Gurvinder Kaur Bhatia Indore Vs PR Cit 2 Indore On 18 December 2019

Gurvinder Kaur Bhatia , Indore vs Pr.
Cit-2, Indore on 18 December, 2019
Income Tax Appellate Tribunal - Indore

Gurvinder Kaur Bhatia , Indore vs Pr. Cit-2, Indore on 18 December, 2019
, ,
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.150/Ind/2019
Assessment Years: 2015-16
Smt. Harleen Kaur Bhatia Pr.CIT-2

144, Pipliyarao, Near Vs. Indore
Vishnupuri Colony, A.B. Road,
Indore
(Appellant) (Respondent )
PAN No.AMGPB3531P
ITA No.151/Ind/2019
Assessment Years: 2015-16
Smt. Gurvinder Kaur Bhatia Pr.CIT-2
13-14, Aditya Nagar, Near Vs. Indore
Vishnupuri Colony, A.B. Road,
Indore
(Appellant) (Respondent )
PAN No.AGJPB0037B
Assessee by S/Shri Sumit Nema & Shri

GaganTiwari, ARs
Revenue by Shri S.S. Mantry, CIT-DR
Date of Hearing 15.10.2019
Date of Pronouncement 18.12.2019
ORDER
PER MANISH BORAD, AM The above captioned appeals filed at the instance of the different
assessee(s) pertaining to Assessment Year 2015-16 are HarleenKaur Bhatia &GurvinderKaur Bhatia
ITA Nos.150 & 151 /Ind/19 directed against the orders of Pr.Commissioner of Income Tax-2 (in
short 'Pr.CIT'] Indore dated 21.12.2018 & 24.12.2018 passed u/s 263 of the Income Tax Act 1961(In
short the 'Act').
2. Assessee(s) haveraised following grounds of appeals;
ITA No.150/Ind/2019 in case of Smt. HarleenKaur Bhatia 1(a) That, on the facts and
in the circumstances of the case, the learned Pr. CIT grossly erred in invoking the
provisions of section 263 of the Income-Tax Act, 1961 in the appellant's case without
considering the material fact that the Assessment Order passed by the learned
Assessing Officer was neither erroneous nor prejudicial to the interest of the
Revenue.
Indian Kanoon - http://indiankanoon.org/doc/95739707/ 1

l(b) That, the learned Pro CIT grossly erred, both on facts and in law, in assuming the
jurisdiction u/s. 263 of the Income-Tax Act, 1961 without considering the material
fact that during the course of the assessment proceedings, the appellant had brought
on record all the materials and evidences relating to the concerning issue and the
same were duly verified by the AO after proper application of his mind.
2.That, without prejudice to the above, the learned Pr.CIT has grossly erred in giving
a direction to the AO to assess the income in the hands of the assessee on account of
maturity receipts of the Keyman Insurance Policy amounting to Rs.6,49,45,7101- and
as also, to examine the treatment of the insurance premiums paid by Shri Amandeep
Singh Bhatia, on behalf of the appellant, after the assignment of the policy to the
appellant.
3.That, the learned Pr. CIT grossly erred in assuming the jurisdiction under s.263 of
the Act without considering and appreciating the material fact that during the course
of the assessment proceedings, the appellant had duly furnished the necessary
particulars and explanation in respect of the subject issue by way of a note while
filing her return of income for the relevant assessment year which was duly examined
and HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 verified
by the learned AO before passing the Assessment Order in the case of the appellant.
4. That, Ld. Pr. CIT grossly erred in invoking provisions of section 263 based merely on 'Change in
Opinion'
5. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds
of appeal as and when considered necessary ITA No.151/Ind/2019 in case of Smt. GurvinderKaur
Bhatia 1(a) That, on the facts and in the circumstances of the case, the learned Pr. CIT grossly erred
in invoking the provisions of section 263 of the Income-Tax Act, 1961 in the appellant's case without
considering the material fact that the Assessment Order passed by the learned Assessing Officer was
neither erroneous nor prejudicial to the interest of the Revenue.
l(b) That, the learned Pro CIT grossly erred, both on facts and in law, in assuming the jurisdiction
u/s. 263 of the Income-Tax Act, 1961 without considering the material fact that during the course of
the assessment proceedings, the appellant had brought on record all the materials and evidences
relating to the concerning issue and the same were duly verified by the AO after proper application
of his mind.
2.That, without prejudice to the above, the learned Pr.CIT has grossly erred in giving a direction to
the AO to assess the income in the hands of the assessee on account of maturity receipts of the
Keyman Insurance Policy amounting to Rs.7,29,49,460/- and as also, to examine the treatment of
the insurance premiums paid by Shri Amandeep Singh Bhatia, on behalf of the appellant, after the
assignment of the policy to the appellant.

