VINAY PARMANAND HARIANI,MUMBAI vs. ITO INTERNATIONAL TAXATION WARD 2(2)(1), MUMBAI
Facts
The assessee, a non-resident individual, initially failed to file an income tax return, leading the AO to issue a notice under Section 148. The AO made several additions in the draft assessment, including capital gain on the surrender of an insurance policy. The assessee challenged the calculation of this capital gain, arguing a loss instead of a gain, and sought indexation benefit and refund with interest.
Held
The Tribunal held that the AO incorrectly calculated the capital gain on the insurance policy surrender by not allowing the indexation benefit, directly contravening the DRP's directions and the AO's own remand report. The Tribunal upheld the assessee's claim for indexation on capital gain. Regarding the refund with interest, the Tribunal directed the AO to compute and grant any refund due, along with interest, once the correct tax liability is determined, deeming the interest claim premature until then.
Key Issues
1. Whether the Assessing Officer correctly computed capital gain on the surrender of an insurance policy without granting the benefit of indexation despite DRP directions. 2. Whether the assessee is entitled to a refund of tax along with interest.
Sections Cited
148, 143(3), 147, 240, 69, 69A, 142(1), 133(6), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
PER PRASHANT MAHARISHI, AM:
ITA No. 2891/Mum/2024 for A.Y. 2017-18, is filed by the Vinay Parmanand Hariani,[ Assessee/ Appellant] against the assessment order passed by the Income Tax Officer, International tax, ward 2(2)(1), Mumbai dated 21st March, 2024, raising following grounds of appeal:
“On the facts and circumstances of the case and in law:-
The Ld. AO/DRP erred in not allowing the refund along with interest arise to the assessee as a result of giving the effect of the directions of the DRP order with respect to reassessment u/s 143(3) r.w.s 147 of the Act.
The L.d. AO/DRP failed to apricate that the refund along with interest due to the assessee, being the excess of TDS over the tax chargeable on corresponding income assessed by the AO, ought to have been allowed following the amended provision of sec. 143(3) r.w.s 240 of the Act while giving the effect of DRP directions, irrespective of the claim made by the assessee.
The assessee reserves the right to add, withdraw, amend, or alter any of the grounds of objections at any point of time prior to or during the case of proceedings before the ITAT.”
Brief facts of the case shows that assessee is a non- resident individual, who did not file his return of income. The learned Assessing Officer on the basis of the information found that assessee is in receipt of substantial income and has also made substantial payments and has not filed his return of income and therefore, notice under Section 148 of the Income-tax Act, 1961 (the Act) was issued on 1st June, 2021.
The assessee preferred the objection before the learned Dispute Resolution Panel(1), Mumbai. The learned Dispute Resolution Panel who passed direction on 27th February, 2024. Based on this direction, the learned Assessing Officer passed an assessment order under Section 147 read with section 144 of the Act on 21st March, 2024, wherein the assessed income of the assessee was determined at ₹69,07,025/-. The assessee is aggrieved against the assessment order. 7. As per ground no. 1 & 2, the assessee has challenged that the learned Assessing Officer has erred in calculating the gain on the surrender of Bajaj Allianz Policy for ₹44,06,623/- instead of loss of ₹1,75,284/-, despite direction of the ld DRP.
He submitted that on perusal of the information under section 133(6) of the Act, it was found that assessee has purchased insurance policy of Bajaj Life Insurance Corporation, ICICI Prudential Life Insurance, Aviva Life Insurance Corporation of India. These policies were surrendered by the assessee wherein the assessee received pay out of ₹44,06,612/-. The learned Authorized Representative referred to the assessee’s submission at paragraph no.9.1 of the order of the learned Dispute Resolution Panel. He submitted that explanation of the assessee was given which was accepted by the learned
The learned Departmental Representative supported the order of the learned Assessing Officer.
On careful consideration of the rival contentions and the orders of the learned Assessing Officer and direction of the learned Dispute Resolution Panel, we find that the learned Assessing Officer in spite of the acceptance of case of the correctness of the claim of the assessee in remand report and direction of the learned Dispute Resolution Panel has not granted assessee the benefit of indexation while computed the capital gain, Thus addition is in violation of the direction of the learned Dispute Resolution Panel which is binding on the Assessing Officer.
The fact clearly shows that assessee has purchased a insurance policy on 26th April, 2010, on which yearly premium of ₹30 lacs was to be paid. This policy was completed on 13th may, 2016, and tax was deducted at source at the rate of 30.90% on the gain of ₹42,80,577/-. The assessee computed the capital gain on surrendered of the insurance policy after computing the indexation benefit. Sale consideration of ₹1,32,80,577/- was reduced by index cost of ₹1,30,07,466/- resulting into a gain of ₹
Ground no. 3 of the appeal of the assessee is that the assessee is entitled to refund of tax along with interest which is granted to the assessee. The computation sheet attached with the assessment order shows that aggregate tax liability of the assessee was determined at ₹ 20,00,369/-. The assessee has been granted TDS of ₹19,99,379/- and TCS credit of ₹999/-. Therefore, the assessee has been granted total credit of tax paid of ₹20,00,369/-. The learned Authorized Representative has
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 24.07. 2024.
Sd/- Sd/- (SUNIL KUMAR SINGH) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 24.07. 2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: The Appellant 1.
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai
