TaxTMI 
TaxTMI 
2025 (7) TMI 1505
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....aken a life insurance policy of Reliance Life Insurance issued on 31.03.2011. The sum assured was for Rs. 20,00,000/- and single premium paid in the year of issue was Rs. 5,00,000/-. During the year relevant to AY- 2017-18, the appellant surrendered the policy and received maturity proceeds of Rs. 7,41,718/-. Tax was also deducted at source u/s 194DA of the Act on such maturity proceeds. The appellant had claimed the receipts as exempt from tax u/s 10(10D) of the Act but while processing the return u/s 143(1), CPC included the amount within total income. As per the provisions of section 10(10D)(c) of the Act, any amount received under an insurance policy issued in between 01.04.2003 and 31.03.2012, in respect of which premium payable for any of the year during the term of the policy exceeds 20% of the actual capital sum assured shall not be eligible for exemption under this section. In the appellant's case, the policy was issued on 31.03.2011, capital sum assured was Rs. 20,00,000/- and single premium payable in the first year was Rs. 5,00,000/-. Since the one-year premium payable was more than 20% of the capital sum assured, the maturity proceeds receivable on such policy was ....
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....ling of this appeal. If yes, the conclusion drawn therein with a copy of the order. Ans: No, the appellant was not scrutinized under section 143(3), hence no order. Q3. Whether any intimation was given to you as per the 1st proviso to sec. 143(1)(a) before making adjustment to returned income and evidence thereof. If yes, copy of such intimation. Ans: Yes, intimation in terms of 1st proviso to sec. 143(1)(a) before making adjustment was given to the appellant on dt.21.05.2018 but the exact reasons and details as to why such addition was proposed was missing. Copy of such intimation is attached herewith as Annex-1. From the details of such communication, it can be seen that no E-mail ID has been mentioned in such Communication. Q4. If intimation as mentioned above in (3) was given to you whether you had complied to it and if yes, copy of such compliance. Ans: The appellant filed rectified returns u/s 154 but it was processed with same results and Copy of the same was not received by the appellant nor it is Downloadable form ITBA. Q5. The relevant portion of TAR and / or ITR where the facts and figures are reported on the basis of....
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....selected for scrutiny and an assessment under Section 143(3) ought to have been made to Assessee the correct income. While making such contention the appellant had relied on the Decision of Hon'ble ITAT Bench Kolkata in the case of Anita Seth Vs. DCIT, CPC, Bengaluru ITA No.109/Kol/2022 AY 2017-18 Pronounced on dated 18.04.2022. The ratio of the case is applicable in this case. In the decided case CPC made adjustment based on information in 26AS Statement about TDS and the Hon'ble bench decided that n issue, which raises a question of fact and can be done only on scrutiny Assessment u/s. 143(3) of the Act or by reopening of assessment u/s. 147 of the Act. 1.4 It is an established legal position that an addition made by the CPC under Section 143(1) based on Form 26AS is beyond its jurisdiction, as it required adjudication of legal provisions under Section 10(10D). CPC is only empowered to make prima facie adjustments, and any issue requiring interpretation of law or factual verification must be addressed through scrutiny assessment under Section 143(3). As the adjustment made by CPC was not a simple computational correction but required legal interpretation....
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.... not hit by Section 80C (5). M/s Reliance Nippon was not liable to deduct TDS on the LIC maturity proceeds u/s 194DA and because of their mistake the appellant cannot be Penalized. 3.2 Form 26AS merely reflects tax deducted at source (TDS) but does not determine whether an income is actually taxable. Form 26AS is only a tool for reconciliation and cannot be treated as conclusive proof of income receipt. 3.3 Thus, CPC erred in relying upon the information available on the 26AS statement that the Gross amount is taxable and ignored to verify whether it is exempt u/s. 10(10D). 3.4 Therefore, the addition made is liable to be deleted. 4: Necessary direction may be made to the concerned authorities against the wrongful deduction of TDS made by the insurance company which caused hardship to the Appellant. 4.1 It is a settled principle that TDS should only be deducted where expressly mandated by law. The wrongful deduction of TDS on exempt maturity proceeds by the insurance company reflects a misinterpretation of the applicable provisions and a failure to exercise due diligence. 4.2 Additionally, relief should be granted to the Appella....
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....nd to be genuine and acceptable. The delay in filing of appeal is therefore condoned and appeal admitted. 5.3 The appellant has raised several grounds of appeal, all of which are however against the single issue of taxing the maturity proceeds received from life insurance policy upon its surrender. Facts involved in the issue is that the appellant is an individual and had taken a life insurance policy of Reliance Life Insurance issued on 31.03.2011. The sum assured was for Rs. 20,00,000/- and single premium paid in the year of issue was Rs. 5,00,000/-. During the year relevant to AY-2017-18, the appellant surrendered the policy and received maturity proceeds of Rs. 7,41,718/-. Tax was also deducted at source u/s 194DA of the Act on such maturity proceeds. The appellant had claimed the receipts as exempt from tax u/s 10(10D) of the Act but while processing the return u/s 143(1), CPC included the amount within total income. As per the provisions of section 10(10D)(c) of the Act, any amount received under an insurance policy issued in between 01.04.2003 and 31.03.2012, in respect of which premium payable for any of the year during the term of the policy exceeds 20% of the act....
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.... received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than- (a) any sum received under sub-section (3) of section 80DD or subsection (3) of section 80DDA; or (b) any sum received under a Keyman insurance policy; or (c) any sum received under an insurance policy issued on or after the 1st day of April, 2003 but on or before the 31st day of March, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured; or (d) any sum received under an insurance policy issued on or after the 1st day of April, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten per cent of the actual capital sum assured:" 8. The Ld. Sr. DR had submitted that the present matter entails as per Section 10(10D) sub-clause (c) of the Act which suggests ".............in respect of which the premium payable...........". Essentially the determination whether such receipt from insurance policy would form part of the total income or not is based on the premium payable. However, the fact....
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....d in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. 15. In the result, appeal of the assessee is allowed." 9. Similarly, in the decision of Hon'ble High Court of Allahabad in the case of Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, reported in (2018) 407 ITR 254 (All) which decision was referred to and applied in the earlier decision of the Coordinate Bench of Delhi (supra), the Hon'ble High Court of Allahabad held as follows: "In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that "it is clear that under the provisions of Section 68....