ASST CIT CC 38, MUMBAI V. AMAN J AGARWAL, MUMBAI

ITA 4824/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5657 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Section: 10(10D)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , / , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER . / ITA NO. 4824/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2010-11 THE ACIT, CC-38, ROOM NO.32(1), GROUND FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020. ' ' ' ' / VS. SHRI AMAN J. AGARWAL, 316/A, MITTAL PARK, J.M.ROAD, JUHU, MUMBAI 400 049. $ ./ % ./ PAN/GIR NO. : ADHPA 6018J ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) APPELLANT BY : SHRI M.L.PERUMAL RESPONDENT BY : SHRI ANUJ KISNADWALA ' ) *+ / DATE OF HEARING : 27/02/2014 ,# ) *+ / DATE OF PRONOUNCEMENT : 27/02/2014 - / O R D E R PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-41 MUMBAI DATED 16/05/2012 FOR THE ASSESSMENT YEAR 2010-11. THE GROUNDS OF APPEAL READ AS UNDER: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT AMOUNT OF RS. 76,00,000 RECEIVED BY THE ASSESSEE ON MATURITY OF KEYMAN INSURANCE PO LILCY IS NOT TAXABLE AND IS EXEMPT UNDER SECTION 10(1OD) OF THE INCOME T AX ACT IGNORING THE CIRCULAR NO. 762 DATED 18/02/1 998 ISSUE BY CBDT WH EREIN IT WAS CLARIFIED THAT SUCH AMOUNT IS TAXABLE IN THE HANDS OF RECIPIENT. . / ITA NO. 4824/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2010-11 2 (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE BY RELYING ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. RAJAN NANDA 249 CTR 41 WHEN IN THE PRESENT CASE THERE ARE NO EVIDENCE TO SHOW THAT KEYMAN INSURANCE POLICY WAS CONVERTED INT O ANY OTHER KIND OF ANY TIME BEFORE MATURITY. 2. DURING THE COURSE OF HEARING IT WAS BROUGHT TO O UR NOTICE THAT IN THE CASE OF BROTHER OF THE ASSESSEE SIMILAR ADDITION WAS MADE AND ITS DELETION BY LD. CIT(A) WAS SUBJECT MATTER OF APPEAL FILED BEFORE TH E TRIBUNAL AND THE SAID APPEAL WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER D ATED 6/9/2013 IN ITA NO.4825/MUM/2012. COPY OF ORDER WAS PRODUCED BEFOR E US AND WAS ALSO GIVEN TO LD. DR, WHO RELIED UPON THE ORDER PASSED BY LD. AO. FOR THE SAKE OF COMPLETION OF FACTS AS WELL AS DECISION OF THE TRI BUNAL THE SAID ORDER IS REPRODUCED BELOW: THE DEPARTMENT HAS PREFERRED THIS APPEAL AGAINST T HE ORDER OF LEARNED CIT(A), MUMBAI FOR ASSESSMENT YEAR 2010-201 1. 2 . THE DEPARTMENT IN ITS APPEAL HAS RAISED OBJECTION IN REGARD TO HOLDING THAT THE AMOUNT OF RS.76,00,000/- RECEIVED BY THE ASSESSEE ON MATURITY OF KEYMAN INSURANCE POLICY IS NOT TAXABL E AND IS EXEMPT UNDER SECTION 10(10D) OF THE INCOME TAX ACT IGNORING THE CIRCULAR NO.762 DATED 18-2-1998 ISSUED BY THE CBDT, WHEREIN IT WAS CLARIF IED THAT SUCH AMOUNT IS TAXABLE IN THE HANDS OF THE RECIPIENT. 3 . BRIEF FACTS OF THE CASE ARE THAT THE AO DURING TH E ASSESSMENT PROCEEDING NOTED THAT THE ASSESSEE HAS CLAIMED DEDU CTION UNDER SECTION 10(10D) ON ACCOUNT OF KEYMAN INSURANCE POLICY PREMI UM RECEIVED AT RS.76,00,000/-. ON REQUIREMENT BY THE AO, THE ASSES SEE FILED DETAILED SUBMISSIONS AND IT WAS SUBMITTED THAT THE KEYMAN IN SURANCE POLICY PREMIUM IS EXEMPT UNDER SECTION 10(10D) OF THE ACT, HOWEVER, THE AO WAS NOT SATISFIED. IN HIS VIEW THE AMOUNT RECEIVED UNDE R KEYMAN INSURANCE POLICY IS TAXABLE IN THE HANDS OF THE ASSESSEE AS P ROFITS IN LIEU OF SALARY. THE AO RELIED ON THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF MC DOWELL & CO. LTD. VS. COMMERCIAL TAX OFFICER, RE PORTED IN 154 ITR 148 BY TREATING THE CHANGE OF KEYMAN INSURANCE POLICY TO A NORMAL POLICY AS COLORABLE DEVICE. ACCORDINGLY, THE AO ASS ESSED THE AMOUNT RECEIVED ON ACCOUNT KEYMAN INSURANCE POLICY UNDER S ECTION 56(2)(IV) OF THE ACT. 4 . DETAILED SUBMISSIONS WERE FILED BEFORE THE CIT(A) , WHICH ARE REPRODUCED IN THE ORDER OF THE CIT(A) IN PARA 1.3 A T PAGE 3. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS. RAJAN NANDA, REPORTED IN (2012) 349 ITR 8 (DELH I) . AFTER . / ITA NO. 4824/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2010-11 3 CONSIDERING THE SUBMISSION AND TAKING INTO CONSIDER ATION THE DECISION OF THE HONBLE DELHI HIGH COURT, THE CIT(A) FOUND THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON ACCOUNT OF MATURITY OF KEYMAN INSUR ANCE POLICY IS EXEMPT UNDER SECTION 10(10D). THE FINDINGS OF THE HONBLE DELHI HIGH COURT HAVE ALSO BEEN REPRODUCED IN THE ORDER OF CIT(A) IN PARA 1.4 AT PAGES 4 & 5. LEARNED CIT(A) ALSO NOTED THAT THE HONBLE DELHI HI GH COURT HAS ALSO CONSIDERED THE CBDT CIRCULAR DATED 18-2-1998, WHICH HAS PERMITTED THIS CONVERSION WHICH IS BINDING ON THE INCOME TAX DEPAR TMENT. ACCORDINGLY, HE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. NOW , THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5. LEARNED DR PLACED RELIANCE ON THE ORDER OF AO. IT WAS FURTHER STATED THAT THE CBDT CIRCULAR HAS NOT BEEN CONSIDERED BY T HE CIT(A) WHILE ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. 6. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE STATED THAT THE CIT(A) WAS RIGHT IN ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF RAJAN NANDA (SUPRA) , COPY OF WHICH HAS ALSO BEEN FILED. IT WAS FURTHER S UBMITTED THAT EVEN THE PROVISIONS OF SECTION 10(10D) HAVE BEEN AMENDED BY THE LEGISLATURE, WHICH IS APPLICABLE FROM 1ST APRIL, 2014. FROM THIS AMENDMENT, IT IS AMPLY PROVED THAT EARLIER AMOUNT RECEIVED ON ACCOUNT KEYM AN INSURANCE POLICY WAS EXEMPT. IT WAS ALSO SUBMITTED THAT THE AMENDME NT HAS TAKEN PLACE IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH C OURT IN THE CASE OF RAJAN NANDA (SUPRA) . THE APPEAL OF THE DEPARTMENT RELATES TO ASSESSMEN T YEAR 2010-2011 AND THE DECISION OF THE HONBLE DELHI HIG H COURT IS APPLICABLE ON THE FACTS OF THE PRESENT CASE. ACCORDINGLY, HE S TATED THAT THE LEARNED CIT(A) WAS CORRECT IN ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THE M CAREFULLY. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE M ATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CI T(A), WHO HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RAJAN NANDA (SUPRA) . IDENTICAL ISSUE WAS INVOLVED IN THE AFORESAID CASE AND THE HONBLE DELH I HIGH COURT AFTER CONSIDERING THE PROVISIONS OF SECTION 10(10D) AND T HE CBDT CIRCULAR AND ALSO PERUSING THE DECISIONS I.E. IN THE CASE OF CIT VS. B.N.EXPORTS, REPORTED IN (2010) 323 ITR 178 (BOM) AND VARIOUS OTHERS, HELD THAT THE AMOUNT RECEIVED ON KEYMAN INSURANCE POLICY IS EXEMP T BY THE SECTION 10(10D) OF THE ACT. THERE IS NO CONTRARY DECISION A VAILABLE TILL DATE. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FIN DINGS OF THE LEARNED CIT(A), WHO HAS DECIDED THE ISSUE FOLLOWING THE DEC ISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RAJAN NANDA (SUPRA) . THE HONBLE DELHI HIGH COURT HAS ALSO TAKEN INTO CONSIDERATION THE CB DT CIRCULAR AND CAME TO THE CONCLUSION THAT THE AMOUNT RECEIVED ON ACCOU NT OF KEYMAN INSURANCE POLICY IS EXEMPT BY THE SECTION10(10D) OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A). 8 . RESULTANTLY, APPEAL OF THE DEPARTMENT IS DISMISSED. . / ITA NO. 4824/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2010-11 4 3. IN THIS VIEW OF THE SITUATION, AFTER HEARING BO TH THE PARTIES, WE PASS SIMILAR ORDER AND DISMISS DEPARTMENTAL APPEAL. 4. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2014 - ) ,# . /'0 27/02/2014 ) 1 SD/- SD/- ( / SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; /' DATED 27/02/2014 - - - - ) )) ) '*2 '*2 '*2 '*2 32#* 32#* 32#* 32#* / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 251 '*' , , / DR, ITAT, MUMBAI 6. 16 7 / GUARD FILE. -' -' -' -' / BY ORDER, (2* '* //TRUE COPY// 8 88 8 / 9 9 9 9 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS