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Issues involved: Whether the maturity value of Life Insurance received by the assessee from American Life Insurance Company is exempt u/s 10(10D) of the I T Act or not.
Summary: Issue 1: The Assessing Officer taxed the maturity value of Life Insurance received by the assessee from American Life Insurance Company on the grounds that the policy was not taken from any Indian Life Insurance Company as per section 2(28BB) of the I T Act. Issue 2: The CIT(A) confirmed the action of the Assessing Officer, leading to the appeal by the assessee. Details for Issue 1: The assessee received a sum of US $9441.98 from National Bank of Abu Dhabi, equivalent to Rs. 4,16,200. The Assessing Officer held that provisions of sec. 10(10D) of the I T Act did not apply since the policy was not taken from an Indian Life Insurance Company. Details for Issue 2: The assessee's representative argued that the amount received from the American Life Insurance Company should be exempt u/s 10(10D) as it falls under the provisions of the clause. The representative also contended that the amount is a capital receipt and not a revenue receipt, hence not taxable. Analysis: The tribunal considered the provisions of sec. 10(10D) which allow exemption for any sum received under a Life Insurance Policy, without specifying that it must be from an Indian insurance company. The tribunal emphasized that the term 'insurer' was not used in sec. 10(10D), indicating no restriction to Indian insurance companies. Therefore, the tribunal held that the assessee is entitled to deduction u/s 10(10D) for the sum received under the Life Insurance Policy from American Life Insurance Company. Conclusion: The tribunal allowed the appeal filed by the assessee, setting aside the orders of the lower authorities regarding the taxation of the maturity value of the Life Insurance Policy.
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