Assessee has right to plan its affairs in such manner which may result in payment of least tax possible

CIT Vs. Rajan Nanda (Delhi HC)– Every assessee has right to plan its affairs in such a manner which may result in payment of least tax possible, albeit, in conformity with the provisions of Act. It is also permissible to the assessee to take advantage of the gaping holes in the provisions of the Act.  The job of the Court is to simply look at the provisions of the Act and to see whether these provisions allow the assessee to arrange their affairs to ensure lesser payment of tax.

If that is permissible, no further scrutiny is required and this would not amount to tax evasion. 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.

Accordingly, we answer the questions of law as framed in favor of the assessees and against the Revenue. As a result, the appeals of the Revenue are dismissed and those of the assessees are hereby allowed.

Tax treatment of keyman insurance policy

Keyman insurance policy is an insurance policy taken out by a business entity on the life of its employees or key personnel (employees) to safeguard itself against financial loss in the event of death of such employees.

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