Case Law Details
Brief of the case
In the case of Suri Sons vs. ACIT – ITAT Amritsar has held that that once life insurance policy has been sold as a life insurance policy on the keyman to the business, as long as it is in the nature of life insurance policy, whether pure life cover or term cover or a growth or guaranteed return policy, it is eligible for coverage of Section 10(10D).
Facts of the case
1. The assesse has claimed a deduction of Rs 1,49,99,222 towards keyman insurance policy on its partner Shri Sanjeev Suri. The Assessing Officer noted that the assesse had taken “united linked endowment assurance plan” and that out of total premium paid by the assesse, only Rs 3,26,293 is towards “risk premium on life” and the balance premium is invested by the insurance company in buying units. The main objective of the insurance policy, thus, was guaranteed returns on the insurance premium amounts, rather than life insurance, and this main objective was to be achieved by investing in units.
2. The Assessing Officer was of the view that a unit linked endowment plan, under Kotak Safe Investment Plan, “cannot be keyman insurance policy as per definition of keyman insurance given in the Income Tax Act”. The AO was of the view that keyman insurance policy can include only a ‘life insurance policy’ and “the scope of cover should not be wider than the term assurance”. The AO concluded that “the policy that has been taken as united linked endowment assurance plan is investment plan, premium of which has been put into growth fund and it is not a pure life insurance policy on the life of another person (emphasis, by underlining, supplied by the Assessing Officer)”.
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