3.That, the learned Pr. CIT grossly erred in assuming the jurisdiction under s.263 of the Act without
considering and appreciating the material fact that during the course of the assessment proceedings,
the appellant had duly furnished the necessary particulars and explanation in respect of the subject
issue by way of a note while filing her return of income for the HarleenKaur Bhatia &GurvinderKaur
Bhatia ITA Nos.150 & 151 /Ind/19 relevant assessment year which was duly examined and verified
by the learned AO before passing the Assessment Order in the case of the appellant.
4. That, Ld. Pr. CIT grossly erred in invoking provisions of section 263 based merely on 'Change in
Opinion'
5. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds
of appeal as and when considered necessary
3. As the issues raised in both these appeals are common, they were heard together and are being
disposed off by this common order for the sake of convenience and brevity. For adjudication
purpose we will take up the facts of the assessee namely Harleen Kaur Bhatia and our decision in the
case of Harleen Kaur Bhatia ITA No.150/Ind/2019 shall apply mutatis mutandis in the case of
Gurvinder Kaur Bhaita in ITANo.151/Ind/2019.
4. Brief facts as culled out from the records are that the assessee is an individual. She filed e-return
of income on 31.03.2016 declaring total income of Rs.78,390/-. Case was selected for scrutiny
through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. The assessee duly
replied to the questionnaire issued by the Ld. AO. On requisite compliance, written submissions
filed by the assessee and after perusal of records, books of accounts and other documents returned
income was accepted as assessed income. Subsequently, Ld. Pr. CIT within the powers conferred to
him u/s 263 of the Act, observed from the assessment records that assessee received maturity
amount of Insurance Policy at Rs.6,49,45,710/-.
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 This Policy was originally
issued in the year 2005 as Keyman Insurance Policy with an assured return of 5 crores to Bhatia
International Ltd. for its Keyman i.e. Director of the company Mr. Amarjeet Singh Bhatia. Bhatia
International Company (BIC)paid regular premium till assignment and also claimed deduction u/s
37 of the Act as expenditure during the terms of payment. The Keyman insurance policy was
assigned by the company to its Keyman i.e. Mr. A.S. Bhatia (director). Surrender value on the date of
assignment was offered to tax by the company during FY 2011-12. After the assignment the policy
continued as normal Life Insurance Policy and premium was paid. Mr. A.S. Bhatia further assigned
the policy to his wife i.e. the assessee on 30.01.2013 and the assignment was duly recorded by Life
Insurance Corporation of India. This Policy was prematured in February 2015 and the amount was
received from LIC of India. Assessee claimed it as an exempted receipt. Assessee's case was selected
for scrutiny assessment and Ld. Assessing officer after conducting necessary enquiry accepted the
claim of assessee. Subsequently Ld. Pr. CIT on examining the transaction in light of the amendment
brought in by Finance Act 2013 effective from 01.04.2014 in Explanation 1 to section 10(10D) of the
Act was of the view that this amendment is clarificatory in nature and the entire amount received on
maturity is liable to tax. Ld. Pr. CIT, issued show cause notice u/s 263 of the Act calling upon the

assessee as to why assessment order should not be revised and the maturity amount of Insurance
Policy referred above be subjected to tax. In response to the notice assessee filed a HarleenKaur
Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 detailed submissions placing reliance on
various judgments but the same was not found acceptable. Ld. Pr. CIT. after recording detailed
finding, discussing the issues on merits as well as the legal aspect decided to set aside the
assessment order and directed the AO to make afresh assessment order in accordance with law.
5. Aggrieved by this the assessee is in appeal before the Tribunal raising various grounds of appeal
challenging the assuming of jurisdiction u/s.263 of the Act and legality of the order passed u/s 263
of the Act.
6. Ld. Counsel for the assessee reiterated the submissions and various replies given before the Pr.
CIT but the crux of the argument were that the Keyman insurance policy issued to the company
namely BIC was assigned to the assessee's Husband and thereafter to the assessee. As a result the
nature of Policy changed from Keyman Insurance Policy to Life Insurance Policy. Surrender value
on the date of assignment was duly offered to tax by the company namely "BIL". Since the policy
post assignment got converted to Life Insurance Policy, deduction u/s 80C of the Act was claimed by
the assessee. He submitted that the proceeds on the prematurity of the Policy are exempt in view of
various judgments wherein it is held that Keyman Insurance Policies subsequent to their assignment
in favor of Keyman or other person is converted into a simple Life insurance policy and the proceeds
on it maturity or pre-maturity are exempted u/s.10(10D) of the Act. Referring to HarleenKaur
Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 other judgements it was submitted that
since the amendment brought in by Finance Act 2013 in explanation 1 to section 10(10D) of the Act
increases the scope of taxability for the assessee, they are to be treated as prospective in nature and
by no cannon can be treated as retrospective or clarificatory in nature.
7. Ld. counsel for the assessee also submitted that the issue of alleged insurance policy maturity
receipts being exempt stands squarely covered by the judgment of Hon'ble High Court of Bombay in
the case of CIT vs. Prashant J. Agarwalin ITANo.465 of 2014 dated 26.09.2016 wherein after
considering the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Rajan Nanda(2012)
18 taxmann.com 98 Delhi and CIT vs. Rajan Nanda (2013) 37 Taxman.com 335 (Delhi Tribunal.) it
was held that once there is assignment of the employer in favor of individual , the character of the
insurance policy changes and it gets converted into an ordinary policy and the sum received
thereunder would not be subject to tax. He also submitted that the amendment brought in
explanation (1)to section 10(10D) of the Act w.e.f. 01.04.2014 would not apply on the amount
received since the keyman insurance policy was assigned prior to assessment year 2014-15. Ld.
counsel for the assessee also submitted that Ld. Pr. CIT wrongly assumed the jurisdiction u/s 263 of
the Act even when detailed inquiry was conducted by the Ld. AO for the issue raised in the show
cause notice issued by the Ld. Pr. CIT and order u/s 263 of the Act deserves to be quashed. Reliance
place on following judgments:
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19
1. Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC)

