Strict construction of exemption claims bars relief on premature surrender of a pension-linked insurance plan.

Premature surrender of a Unit Linked Insurance Pension Plan did not qualify for exemption under section 10(23AAB) because the assessee had not fulfilled the statutory conditions attached to that relief. Exemption provisions were required to be construed strictly, and the assessee had the burden of showing that the receipt fell squarely within the provision. Arguments based on the capital nature of the principal investment and the absence of an earlier deduction could not override the statutory language. The surrender proceeds were therefore taxable under the charging provisions, and the addition was sustained.

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Issues: Whether the amount received on premature surrender of a Unit Linked Insurance Pension Plan was eligible for exemption under section 10(23AAB) of the Income-tax Act, 1961.

Analysis: The assessee had surrendered the pension policy before fulfilling the statutory conditions for exemption. The claim that the principal investment could not be taxed, and that no deduction had earlier been claimed, was rejected because exemption provisions must be construed strictly. The assessee bears the burden of showing that the case falls squarely within the exemption and equitable considerations cannot override the clear language of the statute. Since the conditions of section 10(23AAB) were not satisfied, the receipt was liable to tax under the charging provisions as applied by the Assessing Officer.

Conclusion: The exemption under section 10(23AAB) was not available and the addition was rightly sustained.

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