2023 (10) TMI 1227

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....with Section 147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 3. The relevant facts in brief are the Appellant filed return of income for the Assessment Year 2013-14 declaring income of INR 39,07,180/-. On the basis of information received by the Assessing Officer from the Income Tax Department's (Intelligence and Criminal Investigation) Wing, that the Appellant had prematurely surrendered insurance policy bearing number 883065720, 883065721 and 883065772/- on 27/08/2012, 26/12/2012 and 21.03/2013, respectively and had received INR 38,64,799/-, INR 39,94,655/- and INR 41,32,339/-, respectively, as surrender value in respect of the same. The policies surrendered were purchased by the Appellant from LIC of India on 31/03/2008 on payment of premium of INR 25,00,000/- each. Thus, the Appellant has not offered to tax INR 44,91,793/- being difference between aggregate surrender value of INR 1,19,91,793/- and the purchase value of INR 75,00,000/-. The assessment for the Assessment Year 2013-14 was reopened and order under Section 144 read with Section 147 of the Act was passed on 03.12.2019 assessing total income of the Appellant at INR 83,98,970/- after making an ....

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....ant has, being aggrieved by the dismissal of appeal by the CIT(A), preferred the present appeal. 7. Before us, the Learned Authorised Representative for the Appellant reiterated the submission made before the CIT(A). He vehemently contended that the CIT(A) had failed to appreciate the correct facts. The Appellant had essentially made investment and not purchased pension policy. Referring to status report of policy placed at page 13 of the paper-book, the Learned Authorised Representative for Appellant submitted that the Appellant had not taken any cover and the assured sum was 'Nil'. The aforesaid status report of policy no. 883065720 clearly specified number of units (i.e. 233867) and Fund Type (i.e., Bonds). He also relied upon the Letter dated 25/01/2023 issued by the Sr. Branch Manager, LIC to support his contention that the policy taken by the Appellant was in the nature of a Debt Mutual Fund. Learned Authorised Representative for Appellant also placed reliance on the decision of the Ahmadabad Bench of the Tribunal in the case of ACIT - Circle 7, Ahmedabad Vs. Shri Girish Haribhai Trivedi : ITA No. 2966/AHD/2011, Dated 13.07.2012. The Learned Authorised Representative for App....

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....nal in the case of Shri Girish Haribhai Trivedi (supra). In that case the subject matter of consideration before the Tribunal was surrender value received on surrender of investment made the assessee in that case in the ICICI Pru Life Term, a unit linked insurance plan by ICICI Prudential Life Insurance. The Tribunal accepted the alternative contention of the assessee and upheld the order of the CIT(A) holding that the surplus on maturity of the policy was in the nature of Long Term Capital Gains. The relevant extract of the aforesaid decision reads as under: "7. After hearing both the parties and perusing the record we find that ld. CIT(A), after properly appreciating the facts of this case, has passed a well reasoned speaking order by partly allowing the appeal of the assessee. The findings of the ld. CIT(A) has remained uncontroverted by ld. D.R. at the time of hearing before us. Therefore, we are not inclined to interfere with the order passed by ld. CIT(A). For the sake of clarity, the relevant portion of the order of ld. CIT(A) is reproduced as under:- "I have carefully perused the assessment order and the submissions given by the appellant. The brief facts of the case a....

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.... in a unit linked insurance policy in which major portion was invested in mutual funds and accordingly, the surplus on maturity of the policy should be treated as capital gain. Since no security transaction tax has been deducted at the time of transaction by the fund, the benefit of indexation will be available to the appellant. The last payment in the fund was made by the appellant on 25.08.2005 and the policy has been surrendered on 22.08.2007 which shows that the investment was for more than three years for the overall policy and more than one year from the date of last investment. The surplus will, therefore, be treated as long term capital gain on investment in mutual funds. The A.O. is, therefore, directed to take the sale consideration of units as the amount received on account of maturity of the policy and the cost of investment as the amount invested by appellant during the span of 2-3 years i.e. Rs. 18,00,000/- and accordingly work out the long term capital gain and tax payable thereon, if any. The ground of appeal is accordingly partly allowed." (Emphasis Supplied) 10. As was the case in the above decision, the Appellant has held investment for a period of more than....