Case Law Details
Sandeep Modi Vs DCIT (ITAT Kolkata)
It is noted that the assessee has taken a life insurance policy in AY 2012-13 of the SBI of sum assured to the tune of Rs.10,88,000/- (along with credit bonus of 3.25%) by paying single premium of Rs.10,00,000/-. And in this year (AY 2017-18), the assessee received the LIC maturity benefit to the tune of Rs.13,09,000/-. And the assessee in his Return of Income disclosed the net amount Rs.3,09,000/- (i.e. total receipt of Rs.13,09,000/- minus (-) Rs.10,00,000 premium paid by assessee) as taxable income under the head “Income from Other sources”. It is noted that the assesses neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI, [therefore, he did not include redemption payment of premium amount of Rs. 10,00,000/- in his return of income] nor claimed any deduction under section 10(10D) of the Act and offered Rs 3,09,000/- for tax. However, since SBI (Payer) had deducted 1% TDS on the entire receipt of Rs.13,09,000/- and the CPC while processing the ROI, found that out of Rs.13,09,000/- assessee received (total LIC benefit) the assessee has offered for taxation only Rs.3,09,000/- and therefore added the balance Rs.10,00,000/- as income of the assessee. On appeal, Ld. CIT(A) has confirmed the action of CPC/AO. Before us the claim of the assessee is that only the net amount i..e. Rs.3,09,000/- is taxable (which assessee has offered in his ROI) and the addition of Rs.10,00,000/- is erroneous because it is the premium amount paid by the assessee in AY 2012-13 and the same is his investment which assessee had in his possession/saving being tax paid amount. So, according to assessee in effect the impugned action tantamount to double taxation. It has been pointed out by the Ld. AR that this confusion happened because SBI (Payer) has deducted tax at source of one (1%) on the entire amount as contemplated u/s. 194DA of the Act. And this problem has been taken notice while increasing the TDS rate from 1% to 5% albeit in the Finance Bill 2019 (supra). Having carefully gone through the contents while moving the Bill, I find that the Govt. has taken note of this problem by observing “…..Under section under section 194DA of the Act, a person is obliged to deduct tax at source, if it pays any sum to a resident under a life insurance policy, which is not exempt under sub-section (10D) of section 10. The present requirement is to deduct at the rate of one per cent of such sum at the time of payment. Several concerns have been expressed that deducting tax on gross amount creates difficulties to an assessee who otherwise has to pay tax on net income (i.e after deducting the amount of insurance premium paid by him from the total sum received). From the point of views of tax administration as well, it is preferable to deduct tax on net income so that the income as per TDS return of the deductor can be matched automatically with the return of income filed by the assessee. The person who is paying a sum to a resident under a life insurance policy is aware of the amount of insurance premium paid by the assessee.” From a reading of the aforesaid observation as well as taking note of the contention of the assessee, and taking note of the fact that assessee had neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI nor claimed any deduction under section 10(10D) of the Act and offered Rs 3,09,000/- for tax in his ROI, according to me, no addition was warranted. Therefore in this case only the net amount that is Rs.3,09,000/-should have been taxed, which assessee has already offered to tax in his ROI. Therefore, in the light of the aforesaid discussions I am of the considered opinion that the assessee’s claim is valid and allow the claim of the assessee by directing deletion of the addition of Rs 10 Lakhs.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 22.07.2021 for AY 2017-18.
2. At the outset, it is noticed that this appeal of assessee is time barred by 21 days. However, after going through the reason for the delay caused in filing the appeal, I am inclined to condone the delay and admit the appeal for hearing.
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