The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has directed the Assessing Officer (AO) to delete the addition of 1.43 crore on ground that maturity Life Insurance Corporation (LIC) amounts are exempted from taxability under section 10(10D) of Income Tax Act, 1961.
The assessee filed his return of income, declaring total income of INR 64, 76,000/- on 08.10.2016. The case of the assessee was selected for scrutiny assessment. During the course of assessment proceedings, the Assessing Officer (AO) noticed that the assessee had claimed a sum of INR 1, 46, 00,000/- as exempt income being the maturity proceeds from Life Insurance Corporation of India (“LIC”). The AO did not accept the contention of the assessee and treated the sum as taxable under Section 28(vi) of the Income Tax Act, treating the proceeds under Keyman Insurance policy.
Mr. Gautam Jain, representing the assessee submitted argued that the maturity proceeds were received in the assessment year 2016-17. The insurance policy was under the Keyman Insurance policy taken by M/s. Pratap Parikh Associates, a proprietorship concern in which the assessee was a Keyman. The proprietorship concern was dissolved and the assessee purchased the Keyman Insurance policy from M/s. Pratap Parikh Associates on 22.11.2008 after paying a surrender value amounting to INR 45,54,344/-. Thus, the assessee rightly claimed the amount as exempt under Section 10(10D) of the Income Tax Act as a character of policy had changed way back in the year 2008.
The two member bench of the tribunal comprising N.K Billaya (Accountant member) and Kul Bharat (Judicial member) considered that the authorities below were not justified in denying the benefit of exemption to the assessee. Maturity maturity Life Insurance Corporation (LIC) amounts are exempted from taxability under section 10(10D) of the Income Tax Act, The AO is directed to delete the addition of Rs. 1,43,08,000/-. Accordingly appeal of the assessee was allowed.
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