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TMI Blog2015 (2) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... ets converted into an ordinary policy. Contracting parties also change inasmuch as after the assignment which is accepted by the insurance, the contract is now between the insurance company and the individual and not the company/employer no more remains the contracting parties. We have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to conversion and the character of policy changes. The insurance company has itself clarified that on assignment, it does not remain a keyman policy and gets converted into an ordinary policy. In these circumstances, it is not open to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 232/2011, wherein it was, inter-alia, clarified that on assignment the key man insurance policy gets converted into an ordinary policy and it is not open to the revenue to allege that the policy in question is a key man policy and when it matures, the advantage drawn from them is taxable. It was further observed by the Hon ble Delhi High Court that no doubt the company as well as individual had taken huge benefit of the tax provision but same is allowable and exempt u/s 10(10D) of the Act. 3.1 Being aggrieved with the order of ld. CIT(A), the Department is in appeal before us and has taken following grounds of appeal: 1. In the facts and circumstances of the case the ld. CIT(A) has erred in deleting the addition made by the AO on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 11320445 1/4/2002 3.00cr 2,13,78,810 1,06,89,405 4,06,40,367 15/04/2007 4 113670387 1/9/2002 5.00cr 2,80,49,025 93,49,675 3,46,65,750 1/9/2012 5 113670388 1/9/2002 5.00cr 2,80,49,025 93,49,675 3,46,65,750 1/9/2012 6 113675876 28/3/2003 5.00cr 1,87,91,512 1,87,91,512 3,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the years preceding the assessment year in question. The Tribunal took note of the certificate obtained by the assessee from the LIC whereby it had certified that a Keyman insurance policy after assignment assumed the status of an ordinary insurance policy. The Tribunal also took note of the relevant provisions of the Act and the aforesaid CBDT Circular to hold as under: All this shows that from the time of taking out the policy upto its maturity, the Legislature has envisaged the treatment to be given with regard to sums involved in the hands of the players involved. The players involved obviously are two-one, the person on the life of whom the insurance policy is taken out and second the person who takes out such policy. The prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubjected to tax. 53. Once there is no assignment of company/employer in favour of the individual, the character of the insurance policy changes and it gets converted into an ordinary policy. Contracting parties also change inasmuch as after the assignment which is accepted by the insurance, the contract is now between the insurance company and the individual and not the company/employer no more remains the contracting parties. We have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to conversion and the character of policy changes. The insurance company has itsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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