TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 1015
X X X X Extracts X X X X
X X X X Extracts X X X X
....were heard together and are disposed off by this common order for the sake of convenience and brevity. 3. We first take up ITA No. 2879/Mum/2024; AY 2018-19 4. Assessee is aggrieved by the disallowance of interest of Rs. 63,48,487/- on the ground that the assessee had earned interest income on his own funds hence the sum had to be disallowed out of total deduction of interest of Rs. 2,02,76,955/-. 4.1. The second grievance of the assessee is relating to the maturity profits from Keyman Insurance Policies which was taxed as profit in lieu of salary. 5. Briefly stated the facts of the case are that the return of income of the assessee was selected for limited scrutiny under the E-assessment scheme on the issue of deductions from income fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oceeding further, the AO noticed that the assessee has shown income from other sources at Rs. 3,64,00,000/- on account of Keyman Policy (KMP) maturity value and claimed deduction u/s 57(iii) of the Act at Rs. 1,66,68,184/- on account of KMP premium paid. It was explained that two Keyman policies were taken out by Shemaroo Entertainment Ltd., for which the company had paid premium of Rs. 9,27,668/- per year per policy from the date of insurance policy and the last insurance premium was paid on 23/02/2011. The policies were assigned to the assessee at the surrender value of Rs. 74,06,424/- per policy on 31/12/2011. Thereafter, the assessee kept the policy alive till 27/03/2012 by yearly payment of premium of Rs. 9,27,668/-. The Keyman Insuran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld. D/R strongly supported the findings of the ld. AO and the ld. CIT(A). 8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the assessee had lent money out of the borrowed funds. Assessee was charging interest @ 12.5% and was paying interest @12%. It is also not in dispute that the assessee has lent out funds out of borrowed capital till October, 2017 on which gross interest received was Rs. 2,02,76,955/-. Thereafter, since November, 2017, the assessee has lent money out of his own funds. The total interest paid by the assessee was Rs. 2,42,26,347/-. Thus, the assessee was eligible for claim of deduction of interest payments totaling to Rs. 2,42,26,347/-. However, a perusal of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant and has made the addition of Rs. 1,43,08,000/-. 5.1 Now before me in the appellate proceedings, the appellant has filed the written submission. I have gone through the written submission. It is to be mention that when show-cause notice was issued to the appellant by the Assessing Officer why Keyman Insurance Policy should not be taxed. The appellant has filed the revised computation of income and has shown Long Term Capital Loss of Rs. 16,30,328/-. The appellant has relied upon various case laws in the written submission. Section 28(vi) is very clear and hence the Assessing Officer has rightly made the addition. Since the legislative intent of the Act and the section 28(vi) is very clear and hence as per interpretation of the statu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al, the character of the insurance policy changes and it gets converted into an ordinary policy. Contracting parties also change inasmuch as after the assignment which is accepted by the insurance, the contract is now between the insurance company and the individual and not the company/employer which initially took the policy. Such company/employer no more remains the contracting parties. We have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to Page | 6 conversion and the character of policy changes. The insurance company has itself clarified that on assignment, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g can be read in Section 10(10D) of the Act, which is not specifically provided because any attempt in that behalf as contended by Revenue would be tantamount to legislation and not interpretation." 11. Therefore, in the light of above-mentioned binding precedents, we are of the considered view that the authorities below were not justified in denying the benefit of exemption to the assessee. We hold accordingly. The AO is directed to delete the addition. The ground raised by the assessee is accordingly, allowed. 10. Similarly, the Co-ordinate Bench in the case of Smt. Harleen Kaur Bhatia vs. PCIT in ITA No.150/Ind/2019, has decided the issue in favour of the assessee. 11. Respectfully following the decision of the Co-ordinate Bench (sup....