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Insurance Premium paid which wasn’t claimed Deduction u/s 80C can’t be taxed: ITAT

Insurance Premium - Insurance Premium claimed deduction - us 80C - Insurance Premium cannot be taxed - ITAT - Taxscan

The Bangalore Bench Income Tax Appellate Tribunal (ITAT) ruled that the insurance premium paid which wasn’t claimed deduction under section 80C of the Income Tax Act,1961 cannot be taxed.

The appellant challenged the order of CIT(A), NFAC dated 13.7.2022 for the assessment year 2017-18. The appellant, Kantilal Jain filed his return of income for Assessment Year (AY)2017-18 on 05.08.2017 vide Ack. No. 146483630050817 declaring a total income of Rs.16,13,080/- after claiming deductions under Chapter Vl-A of the Income Tax Act of Rs. 1,60,000/-.

The total income of the appellant included Income from Salary, House property and Income from other sources which included interest income of Rs. 3,30,282/- and income of Rs. 4,78,000/- out of LIC maturity proceeds. Total tax payable in the return of income amounted to Rs. 3,34,331/-, which was paid via advance tax Rs. 32,000/-, Tax deducted at source Rs. 1,21,659/- and self-assessment tax Rs. 1,80,672/- 

The assessee took a Life Insurance Policy for a period of 10 years in the financial year 2006-07.  The assessee has paid half yearly premium of Rs.1,06,275/- for 5 years totalling Rs.10,62,750/-, wherein the annual premium exceeded 10% of the sum assured and therefore the maturity proceeds were not exempted u/s 10 (10D) of the Act.

 The assessee offered an excess amount of Rs.62,750/-. The Form No.26AS reflects Rs.17,74,288/- and assessee disclosed only Rs.8,08,282/-.  The assessee contended that he is only liable for the net amount issued from maturity of the life insurance policy at Rs.4,15,250/- only and the CPC committed an error in taxing the entire amount of Rs.14,78,000/-.  Further contended that the premium at Rs.10,62,750/- paid was included in maturity value which cannot be brought to tax. 

The Single member bench consists of Shri Chandra Poojari, Accountant member observed that the error has happened because the tax has been deducted on the entire amount contemplated u/s 194DA of the Act which was noticed while increasing the TDS rate from 1% to 5% albeit, in the financial bill 2019.

The Tribunal viewed that the contention of the assessee in respect of premium paid to the insurance company cannot be brought to tax subject to the fact that the assessee shall not avail deduction u/s 80C of the Act in respect of premium paid towards that insurance policy.

The issue was remitted to the file of AO to consider only the net amount to taxation provided the assessee has not claimed deduction u/s 80C of the Act in respect of premium paid on the life insurance policy or claimed any deduction u/s 10(10D) of the Act partly allowed the appeal filed by the assessee.

Shri B.R. Sudheendra appeared for the appellant and Shri Ganesh R. Ghale appeared for the respondent.

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Kantilal Jain Vs ITO Ward-3(3)(1) Bangalore

Case Number:   ITA No.579/Bang/2022

Date of Judgement:   18.08.2022

Counsel for Appellant:   B.R. Sudheendra, A.R.

Counsel for Respondent:   Ganesh R. Ghale,


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