2. Abhishan Entereprises Vs CIT (2016) 28 ITJ 139 (Trib.-Indore)
3. M/s Gupta Spinning Mills vs. CIT in ITANo.3398/Del/2010
4. CIT vs. Max India Ltd. 295 ITR 282 (SC)
5. CIT vs. Gabriel India Ltd. (1993) 203 ITR 108(Bom)
6.CIT vs. R.K. Construction Co. 313 ITR 65 (Gujarat)
7. CIT vs. Arvind Jewellers (2003) 259 ITR 502(Gujarat)
8.CIT vs. Sunbeam Auto Ltd. (20100 189 Taxman 436 (Del)
8. With regard to the contention that the amendment brought in Finance Act 2013 in Explanation
(1) to section 10(10D) is prospective in nature, assessee relied following judgments:
1. Nirmal Textiles (1997) 224 ITR 378 (Gujarat High Corut)
2. CIT vs. Essar Teleholding Ltd. (2018) 3 SCC 253
3. CIT vs. M/s Shah Sadiq and Sons (1987) 3 SCC 516
4. CIT vs. Vatika Township Private ltd. (2015) 1SCC 1
5. CIT vs. Sarkar Builders (2015) 7 SCC 579
9. Per contra Ld. Departmental Representative(DR) vehemently argued strongly supporting the
detailed finding of Ld. Pr. CIT.
10. We have heard rival contentions and perused the records placed before us and carefully gone
through the judgments referred and relied by the Ld. Counsel for the assessee as well as the
judgments referred in the impugned order passed by the Ld. Pr. CIT. Before deciding the issue
whether the order passed by the Ld. Pr. CIT is HarleenKaur Bhatia &GurvinderKaur Bhatia ITA
Nos.150 & 151 /Ind/19 valid and in accordance with law laid down u/s 263 of the Act, it is necessary
for us to discuss the provisions of section 263 of the Act which empowers the Pr. CIT/CIT to revise
the assessment order:
263. (1) The Principal Commissioner or Commissioner may call for and examine the
record of any proceeding under this Act, and if he considers that any order passed
therein by the Assessing Officer is erroneous in so far as it is prejudicial to the
interests of the revenue, he may, after giving the assessee an opportunity of being
heard and after making or causing to be made such inquiry as he deems necessary,
pass such order thereon as the circumstances of the case justify, including an order

enhancing or modifying the assessment, or cancelling the assessment and directing a

fresh assessment. Explanation 1.--For the removal of doubts, it is hereby declared
that, for the purposes of this sub-section,--
(a) an order passed on or before or after the 1st day of June, 1988 by the Assessing
Officer shall include--
(i) an order of assessment made by the Assistant Commissioner or Deputy

Commissioner or the Income- tax Officer on the basis of the directions issued by the
Joint Commissioner under section 144A;
(ii) an order made by the Joint Commissioner in exercise of the powers or in the
performance of the functions of an Assessing Officer conferred on, or assigned to,
him under the orders or directions issued by the Board or by the Principal Chief
Commissioner or Chief Commissioner or Principal Director General or Director
General or Principal Commissioner or Commissioner authorised by the Board in this
behalf under section 120;
(b) "record" shall include and shall be deemed always to have included all records
relating to any proceeding under this Act available at the time of examination by the
Principal Commissioner or Commissioner;
(c) where any order referred to in this sub-section and passed by the Assessing
Officer had been the subject matter of any appeal filed on or before or after the 1st
day of June, 1988, the powers of the Principal Commissioner or] Commissioner
under this sub-section shall extend and shall be deemed always to have extended to
such matters as had not been considered and decided in such appeal.
Explanation 2.--For the purposes of this section, it is hereby declared that an order passed by the
Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the
revenue, if, in the opinion of the Principal Commissioner or Commissioner,--
(a) the order is passed without making inquiries or verification which should have
been made;
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or
instruction issued by the Board under section 119; or
(d) the order has not been passed in accordance with any decision which is
prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme

