Taxpublishers.in - InterestingDecision/IDDTF_234.htm - Tax Publishers Your Tax Solution Hub

Share via Whatsapp 122 Views


Tax Publishers Treatment of Income from non-exempt (under section 10(10D)) ULIP plans prior to insertion of Section 45(1B) vide Finance Act, 2021 w.e.f. 01-04-2021 - whether income from other sources or capital gains *Facts:* Assessee was in receipt of maturity/redemption proceeds from Unit linked insurance plans which he offered as Income from capital gains after claiming indexation benefit on the payment made for the units. Plea of the AO and CIT(A) was that the entire proceeds ought to have been taxed as income from other sources without any benefit of expenditure/cost of units. On higher appeal by the assessee to ITAT - Held in favour of the assessee that the income from maturity/redemption of ULIP's prior to insertion of Section 45(1B) vide Finance Act, 2021 will also need to be treated as Capital gains with indexed cost of acquisition benefit being granted. Section 45(1B) w.e.f. 01-04-2021 reads as under - 45(1B) Notwithstanding anything contained in sub-section (1), where any person receives at any time during any previous year any amount under a unit linked insurance policy, to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth provisos thereof, including the amount allocated by way of bonus on such policy, then, any profits or gains arising from receipt of such amount by such person shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of such person of the previous year in which such amount was received and the income taxable shall be calculated in such manner as may be prescribed.] *Case:* Subhash Tandon v. ITO 2023 TaxPub(DT) 5017 (Del-Trib)

Tax Publishers

Treatment of Income from non-exempt (under section 10(10D)) ULIP plans prior to insertion of Section 45(1B) vide Finance Act, 2021 w.e.f. 01-04-2021 - whether income from other sources or capital gains

Facts:

Assessee was in receipt of maturity/redemption proceeds from Unit linked insurance plans which he offered as Income from capital gains after claiming indexation benefit on the payment made for the units. Plea of the AO and CIT(A) was that the entire proceeds ought to have been taxed as income from other sources without any benefit of expenditure/cost of units. On higher appeal by the assessee to ITAT -

Held in favour of the assessee that the income from maturity/redemption of ULIP's prior to insertion of Section 45(1B) vide Finance Act, 2021 will also need to be treated as Capital gains with indexed cost of acquisition benefit being granted.

Section 45(1B) w.e.f. 01-04-2021 reads as under -

45(1B) Notwithstanding anything contained in sub-section (1), where any person receives at any time during any previous year any amount under a unit linked insurance policy, to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth provisos thereof, including the amount allocated by way of bonus on such policy, then, any profits or gains arising from receipt of such amount by such person shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of such person of the previous year in which such amount was received and the income taxable shall be calculated in such manner as may be prescribed.]

Case: Subhash Tandon v. ITO 2023 TaxPub(DT) 5017 (Del-Trib)