheme and is related to the units of mutual fund allotted to the assessee in respect of the money paid by him. CIT(A) ought to have considered the issue from that perspective since the transactions are akin to mutual fund therefore, deserves same treatment. Merely, because life is insured by the transaction would not alter basic character of transaction. CBDT has issued a circular regarding exemption u/s 10(10D) which provides exemption qua the life insurance schemes. It is pertinent to note that a new provision has been inserted w.e.f. 01.04.2021 by Finance Act, 2021 i.e. Section 45(1B) [objective of inserting of this provision is stated to subject the matured/redeemed amount to tax which otherwise was exempt u/s 10(10D)] Hence, it can be construed the receipt fell under the head “capital gains” but not under “income from other sources”. We therefore, direct the AO to allow indexation and tax the amount under the head “capital gains”. The grounds raised by the assessee are allowed.
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