Court in the case of the assessee or any other person.
(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the
financial year in which the order sought to be revised was passed.
(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section
may be passed at any time in the case of an order which has been passed in consequence of, or to
give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax
Tribunal, the High Court or the Supreme Court.
Explanation.--In computing the period of limitation for the purposes of sub-section (2), the time
taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any
period during which any proceeding HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151
/Ind/19 under this section is stayed by an order or injunction of any court shall be excluded.
11. From perusal of the aforesaid section, it is apparent that there are mainly four features of the
power for revision to be exercised u/s 263 of the Act by the Pr. CIT.
i. The Pr. CIT may call for and examine the records of any proceedings under the Act and for this
purpose he/she need not to show any reason or record any reason to belief as it is required u/s 147
or 148(2) of the Act.
ii. He/She may consider any order passed by the Assessing Officer as erroneous as well as
prejudicial to the interest of the Revenue. This is exercised by calling for and examining the record
available at this stage.
iii. If after calling for and examining the records the Commissioner considers that the order of the
Assessing Officer is erroneous is so far it is prejudicial to the interest of the Revenue, he is bound to
give an opportunity to the assessee of being heard and after that as he/she may deem fit, pass such
order thereon as the circumstances of the case may justify including an order enhancing or
modifying the assessment or cancelling assessment and directing a fresh assessment or make such
enquiries as he deems necessary.
iv. Under the provisions of section 263 of the Act Pr. CIT/CIT can enhance or modify the assessment
as a result of inquiry conducted and hearing of the assessee.
12. It is well settled law that for invoking the provisions of section 263 of the Act both the conditions
that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This
ratio stands laid down by various Hon'ble Courts.
13. Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of H.H. Maharaja Raja Power
Dewas (1983) 15 Taxman 363 in para 10 of this order held that"However, the first argument, viz.,

that an assessment order without compliance with the procedure laid down in section 144B is
erroneous but not prejudicial to the interests of the revenue conferring revisional jurisdiction on the
Commissioner under section 263(1), has force. Under section 263(1) two pre-requisites must be
present before the Commissioner can exercise the revisional jurisdiction conferred on him. First is
that the order passed by the ITO must be erroneous. Second is that the error must be such that it is
prejudicial to the interests of the revenue. If the order is erroneous but it is not prejudicial to the
interests of the revenue, the Commissioner can not exercise the revisional jurisdiction under section
263(1)....................There cannot be any prejudice to the revenue on account of the ITO's failure to
follow the procedure prescribed under section 144B, and unless the prejudice to the interests of the
revenue is shown, the jurisdiction under section 263(1) cannot be exercised by the Commissioner,
even though the order is erroneous. The argument that such an order may possibly be challenged in
appeal by the assessee, and for this reason it is prejudicial to the interests of the HarleenKaur Bhatia
&GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 revenue, has no merit. Section 263(1) clearly
contemplates that the order of assessment itself should be prejudicial to the interests of the revenue
and this prejudice has to be proved by reference to the assessment order only. It cannot be argued
that there is some possibility of the assessment order being challenged or revised in appeal and,
therefore, on account of this contingency, the order becomes prejudicial to the interests of the
revenue." [emphasis supplied]
14. Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. - [2000] 243 ITR 83 - order
pronounced on 10.02.2000 - HEAD NOTE - "Section 263 of the Income-tax Act, 1961 - Revision - Of
orders prejudicial to interests of revenue - Assessment year 1983-84 - Whether in order to invoke
section 263 Assessing Officer's order must be erroneous and also prejudicial to revenue and if one of
them is absent, i.e., if order of Income-tax Officer is erroneous but is not prejudicial to revenue or if
it is not erroneous but is prejudicial to revenue, recourse cannot be had to section 263(1) - Held, yes
- Whether if due to an erroneous order of ITO, revenue is losing tax lawfully payable by a person, it
will certainly be prejudicial to interests of revenue - Held, yes - Assessee-company entered into
agreement for sale of estate of rubber plantation - As purchaser could not pay installments as
scheduled in agreement, extension of time for payment of installments was given on condition of
vendee paying damages for loss of agricultural income and assessee passed resolution to that effect -
Assessee showed this receipt as agricultural HarleenKaur Bhatia &GurvinderKaur Bhatia ITA
Nos.150 & 151 /Ind/19 income - Resolution passed by assessee was not placed before Assessing
Officer - Assessing Officer accepted entry in statement of account filed by assessee and accepted
same - Commissioner under section 263 held that said amount was not connected with agricultural
activities and was liable to be taxed under head 'Income from other sources' - Whether, where
Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any
supporting material without making any enquiry, exercise of jurisdiction by Commissioner under
section 263(1) was justified - Held, yes
15. Hon'ble Gujarat High Court in the case of Smt. Minalben S. Parikh - [1995] 215 ITR 81 - order
pronounced on 17.10.1994 - Para 12 - "From the aforesaid, it can well be said that the well-settled
principle in considering the question as to whether an order is prejudicial to the interests of the
revenue or not is to address oneself to the question whether the legitimate revenue due to the
exchequer has been realised or not or can be realised or not if his orders under consideration are

