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TMI Blog2024 (11) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed Rs. 39,49,392/-, which can cover all the apprehensions of the AO. Therefore, no reason for a further disallowance of Rs. 63,48,487/-. The AO is directed to delete the disallowance.Decided in favour of assessee. Maturity profits from Keyman Insurance Policies which was taxed as profit in lieu of salary - We are of the considered opinion that on identical set of facts, the Co-ordinate Bench in the case of Mihir Parikh [ 2024 (2) TMI 1194 - ITAT DELHI] wherein held benefit inured owing to the combined effect of a prudent investment and statutory exemption provided under Section 10(10D) of the Act, the section does not envisage of any bifurcation in the amount received on maturity on any basis whatsoever. Nothing can be read in Section 10(10D) of the Act, which is not specifically provided because any attempt in that behalf as contended by Revenue would be tantamount to legislation and not interpretation.Therefore, in the light of above-mentioned binding precedents, we are of the considered view that the authorities below were not justified in denying the benefit of exemption to the assessee. Decided in favour of assessee. - Shri Narendra Kumar Billaiya, Hon ble Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,487/- out of his own funds against which deduction on account of interest paid is not allowable in view of the provisions of Section 57 of the Act. Accordingly, the AO disallowed the sum of Rs. 63,48,487/-. 5.2. Proceeding further, the AO noticed that the assessee has shown income from other sources at Rs. 3,64,00,000/- on account of Keyman Policy (KMP) maturity value and claimed deduction u/s 57(iii) of the Act at Rs. 1,66,68,184/- on account of KMP premium paid. It was explained that two Keyman policies were taken out by Shemaroo Entertainment Ltd., for which the company had paid premium of Rs. 9,27,668/- per year per policy from the date of insurance policy and the last insurance premium was paid on 23/02/2011. The policies were assigned to the assessee at the surrender value of Rs. 74,06,424/- per policy on 31/12/2011. Thereafter, the assessee kept the policy alive till 27/03/2012 by yearly payment of premium of Rs. 9,27,668/-. The Keyman Insurance policies matured on 28/02/20218 and the income was declared as income from other sources and surrender value and premium paid till the date of maturity were claimed as deduction from maturity value as per Section 57(iii) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the disallowance of Rs. 63,48,487/-. 9. Coming to the second issue of addition on account of surrender value of Keyman Insurance policy, on perusal of the facts, we are of the considered opinion that on identical set of facts, the Co-ordinate Bench in the case of Mihir Parikh vs. ACIT in ITA No. 2982/Del/2023, has considered and decided the issue as under:- 9. We have heard Ld. Authorized Representatives of the parties and perused the material available on record. Ld. CIT(A) has decided the issue by observing as under:- 5. Decision: In this case, the addition has been made by the Assessing Officer worth Rs. 1,43,08,000/- u/s 28(vi) of the Income Tax Act, 1961. The Assessing Officer held that definition of capital assets as per section 2(14) of the Income Tax Act, 1961, does not have any mention of Keyman Insurance policy. The appellant has held that the insurance policy is a capital asset and has worked out long term capital loss of Rs. 16,30,328/- in respect of maturity proceeds received from Keyman Insurance policy. The Assessing Officer did not agree with the contention of the appellant and has made the addition of Rs. 1,43,08,000/-. 5.1 Now before me in the appellate proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual and not the company/employer which initially took the policy. Such 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 Page | 6 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 the Revenue to still allege that the policy in question is keyman policy and when it matures, the advantage drawn therefrom is taxable. One has to keep in mind on maturity, it does not the company but who is an individual getting the matured value of the insurance. 54. No doubt, the parties here, viz., the company as well as the individual taken huge benefit of these provisions, but it cannot be treated as the case of tax evasion. It is a case of arranging the affairs in such a manner as to avail the state exemption as provided in Section 10(10D) of the Act. Law is clear. Every asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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