TMI Blog2022 (10) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the total income in the return, there remains no doubt whatsoever that it talks of making adjustment of income directly received as such; or as comprised in the gross sum on which tax has been deducted at source. Ergo, the contention that since section 194DA requires deduction of tax at source on the sum payable and not the income and hence section 143(1), talking of making adjustment as addition of income, cannot apply, is jettisoned. It is clear from Form No.26AS that net sum of Rs.11.76 lakh was credited to the assessee s account and deduction of tax at source was made - The assessee did not offer any income on this score in the income-tax return. Section 143(1) of the Act provides for processing of the return. Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1). Reverting to the facts, the assessee received a sum towards premature surrender of life insurance policy and the amount of premium paid was Rs.8.00 lakh. The resultant income is Rs.4,07,419/-, which calls for adjustment in the intimation u/s.143(1) of the Act. With another negative interest income of Rs.31,419 in Form No. 26AS, which was reduced by the AO himself, the further sustainable amount of the adjustment comes to Rs.3,76,000/-. Assessee appeal is partly allowed. - ITA No.11/NAG/2022 - - - Dated:- 19-10-2022 - Shri R.S. Syal, Vice President For the Assessee : Shri Kapil Hirani For the Revenue : Shri G.J. Ninawe ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 06- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs.12,075/-. The assessee did not offer any income on this score in the income-tax return. Section 143(1) of the Act provides for processing of the return. Clause (a) states that the total income or loss shall be computed after making certain adjustments to the income returned. Sub-clause (vi) of clause (a) provides for such an adjustment on account of addition of income appearing in Form No.26AS ..... which has not been included in computing the total income in the return . A bare perusal of the provision transpires that any income appearing in Form No.26AS which has not been included in the total income by the assessee will call for adjustment u/s.143(1) of the Act. Form No.26AS, in the present context, has its genesis to section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latively lower rate. In such cases, deduction of tax remains towards income albeit calculated on the gross sum. One of such examples is section 194DA, which provides for deducting tax at source on the gross sum paid but a lower rate of 1%. Thus deduction of tax at source on the sum paid under a life insurance policy does not convert the income portion embedded in such sum into non-income. When I turn to section 143(1)(a)(vi) referring to addition of income appearing in Form No.26AS which have not been included by the assessee in the total income in the return, there remains no doubt whatsoever that it talks of making adjustment of income directly received as such; or as comprised in the gross sum on which tax has been deducted at sour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the premium payable for any of the years during the term of the policy exceeds 20% of the capital sum assured. This deciphers that if an insurance policy is issued before 31.3.2012 whose annual premium is more than 20% of sum assured, the sum received under such policy would be subjected to tax and will not qualify for exemption. 11. Turning to the facts of the extant case, it is seen that the date of commencement of the policy is 30-08-2011 with the amount of premium at Rs.8.00 lakh and sum assured at Rs.16.00 lakh. Such premium exceeds 20% of the sum assured. The sum of Rs.12,07,419/- received by the assessee on the premature surrender of life insurance policy falls in exception clause (c) of section 10(10D). As such, the obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be exempt under this clause. 13. The interpretation of the provision makes it manifest that exemption under section 10(10D) does not apply if the conditions of clause (c) are satisfied, in which case the income becomes chargeable to tax. However, the quantum of taxable income, as explained in the Circular is: `the income accruing on such policies (not including the premium paid by the assessee) . In the hue of the above, it is patent that though deduction of tax at source u/s 194DA is contemplated on the gross amount paid under a life insurance policy, but the income is such sum received as reduced by the amount of premium paid. Section 143(1) provides for making adjustment by way of `addition of income appearing in Form no. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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