TMI Blog2022 (3) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... son 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. However, he had shown appreciation in its maturity payment (₹ 13,09,000/-) over the premium amount paid by the assessee to the SBI (₹ 10,00,000/-) as income to the tune of ₹ 3,09,000/- during the year and the same had been disclosed in his return of income. However, when the return of income was processed by the Central Processing Centre (CPC) of the Income Tax department which added ₹ 10,00,000/- as income from other sources. Aggrieved by the action of CPC he had filed petition for rectification u/s 154 of the Act to the AO/CPC. However, according to the assessee, the AO at CPC Bangalore did not give any specific reason for rejection of his petition and simply rejected his application and so he appealed before the Ld. CIT(A) who was pleased to confirm the action of the CPC enhancing the total income by ₹ 10 lacs which according to assessee, was the premium paid by the assessee to the SBI. Aggrieved, assessee is before this Tribunal. 5. Having heard rival submissions and after having carefully gone through the facts and circumstances of the case, it is noted that the assessee took the policy of ₹ 10,88,000/- in AY 2012-13 against payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank. (iii) The insurance company deducted TDS on the full maturity amount of ₹ 13,09,000/- @1% (iv) The appellant had shown the income component of the maturity proceeds as income from other sources in its income tax return. But CPC while processing the return had taken the full maturity proceeds as income of the appellant. (v) This had resulted into double taxation because the premium amount paid is already a tax paid payment and when the same is again taxed on refund of payment. Therefore, this addition of ₹ 10,00,000/- should be deleted. 5.3. As per Sec 10(10D) for policies issued on or after April 1, 2012, the exemption is available only if the premium amount in any financial year does not exceed 10 per cent of the actual capital sum assured. This is applicable to all life insurance policies, including SPLI (Single Premium Life Insurance Policy) Thus the maturity proceeds from the single premium life insurance policy will be tax-free only if the minimum sum assured throughout the policy term remains at least 10 times the single premium paid. SPLI taken by the appellant does not satisfy this condition. Hence taxing the entire maturity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) Any sum received under an insurance policy issued on or after the 1st day of April, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten percent of the actual capital sum assured. 9. 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 of the Act 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/-. So, according to him, the Ld. CIT(A) is right to that extent. However, thereafter the Ld. AR drew our attention to section 194DA of the Act which reads as under: payment in respect of life insurance policy- 194DA. Any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy (other than the amount not includible in the total income under clause (10D) of section 10), shall, at the time of payment thereof, deduct income-tax thereon at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en of sec. 10(10D) of the Act, has rightly upheld the action of CPC which does not deserve any interference on the part of this Tribunal. 13. Having heard both the parties and after perusal of the records it is noted that the assessee has taken a life insurance policy in AY 2012-13 of the SBI of sum assured to the tune of ₹ 10,88,000/- (along with credit bonus of 3.25%) by paying single premium of ₹ 10,00,000/-. And in this year (AY 2017-18), the assessee received the LIC maturity benefit to the tune of ₹ 13,09,000/-. And the assessee in his Return of Income disclosed the net amount ₹ 3,09,000/- (i.e. total receipt of ₹ 13,09,000/- minus (-) ₹ 10,00,000 premium paid by assessee) as taxable income under the head Income from Other sources . It is noted that the assesses neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI, [therefore, he did not include redemption payment of premium amount of ₹ 10,00,000/- in his return of income] nor claimed any deduction under section 10(10D) of the Act and offered ₹ 3,09,000/- for tax. However, since SBI (Payer) had deducted 1% TDS on the entire receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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