BALBIRSINGH BALWANTSINGH CHHABRA ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -3(1)(1), MUMBAI

ITA 2295/MUM/2025Status: DisposedITAT Mumbai29 August 2025AY 2016-17Bench: Shri Narender Kumar Choudhry (Judicial Member), Shri Omkareshwar Chidara ( (Accountant Member)4 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that while the amendment treating ULIP as a capital asset applied from A.Y. 2021-22, a ULIP policy where the benefit under Section 10(10D) was not taken qualifies as a 'capital asset' under the broad definition of Section 2(14)(a). Therefore, the appellant is entitled to treat the amount received as capital gains/loss, and the appeal was allowed.

What were the facts?

The appellant received Rs. 15,52,159/- from premature withdrawal of a ULIP and claimed long-term capital loss with indexation, treating it as a capital asset for A.Y. 2016-17. The Ld. CIT(A) rejected this, holding the amount taxable as "Income From Other Sources" on the grounds that ULIP was not a capital asset for that assessment year.

What were the issues?

Whether the premature withdrawal of a ULIP policy, for which benefit under Section 10(10D) was not claimed, should be treated as a capital asset under Section 2(14)(a) allowing for long-term capital loss computation, or as income from other sources for Assessment Year 2016-17.

Which sections of the Income-tax Act were involved?

Section 2(14)(c),Section 2(14)(a),Section 10(10D)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Mumbai “B” Bench, Mumbai.

Before: Shri Narender Kumar Choudhry (JM) & Shri Omkareshwar Chidara (AM)

For Appellant: Shri Leyaqat Ali Aafaqui
Pronounced: 29/08/2025

Per Omkareshwar Chidara (AM) :- The issue of dispute in this appeal is whether the appellant is entitled for claim of long term capital loss on the amount received as (premature withdrawal) of ULIP. During this year, the appellant received an amount of Rs. 15,52,159/- from LIC towards ULIP premium amount paid in earlier years. The appellant claims that he had been paying Rs. 1.8 lakhs per annum for a period of 8 years. The amount received/taken by appellant by foreclosing Unit Linked Insurance Premium (ULIP) was treated as ‘capital asset’ and the appellant applied indexation method applicable to capital assets. The “computation” resulted in long term capital loss of Rs. 4 lakh (approximately). The app

The order continues below.

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