Pension policy surrender proceeds and Section 80CCC(2) blocked taxation as other sources income, with reassessment addition deleted.

Premature surrender proceeds of a pension policy were held not taxable as income from other sources under Section 56 where Section 80CCC(2) governed the statutory treatment of the receipt. The Tribunal noted that the assessee had made pension fund contributions in earlier years and that the Assessing Officer had not examined the matter in the correct legal perspective or properly considered the supporting submissions and documents. On that reasoning, the reassessment-based addition was deleted, and the receipt was treated as not taxable in the manner adopted by the revenue.

---

---

Issues: Whether the amount received on premature surrender of a pension policy could be taxed as income from other sources under Section 56 despite the operation of Section 80CCC(2), and whether the reassessment-based addition could be sustained.

Analysis: The assessee had contributed to a pension fund in earlier years and received the disputed amount on premature surrender of the policy. The addition was made by treating the receipt as income under Section 56 of the Income-tax Act, 1961, but the statutory setting of Section 80CCC(2) and the character of the receipt showed that the amount could not be brought to tax in the manner adopted by the Assessing Officer. The record also showed that the matter was not examined in the correct legal perspective and the submissions and supporting documents were not properly considered.

Conclusion: The addition was deleted and the issue was decided in favour of the assessee.

---