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2022 (3) TMI 300 - AT - Income TaxAddition towards single premium paid on policy taken for the Director by the Company - Determination of sum of addition - Gross amount or Net amount of premium - component of the maturity of Life Insurance Policy as Income from other source - According to the Ld. AR, assessee is not entitled to benefit u/s. 10 of the Act, since the assessee’s premium payable exceeds 10% of the actual capital sum assured, so the assessee does not get the benefit of chapter III, section 10 since it is evident that its LIC policy’s, one time premium paid by the assessee was almost the assured value i.e. ₹ 10 lacs and the assured value was ₹ 10,88,000/- - it is the premium amount paid by the assessee in AY 2012-13 and the same is his investment which assessee had in his possession/saving being tax paid amount, so, according to assessee in effect the impugned action tantamount to double taxation and confusion happened because SBI (Payer) has deducted tax at source of one (1%) on the entire amount as contemplated u/s. 194DA - HELD THAT:- Under section under section 194DA of the Act, a person is obliged to deduct tax at source, if it pays any sum to a resident under a life insurance policy, which is not exempt under sub-section (10D) of section 10. The present requirement is to deduct at the rate of one per cent of such sum at the time of payment. Several concerns have been expressed that deducting tax on gross amount creates difficulties to an assessee who otherwise has to pay tax on net income (i.e after deducting the amount of insurance premium paid by him from the total sum received) From the point of views of tax administration as well, it is preferable to deduct tax on net income so that the income as per TDS return of the deductor can be matched automatically with the return of income filed by the assessee. The person who is paying a sum to a resident under a life insurance policy is aware of the amount of insurance premium paid by the assessee.” From a reading of the aforesaid observation as well as taking note of the contention of the assessee, and taking note of the fact that assessee had neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI nor claimed any deduction under section 10(10D) of the Act and offered ₹ 3,09,000/- for tax in his ROI, according to me, no addition was warranted. Therefore in this case only the net amount that is ₹ 3,09,000/- should have been taxed, which assessee has already offered to tax in his ROI. Therefore,assessee’s claim is valid and allow the claim of the assessee by directing deletion of the addition of ₹ 10 Lakhs. - Decided in favour of assessee.
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