AO to Reconsider Alleged Double Taxation of Keyman Proceeds: ITAT Kolkata

Bijay Kumar Agarwal Vs ITO (ITAT Kolkata)

Summary: The Kolkata Bench of the Income Tax Appellate Tribunal considered an assessee’s appeal concerning alleged double taxation of maturity proceeds received from two Keyman Insurance policies for Assessment Year 2017-18. The assessee originally filed his return on 04.12.2017 and revised it on 07.07.2018, declaring total income of ₹50,07,740. While processing the return under Section 143(1) of the Income Tax Act, 1961, the Centralized Processing Centre computed total income at ₹1,68,83,670 after adding ₹1,18,75,930 towards LIC maturity proceeds of Keyman Insurance Scheme under the head “Income from Other Sources”. The assessee maintained that the proceeds had already been offered to tax under the head “Income from Salary”. A subsequent rectification order under Section 154 dated 30.01.2020 made no change to the addition. The Addl/JCIT(A) dismissed the assessee’s appeal after observing that corroborative evidence had not been furnished along with Form No. 26AS and that no regular salary income had been shown.

Before the Tribunal, the assessee sought remand of the issue to the Assessing Officer, contending that the Keyman insurance maturity proceeds had already been included under “Income from Salary” and were again added under “Income from Other Sources”, resulting in double taxation of the same receipt. The Statement of Facts recorded that two policies had yielded maturity amounts of ₹39,17,322 and ₹79,62,500, totalling ₹1,18,79,822, on which TDS of ₹1,18,798 had been deducted. The policies had originally been taken by Esquire Finvest and Trading Private Limited and Shree Jhalaria Dealers Private Limited. The assessee stated that he had paid the surrender value, the policies were transferred to his name, and the difference between the maturity amount and acquisition cost was shown under the salary head.