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2014 (7) TMI 994 - ITAT AMRITSARRejection of expenses on obtention of Keyman Insurance Policy – Redemption amount already offered for taxation – investment plans with accompanying insurance benefits - AO was of the view that the assessee has invested in Unit Linked Insurance Plan under Keyman Insurance Plan and it is not Keyman Insurance Policy as per the meaning given in the Income Tax Act - Held that:- As per definition of “Keyman Insurance Policy”, a person purchasing life insurance can only do so to the extent of his insurable interest in the assured - Following the decision in M/s. FC. Sondhi & Company (India) Pvt. Limited Versus Dy. Commr. of Income Tax [2014 (6) TMI 39 - ITAT AMRITSAR] - the policies have been taken from Unit Linked Investment Plan is investment plan, premium of which has been put into growth fund and it is not a Pure Life Insurance Policy on the life of another person - the policy itself does not fall under the definition of Keyman Insurance Police as defined under explanation to clause (c) of section 10(10D) of the Act - Unit Linked Insurance Plan, an Investment Plan, the purpose of which is guaranteed returns on the premium amount through investment in Units and Unit Linked Insurance Plan for which the premium is paid though wrongly claimed as an expenditure, which is not allowable as an expenditure - The Circular of IRDA has clarified the position and the arguments made by the ld. counsel that it is prospective in nature, cannot be accepted since the circular is clarificatory in nature. It is not a ‘term Assurance Policy Plan” as per IRDA guidelines - A nominal amount is being charged for mortality charges for life cover and balance amount has been deployed to purchase Units as per assessee’s choice - only a fraction of the total premium is meant for risk premium, the balance is for the deployment of purchase of units i.e. Investment in Units which in fact, cannot be claimed as business expenditure, which query, has never been explained by the assessee - It does not fulfill the condition of policy taken by a person on the life of another person as per definition of explanation to clause (c) of section 10(10D) of the Act – thus, there was no infirmity in the order of the CIT(A) who has rightly upheld the order of AO – Decided against Assessee.
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