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TMI Blog2015 (2) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... sources. The assessee also received income from capital gains. The assessee had filed its return of income declaring total income of Rs. 66,22,68,470/-. The assessment was completed at a total income of Rs. 88,70,88,120/-, inter-alia, making an addition of Rs. 19,06,30,917/- being amount received from LIC on maturity of key man insurance policies. 3. Ld. CIT(A) deleted the addition following the decision of Hon'ble Delhi High Court vide order dated 16/12/2011 in ITA No. 165/2011, ITA No. 22/2009, ITA No. 1010/2010, ITA No. 2073/2010, ITA No. 152/2011 & ITA No. 232/2011, wherein it was, inter-alia, clarified that on assignment the key man insurance policy gets converted into an ordinary policy and it is not open to the revenue to allege tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Amt. & DOM 1 112427973 1/11/97 2.00cr 1,07,58,000 1,43,44,000 3,27,86,115 1/11/2007 2 112427974 1/11/97 1.00cr 53,79,000 35,86,000 10,75,800 1,63,93,057 1/11/2007 3 11320445 1/4/2002 3.00cr 2,13,78,810 1,06,89,405 4,06,40,367 15/04/2007 4 113670387 1/9/2002 5.00cr 2,80,49,025 93,49,675 3,46,65,750 1/9/2012 5 113670388 1/9/2002 5.00cr 2,80,49,025 93,49,675 3,46,65,750 1/9/2012 6 113675876 28/3/2003 5.00cr 1,87,91,512 1,87,91,512 3,46,65,750 28/3/2013 4.1 The assessee's representative pointed out that as per the policy rules issued by LIC of India, the Key Man Policy once transferred/assigned becomes the normal policy and on encashment of such policy, the proceeds received are exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the relevant provisions of the Act and the aforesaid CBDT Circular to hold as under: "All this shows that from the time of taking out the policy upto its maturity, the Legislature has envisaged the treatment to be given with regard to sums involved in the hands of the players involved. The players involved obviously are two-one, the person on the life of whom the insurance policy is taken out and second the person who takes out such policy. The premium is borne by the second person. Where such a dual role comes to an end, the very essence of the keyman Insurance Policy is lost. This is the reason why the LIC of India confirmed that after assignment of a Keyman Insurance Policy in the name of the individual and the premiums thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract is now between the insurance company and the individual and not the company/employer no more remains the contracting parties. We have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to conversion and the character of policy changes. The insurance company has itself clarified that on assignment, it does not remain a keyman policy and gets converted into an ordinary policy. In these circumstances, it is not open to the Revenue to still allege that the policy in question is Keyman policy and when it matures, the advantage drawn therefrom is taxable. Once h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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