9911796707
TMI Blog2022 (3) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... aturity proceeds received from LIC to determine the correct taxable income." 4. Brief facts of the case are that as per the statement of facts is that the assessee is an individual and promoter director of M/s. Rinki Plastic Private Limited. The assessee had availed bank finance for his company for manufacturing of epvc pipe and pipe fittings etc. As a condition for giving loan, the banker had asked the promoter director to avail life insurance policy entailing single premium policy of Rs. 10,00,000/- maturing after 3 years. Accordingly, the assessee had taken the SBI Life Insurance Policy against which he did not claim any benefit of deduction under Sec 80C of the Income Tax Act, 1961 (hereinafter referred to as the "Act"). Since, the assesses did not avail any deduction under Sec 80C of the Act, therefore, he did not include redemption payment of premium amount of Rs. 10,00,000/- in his return of income. However, he had shown appreciation in its maturity payment (Rs. 13,09,000/-) over the premium amount paid by the assessee to the SBI (Rs. 10,00,000/-) as income to the tune of Rs. 3,09,000/- during the year and the same had been disclosed in his return of income. However, when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: 5. Maturity amount from SBI Life Insurance Company Limited; 5.1 In the grounds of appeal the appellant contested that the Assessing Officer at CPC Bangalore erred in considering the return of principal amount from the maturity of life Insurance Policy of Rs. 10,00,000/- as income from Other Sources whereas the appellant did not take the benefit of deduction u/s 80C of the income tax act, 1961 in the year of its contribution. 5.2 In the written submission the appellant stated - (i) The appellant took the policy of Rs. 10,88,000/- against payment of one time premium of Rs. 10,00,000/- from SBI life insurance company limited. (credit of bonus @ 3.25% to policy) (ii) This policy was assigned in favour of the -bank and the maturity proceeds of the policy were directly transferred to the bank. (iii) The insurance company deducted TDS on the full maturity amount of Rs. 13,09,000/- @1% (iv) The appellant had shown the income component of the maturity proceeds as income from other sources in its income tax return. But CPC while processing the return had taken the full maturity proceeds as income of the appellant. (v) This had resulted into double taxation because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee received (Rs. 3,09,000/-) was not allowable as a deduction u/s. 10 of the Act (income not included in total income) and drew our attention to section 10(10D) of the Act (income which do not form part of total income under chapter III) which reads as under: "Chapter III Income which do not form part of total income 10. Income not included in total income In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included (1)..... (2)..... ....... ...... (10D) any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than- (a) ....... (b) ........ (c) ....... (d) Any sum received under an insurance policy issued on or after the 1st day of April, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten percent of the actual capital sum assured." 9. According to the Ld. AR, assessee is not entitled to benefit u/s. 10 of the Act, since the assessee's premium payable exceeds 10% of the actual capital sum assured, so the assessee does not get the benefit of chapter III, sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide for tax deduction at source at the rate of five per cent on income component of the sum paid by the person."[Empasis given] 11. Therefore, according to Ld. AR, the CPC/AO/Ld. CIT(A) erred in not appreciating the legitimate claim of the assessee that only the income component (Rs. 3,09,000/-) in the total LIC Maturity Value of Rs. 13,09,000/- was amenable to tax and the CPC/Ld. CIT(A) erred in adding the premium paid by the assessee to the tune of Rs. 10,00,000/-. 12. Per contra, the Ld. DR submitted that SBI (Payer) has rightly deducted tax at 1% of Rs. 13,09,000/- and the Ld. CIT(A) taking notice that assessee's Insurance Policy would not fall in the ken of sec. 10(10D) of the Act, has rightly upheld the action of CPC which does not deserve any interference on the part of this Tribunal. 13. Having heard both the parties and after perusal of the records it is noted that the assessee has taken a life insurance policy in AY 2012-13 of the SBI of sum assured to the tune of Rs. 10,88,000/- (along with credit bonus of 3.25%) by paying single premium of Rs. 10,00,000/-. And in this year (AY 2017-18), the assessee received the LIC maturity benefit to the tune of Rs. 13,09,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the point of views of tax administration as well, it is preferable to deduct tax on net income so that the income as per TDS return of the deductor can be matched automatically with the return of income filed by the assessee. The person who is paying a sum to a resident under a life insurance policy is aware of the amount of insurance premium paid by the assessee." From a reading of the aforesaid observation as well as taking note of the contention of the assessee, and taking note of the fact that assessee had neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI nor claimed any deduction under section 10(10D) of the Act and offered Rs. 3,09,000/- for tax in his ROI, according to me, no addition was warranted. Therefore in this case only the net amount that is Rs. 3,09,000/- should have been taxed, which assessee has already offered to tax in his ROI. Therefore, in the light of the aforesaid discussions I am of the considered opinion that the assessee's claim is valid and allow the claim of the assessee by directing deletion of the addition of Rs. 10 Lakhs. 14. In the result, the appeal of the assessee is allowed. Order is pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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