2013 (9) TMI 1169 - AT - Income Tax

Summary

Issues involved: Appeal against the order of CIT(A) regarding tax exemption on amount received under Keyman Insurance Policy u/s 10(10D) of the Income Tax Act.

Summary:
The department appealed against the CIT(A)'s decision regarding the taxability of the amount received under a Keyman Insurance Policy. The AO initially assessed the amount as taxable under Section 56(2)(iv) of the Act, considering it as profits in lieu of salary. However, the CIT(A) ruled in favor of the assessee, citing the exemption under Section 10(10D) and the decision of the Hon'ble Delhi High Court in a similar case. The department contended that the CBDT Circular was not considered by the CIT(A). The assessee's counsel argued that the CIT(A) correctly followed the Delhi High Court decision, which influenced the subsequent legislative amendment to Section 10(10D). The ITAT upheld the CIT(A)'s decision, noting no contrary rulings and confirming the tax exemption under Section 10(10D) for the amount received under the Keyman Insurance Policy.

In conclusion, the department's appeal was dismissed, and the CIT(A)'s decision in favor of the assessee was upheld by the ITAT based on the Delhi High Court's precedent and the tax exemption provision u/s 10(10D) of the Income Tax Act.