Case Law Details
Drupad Menda Vs PCIT (ITAT Mumbai)
Keyman Insurance Policy : AO Taken possible view- PCIT not justified in initiating revision proceedings
In the case of Drupad Menda vs. PCIT (ITAT Mumbai), a critical matter has been brought before the Income Tax Appellate Tribunal (ITAT) in Mumbai. The central issue at hand is the revision order passed by the Ld PCIT-5, Mumbai, under Section 263 of the Income-tax Act, 1961, for the assessment year 2018-19. The appeal challenges the validity of the revision order initiated by the Ld PCIT.
Detailed Analysis: The assessment for the assessment year 2018-19 was initially completed by the Assessing Officer (AO) under Section 143(3) of the Income-tax Act on November 4, 2020. The assessment was taken up for scrutiny to verify a “large deduction claimed under Section 57 of the Act.” However, the AO did not make any additions in respect of this deduction. Subsequently, the Ld PCIT, upon reviewing the assessment record, considered the assessment order erroneous and prejudicial to the interests of revenue because the AO did not disallow the deduction claimed by the assessee. As a result, the Ld PCIT initiated revision proceedings under Section 263 of the Act.
The matter revolves around a “large deduction claimed under Section 57 of the Act.” The assessee is a director in a company named “M/s JMD Auto India P Ltd.” The company had taken a Keyman Insurance Policy in the name of the assessee. During the relevant year, the policy was surrendered, and the assessee received a sum of Rs. 46,89,087 from the insurance company. TDS was deducted from this payment in the name of the assessee, reflecting in Form 26AS. The assessee declared this amount as income under the head “Income from Other Sources” and claimed it as a deduction. The contention was that this money belonged to M/s JMD Auto India P Ltd, and it was transferred back to the company, hence claimed as a deduction by the assessee.
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