Accretion on Surrender of ULIP Policy Taxable as ‘Capital Gains’

Mihir K. Jhaveri Vs CIT (ITAT Mumbai) Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai has recently ruled in the case of Mihir K. Jhaveri Vs CIT that the investment in a Unit-Linked Insurance Plan (ULIP) policy must be treated as a ‘Capital Asset’ under Section 2(14) of the Income Tax Act. Moreover, the accretion on the surrender of the policy is to be taxed under ‘Income from Capital Gains’, not ‘Income from Other Sources’. Analysis: The case revolves around a critical tax issue – whether the Unit-Linked Insurance Plan (ULIP) should be de...