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

ITA 4825/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71012 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RS C TRIPURA SUNDARI
• Section: 10(10D)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH , MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI R AJENDRA SINGH , A M TA NO. 4825 / MUM / 20 1 2 ( ASSESSMENT YEAR : 20 10 - 11 ) ACIT CENT. CIR - 38, MUMBAI - 20 VS. SHRI PRASHANT J. AGARWAL, 315/A, MITTAL PARK, J.M.ROAD, JUHU, MUMBAI - 400 049 . PAN/GIR NO. : A DGPA 2747 K ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : M RS.C.TRIPURA SUNDARI /ASSESSEE BY : MR. VIJAY MEHTA DATE OF HEARING : 3 RD S E PTEMBER , 201 3 DATE OF PRONOUNCEMENT : 6 TH SEP TEMBER , 2013 O R D E R P ER SHRI R.K.G UPTA, JM : THE DEPARTMENT HAS PREFERRED THIS APPEAL AGAINST THE ORDER OF LEARNED CIT(A) , MUMBAI FOR ASSESSMENT YEAR 20 10 - 2011 . 2 . THE DEPARTMENT IN ITS APPEAL HAS RAISED OBJECTION IN REGARD TO HOLDING THA T THE AMOUNT OF RS. 76,00,000/ - RECEIVED BY THE ASSESSEE ON MATURITY OF KEYMAN INSURANCE POLICY IS NOT TAXABLE 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 CLARI FIED THAT SUCH AMOUNT IS TAXABLE IN THE HANDS OF THE RECIPIENT. 3 . BRIEF FACTS OF THE CASE ARE THAT THE AO DURING THE ASSESSMENT PROCEEDING NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 10(10D) ON ACCOUNT OF KEYMAN INSURANCE POLICY PREMIUM I TA NO. 4 825 /1 2 2 RE CEIVED AT RS. 76,00,000/ - . ON REQUIREMENT BY THE AO, THE ASSESSEE FILED DETAILED SUBMISSIONS AND IT WAS SUBMITTED THAT THE KEYMAN INSURANCE POLICY PREMIUM IS EXEMPT UNDER SECTION 10(10D) OF THE ACT, HOWEVER, THE AO WAS NOT SATISFIED. IN HIS VIEW THE AMOUNT RECEIVED UNDER KEYMAN INSURANCE POLICY IS TAXABLE IN THE HANDS OF THE ASSESSEE AS PROFITS IN LIEU OF SALARY. THE AO RELIED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF MC DOWELL & CO. LTD. VS. COMMERCIAL TAX OFFICER, REPORTED IN 154 ITR 148 BY TREATING THE CHANGE OF KEYMAN INSURANCE POLICY TO A NORMAL POLICY AS COLORABLE DEVICE. ACCORDINGLY, THE AO ASSESSED THE AMOUNT RECEIVED ON ACCOUNT KEYMAN INSURANCE POLICY UNDER SECTION 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 AT PAGE 3. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJAN NANDA, REPORTED IN (2012) 349 ITR 8 (DELHI) . AFTER CONSIDERING THE SUBMISSION AND TAKING INTO CONSIDERATION 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 INSURANCE POLICY IS EXEMPT UNDER SECTION 10(10D) . THE FINDINGS OF THE HON BLE 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 HON BLE DELHI HIGH COURT HAS ALSO CONSIDERED THE CBDT CIRCULAR DATED 18 - 2 - 1998, WHICH HAS PERMITTED THIS CONVERSION WHICH IS BINDING ON TH E I TA NO. 4 825 /1 2 3 INCOME TAX DEPARTMENT. 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 C BDT CIRCULAR HAS NOT BEEN CON SIDERED BY THE 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 SUBMITTED THAT EVEN THE PROVISION S OF SECTION 10(10D) HAVE BEEN AMENDED BY THE LEGISLATURE, WHICH IS APPLICABLE FROM 1ST APRIL, 2014. FROM THIS AMENDMENT, IT IS AMPLY PR OVED THAT EARLIER AMOUNT RECEIVED ON ACCOUNT KEYMAN INSURANCE POLICY WAS EXEMPT. IT WAS ALSO SUBMITTED THAT THE AMENDMENT HAS TAKEN PLACE IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF RAJAN NANDA (SUPRA) . THE APPEAL OF THE DEPARTM ENT RELATES TO ASSESSMENT YEAR 2010 - 2011 AND THE DECISION OF THE HON BLE DELHI HIGH COURT IS APPLICABLE ON THE FACTS OF THE PRESENT CASE. ACCORDINGLY, HE STATED THAT THE LEARNED CIT(A) WAS CORRECT IN ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. 7 . WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) , WHO HAS I TA NO. 4 825 /1 2 4 ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECI SION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF RAJAN NANDA (SUPRA) . IDENTICAL ISSUE WAS INVOLVED IN THE AFORESAID CASE AND THE HON BLE DELHI HIGH COURT AFTER CONSIDERING THE PROVISIONS OF SECTION 10(10D) AND THE CBDT CIRCULAR AND ALSO PERUSING THE DEC ISIONS I.E. IN THE CASE OF CIT VS. B.N.EXPORTS, REPORTED IN (2010) 323 ITR 178 (BOM) AND VARIOUS OTHER S , HELD THAT THE AMOUNT RECEIVED ON KEYMAN INSURANCE POLICY IS EXEMPT BY THE SECTION 10(10D) OF THE ACT. THERE IS NO CONTRARY DECISION AVAILABLE TILL DATE . THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDINGS OF THE LEARNED CIT(A), WHO HAS DECIDED THE ISSUE FOLLOWING THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF RAJAN NANDA (SUPRA) . THE HON BLE DELHI HIGH COURT HAS ALSO TAKEN INTO CONSIDER ATION THE CBDT CIRCULAR AND CAME TO THE CONCLUSION THAT THE AMOUNT RECEIVED ON ACCOUNT OF KEYMAN INSURANCE POLICY IS EXEMPT BY THE SECTION 10(10D) OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) . 8 . RESULTANTLY , APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF SEPT . 201 3 . SD/ - ( ) ( R AJENDRA SINGH ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 06/ 09 / 2013 /PKM , PS I TA NO. 4 825 /1 2 5 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE C I T(A) , MUMBAI . 4. / C I T 5. / DR, ITAT, MUMBAI . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( /ASSTT. REGISTRAR) / ITAT, MUMBAI