allowed to stand. For arriving at this conclusion, it becomes necessary and relevant to consider
whether the income in respect of which tax is to be realised, has been subjected to tax or not or if it
is subjected to tax, whether it has been subjected to tax at a rate at which it could yield the
maximum revenue in accordance with law or not. If income in question has been taxed and
legitimate revenue due in respect of that income had been realised, though as a result of erroneous
order having been made in that respect, in our HarleenKaur Bhatia &GurvinderKaur Bhatia ITA
Nos.150 & 151 /Ind/19 opinion, the Commissioner cannot exercise powers for revising the order
under section 263 merely on the basis that the order under consideration is erroneous. If the
material in that regard is available on the record of the assessee concerned, the Commissioner
cannot exercise his powers by ignoring that material which links the income concerned with the tax
realization made thereon. The two questions are inter-linked and the authority exercising powers
under section 263 is under an obligation to consider the entire material about the existence of
income and the tax which is realizable in accordance with law and further what tax has in fact been
realised under the alleged assessment orders.[emphasis supplied]
16. Hon'ble Karnataka High Court in the case of V. G. Krishnamurthy - [1985] 20 Taxman 65 - order
pronounced on 19.03.1984 - Para 10 - "Section 263 can be invoked by the Commissioner only when
he prima facie finds that the order made by the ITO was erroneous and was prejudicial to the
interests of the revenue. Both these factors must simultaneously exist. An order that is erroneous
must also have resulted in loss of revenue or prejudicial to the interests of the revenue. Unless both
these factors co-exist or exist simultaneously, the Commissioner cannot invoke or resort to section
263. It cannot be exercised to correct every conceivable error committed by an ITO. Before the
suomoto power of revision can be exercised, the Commissioner must at least prima facie find both
the requirements of section 263, namely, that the order sought to be revised is prima facieerroneous
and prejudicial to the interests of the HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 &
151 /Ind/19 revenue. If one of the other factor was absent, the Commissioner cannot exercise the
suomoto power of revision under section 263." [emphasis supplied]
17. Now we proceed to examine the facts of the instant case in the light of the ratio laid down by
Hon'ble Courts so as to examine firstly whether the assessment order passed by the Ld. AO is
erroneous in nature and secondly whether it is prejudicial to the interest of revenue.
18. Firstly, in order to examine that whether the assessment order is erroneous, we observe that Ld.
Pr. CIT within the powers provided in section 263 of the Act issued following show cause notice to
the assessee.
"Please refer to the assessment order dated 15.12.2017 for A.Y. 2015-16 in your case.
On perusal of case record in your case for the A.Y. 2015-16 it is noted that you have
furnished your return of income declaring total income at Rs.78,390/- on 31.03.2016.
Assessment in your case u/s 143(3) of I.T. Act 1961 was completed by the ITO-5(3),
Indore vide order dated 15.12.2017 assessing total income at Rs.78,390/-.
The entire records were gone through by me and on perusal and examination of
records it appears that the order dated 15.12.2017 for A.Y. 2015-16 is erroneous as

also prejudicial to the interest of revenue on account of passing of the order without
making proper enquiries/investigations. As per the information available on records
it is noted that you have received maturity amount of insurance policy to the extent of
Rs.6,49,45,710/-. The company Bhatia International Ltd. in which your husband was
a director, had purchased insurance policy named as JeevanAnand from LIC of India
in April 2005 of the life of your husband, with a sum assurance of Rs.5 crores.
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 Premium thereon was paid
by the company upto Oct, 2010 and claimed deduction thereof, u/s 37 of the Act from its
computation of income.
You have got the ordinary life insurance policy through assignment from your husband sub-sequent
to the payment of surrender value already paid to the company Bhatia International Ltd. for
Rs.1,72,32,045/- dated 31.03.2012 by the husband, as this was a Keyman Policy in his name being
the director of M/s Bhatia International Ltd. the source of premium & surrender value paid in your
hand have been show as gift received from the husband, the assignment is completed in your favour
on 31.03.2013 i.e. before the amendment of section 10(10D) of the I.T. Act LIC has deducted TDS @
2% under section 194DA on maturity value and you have received premature maturity value in Feb,
2015 whereas the actual date of maturity is 28.04.2015. In view of amendment provisions of
explanation (1) of section 10(10D) of the Act, the receipt are taxable in the hands of assignee i.e.
assessee even if they are assigned before the date of said amendment. Although the assignment has
been completed before the amendment date i.e. 31.03.2013, but the same does not change the
nature and character of the receipt, which have been received after the amendment. It appears that
even amended Section. 10(10D) does not make the aforesaid policy exempt from taxation on its
maturity/prematurity receipts. The receipts have taken place subsequent to such amendment,
therefore, the same should have been taxed either in the hands of keyman (the assesseee's husband)
or in the hands of the assessee (the keyman's assigned) but in the present case both have escaped
taxation on the said amount creating detriment to the revenue. Hence this fact should have been
examined.
The AO has not examined this factor and no enquiry/investigation has been made. Therefore, the
assessment order passed by the AO appears to be erroneous in so far as it is prejudicial to the
interest of the revenue. You are, therefore the required to show cause why provision of section 263
be not invoked in your case for the reasons mentioned above."
19. In response to the above notice the sole issue was with regard to the maturity amount received
on the insurance policy by the assessee which was originally taken as a Keyman Insurance Policy by
Bhatia International Ltd but subsequently assigned to the Keyman i.e. Director, Amandeep Singh
Bhatia on 23.02.2012 and further Mr. Amandeep Singh Bhatia assigned policy to his wife Smt.
Harleen Kaur Bhatia on 30.01.2013. Foremost it is to be seen that whether this issue of taxability of
maturity proceeds of the insurance policy came up before the Ld. AO and whether he conducted
sufficient enquiry with regard to this issue.

20. Records show that with the computation of income filed along with return of income on
31.03.2016 assessee gave a detailed note about the amount received from maturity of Insurance
Policy which was originally taken as a Keman Insurance Policy which reads as follows:
During the relevant period assessee received maturity amount of insurance policy of
Rs.6,49,45,710/- and on which assessee has paid assignment value of
Rs.1,72,32,045/- and after assignment premium of Rs.1,61,65,193/- i.e. total amount
of Rs.3,33,97,238/-.
During the relevant period assessee received maturity amount of insurance policy of
Rs.6,49,45,710/-. The company Bhatia International Ltd. in which the assessee's
husband was a director, had purchased insurance policy named as "JeevanAnand"
from LIC of India in April 2005, on the life of the assesseee's husband with a sum
assurance of Rs.5.00 cr. Premium thereon was paid by the company upto Oct. 2010
and claimed deduction thereof, u/s 37 from its computation of income (ie. In P/L
Account).
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 Assesse has
got the ordinary life insurance policy through assignment from her husband on the
payment of surrender value paid to the company Bhatia International ltd. for
Rs.1,72,32,045/- dated 31.03.2012 as this is a Keyman Policy in the name of Bhatia
International Ltd. (Keymanassessee's husband) and 07 years premium paid by the
company(ie from April 2005 to March 2012). Company had assigned this policy to
the Keyman on surrender value & for remaining tenure premium is paid by the
assessee.
The source of premium & surrender value paid in the hand of assessee is gift received
from the husband, the assignment is completed in favour of assessee on 30.01.2013
before the amendment w.e.f 01.04.2014 u/s 10(10D). these amendment is
prospective not retrospective therefore maturity value is fully exempt in the hand of
assessee because these is an ordinary policy. Only due to these amendment assessee
has paid self assessmentchallan, in fact amendment is prospective and no tax is
payable therefore refund is generated. Hence sum of Rs.6,49,45,710/- received from
LIC is claimed as exempt. LIC has deducted TDS @ 2% under section 194DA on
maturity value and assessee has received pre mature maturity value in Feb. 2015
where actual date of maturity value is 28.04.2015.
21. We further observe that Ld. Pr. CIT after considering the submissions, documents and other
relevant details filed by the assessee as well as the correspondence between the assessee and the Ld.
Assessing Officer was not convinced and went ahead to hold that the maturity receipts of the
Keyman Insurance Policy are taxable in the hands of assessee and directed the Ld. Assessing Officer
to reassess the assessee's income observing as follows:

"I have carefully considered the facts of the case, the assessment records and the
written submission given by the assessee. It is noted that the case was selected for
complete HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19
scrutiny through CASS and the reason for selection were mentioned as high ratio of
refund to TDS, delayed payment of tax and ITR filed late and large refund claimed
out of the self-
assessment tax. The records show that the assessee has received payment on account of maturity of
an insurance policy on which the tax has been deducted by the insurance company at the time of
payment of maturity proceeds. The policy was a keyman insurance policy which as assigned to the
husband of the assessee namely ShriAmandeep Bhatia by the employer namely Bhatia International
Ltd. in the month of March, 2012. Shriamandeep Singh Bhatia later on assigned the policy to the
assessee on 30.01.2013. The Policy was encashed before maturity in the month of February 2015
whereas the actual date of maturity was 28.04.2015.
The Assessing Officer issued three notices u/s 142(1) during the course of assessment proceedings.
The first notice was issued on 19.05.2017 in which general details were asked. In the second notice
which as issued on 11.08.2017, the Assessing Officer asked some more questions such as mismatch
the amount paid to related persons, copy of bank account, bill vouchers of sale of jewellery etc.
Another notice was issued on 13.11.2017 there also some sundry question like purchase of share and
source thereof was asked. In none of the notice the Assessing Officer asked about the maturity of the
insurance policy and its treatment thereof. He did not even aske the assessee as to what is the reason
for high refund or refund out of self-assessment tax paid. The order sheet entered also do not show
any questionor query regarding the receipts of maturity amount from LIC. The officer has recorded
some kind of finding on the order sheet towards the end of the proceedings in which he has
reproduced the sequence of events narrated by the assessee in the submissions related to the receipt
of maturity amount of insurance policy. He has accepted the version given by the assessee without
any enquiry regarding the sources of payment of insurance premium, the utilization of the policy
maturity receipts etc. The case laws which has been relied by the assessee before the Assessing
Officer such as Rajan Nanda 18 taxman.com 98 and Prashan J. Agarwal 243 Taxman 119 is
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 no more applicable as the
provision of section 10(10D) of the Income Tax Act has been amended w.e.f. 01.04.2014 in which the
loophole regarding assignment of keyman insurance policy has been plugged. The Assessing Officer
did not make any attempt to make any enquiry on the issue. The sequence of event as narrated by
the assessee before the Assessing Officer clearly show that the policy was assigned to Mr. Bhatia by
Bhatia International Ltd. on the surrendered value of 1.72 crores on 23.02.2012. Subsequently, mr.
Bhatia assigned this policy to his wife as a gift on 30.01.2012. The policy was finally terminated
prematurely in Feb, 2015. These dates clearly show that the date of maturity is after 01.04.2014, the
date from which the amendment in section 10(10D) came into effect. The Assessing Officer should
have examined the whole sequence of event and must have enquired about the motive of the
assessee for showing a gift of the policy the receipt of which was taxable. The Assessing Officer
therefore committed an error by not pursuing the enquiries regarding the policy maturity and
accepting the version of the assessee without application of mind. He did not go through the
provision of section 10(10D) properly and wrongly accepted the claim of the assessee. The policy

was matured after 01.04.2014 and the receipt was clearly taxable as per provision of section
10(10D). There is no question of any other view except bringing the amount to tax. The Assessing
Officer therefore, wrongly applied the provisions of law. The assessee relied on the judgment of
Bombay High Court in the case of Prashant J. Agarwal 243 Taxman 119 and the same was accepted
by the Assessing Officer which was incorrect. In the judgment the assessee had received the
maturity amount during financial year 2009-10 relevant to Assessment year 2010-11. The
assessment was passed by the Assessing Officer after the amendment was brought in the Act. The
court has held that any receipt of maturity amount prior 01.04.2014 would not be accepted by the
amended definition. In the present case the amount has been received on maturity in March 2015
which is clearly after the date from which the amendment was made effective.
During the course of proceedings u/s 263 this officer made HarleenKaur Bhatia &GurvinderKaur
Bhatia ITA Nos.150 & 151 /Ind/19 enquiries with the LIC of India as well as from the assessee
regarding various aspect related to policy. It was found that thought the policy has been purportedly
assigned to the assessee by her husband,the life assured remains the same. The risk of life remained
that of the husband of the assessee. Further the enquiries also revealed that the insurance premium
of the policy, after purported assignment to the assessee, was paid by Mr. Bhatia to whom the policy
was assigned by the company. The Assessing Officer did not make any enquiry about these aspects.
Had he made these enquiries he would have come to know about the correct position of the reasons
of the purported assignment.
The most important point here is that Mr. Bhatia, who had purchased the keyman insurance policy
from the company Bhatia International Ltd. by paying the residuary/surrender value of the policy,
was still the person assured and he had assigned only the receipts of the policy to his wife i.e. the
assessee. The gift is of the maturity proceeds of the policy and not that of the policy itself. There is
the difference between assignment of the Keyman insurance policy by the company to its
keymanMr. Bhatia and subsequent assignment by Mr. Bhatia to his wife. In the first assignment ie.
By the company to thekeyman was for a consideration which was equal to the residual value of the
policy at that time. The character of the policy also changed at that time and it became an assigned
keyman insurance policy the receipts of which were taxable on maturity after 01.04.2014. The
second assignment i.e from Mr. Bhatia (keyman of Bhatia International Ltd.) to his wife i.e. the
assessee is an assignment just to create a camouflage to avoid the taxability of the maturity
proceeds. There is no real purpose of assigning the policy as the annual premium was still being paid
by Mr. Bhatia (keyman of Bhatia International Ltd. ), the assessee took to loan which was again
invested in the business of the Bhatia Group and the life assured or insured remained the same i.e.
Mr. Bhatia. Therefore, the whole pretention of assigning of the policy is merely to avoid the
taxability of the maturity proceeds.
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 It would not be out of place
to reproduce the Explanation 1 to section 10(10D) of the Income Tax Act which read as under:
"Explanation 1. For the purpose of this clause, Keyman insurance policy" means a life insurance
policy taken by a person on the life of another person who is or was the employee of the first
mentioned person or is or was connected in any manner whatsoever with the business of the first

mentioned persona and included such policy which has been assigned to a person, at any time
during the term of the policy, with or without any consideration" Emphasis supplied) The phrase
and included such policy......' has been introduced by the Finance Act 2013 and effective from
01.04.2014. Here, it would also be useful to reproduce the relevant extract of the explanatory notes
to the finance Act 2015:-
5. Keyman insurance policy 5.1 The provision of clause 10(D) of section 10 of the Income Tax Act,
1961 before amendment by the Act, inter alia, exempt any sum received under a life insurance policy
other than a keyman insurance policy. Explanation 1 to the said clause (10D) defines a keyman
insurance policy to mean a life insurance policy taken by a person on the life of another person who
is or was the employee of the first mentioned person or is or was connected in any manner
whatsoever with the business of the first mentioned person.
5.2 It has been noticed that the policies taken a keyman insurance policy are being assigned to the
keyman before its maturity. The keyman pays the remaining premium on the policy and claims the
entire sum received under such policy as exempt on the ground that the policy is no longer a keyman
insurance policy.
5.3 The exemption under section 10(10D) is claimed for policies which were originally keyman
insurance policies but during the term these were assigned to some other person. The courts have
also noticed this loophole in law.
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 5.4 With a view to plug the
loophole and check such practices to avoid payment of taxes, the provisions of clause (10D) of
section 10 of the Income Tax Act, 1961 have been amended to provide that a keyman insurance
policy which has been assigned to any person during its term, with or without consideration, shall
continue to be treated as a keyman insurance policy and consequently would not be eligible for any
exemption under section 10(10D) of the Income Tax Act."
The wording of the explanation also clearly say that if the keyman insurance policy is assigned to "a
person" anytime during the term of the policy with or without consideration the policy would be
considered as keyman insurance policy. The legislature has not use the work 'the' which would have
signified a limited meaning to the assignee. The term used is a "a person" which signify or means
any person which may be other than the keyman person. Therefore, the policy receipts are clearly
taxable as the assignment has not changed the character of receipt. It remains the receipt from a
keyman insurance policy as per the definition given in Explanation 1 to section 10(10D) of the
Income Tax Act. The assignment of the policy for the second time does not change the basic
character of the policy as per the provisions of Income Tax Act.
22. Thereafter, in the impugned order Ld. Pr. CIT rebutted the assessee's submissions which were
running from page 16 to para 19 of the impugned order . Thereafter, the Ld. Pr. CIT treated the
amendment in Explanation (1) section 10(10D) of the Act as curative and merely declaratory in
nature, placing reliance on following judgment:

1. Gold Coin Health Food (P). Ltd. 304 ITR 308 (SC)
2. Reliance Jute & Industries ltd. (1979) 120 ITR 931 (SC)
3. Poddar Cement P. Ltd. (1997) 5 SCC 482 HarleenKaur Bhatia &GurvinderKaur Bhatia ITA
Nos.150 & 151 /Ind/19
4. AnujJayendra Shah, vs. PCIT-35, Mumbai (67 Taxman.com 38)
23. Ld. Pr. CIT also discussed the legal position of power of Commission for revision u/s 263 of the
Act referring to the judgment of Kolkata Tribunal in the case of Subhlakshmi Vinijya(P.) Ltd. 172
TTJ 721(KOL).Thereafter the Pr. CIT placed reliance on the following judgments:
1. CIT vs. Amitabh Bachchan (2016) 384 ITR 200 (Hon'ble Supreme Court)
2. Toyota Motor Corpn. (2008) 174 Taxman 395 (Delhi) Affirmed in (2008) 173
Taxman 458 (SC)
3. Jagdish Kumar Gultai (2204) 139 Taxman 369 (All.)
4. Malabar Industrial Co. Ltd. (2000) 109 Taxman 66 (SC)
5. Crompton Greaves ltd. (2017) 82 Taxmann.com 246 (Mumbai- I.T.A.T., Bench C)
6. CIT vs. Vallabhdas Vithaldas -Gujarat High Court (2002) 253 ITR 543
24. Now in order to examine that whether the assessment order passed by the Ld. Assessing officer
is erroneous or not, we need to examine the fact that whether adequate enquiry was conducted. We
find that during the course of assessment proceedings questionnaire u/s 142(1) of the Act was issued
wherein the Ld. AO asked the assessee to furnish various details about the Insurance Policy for
which the huge maturity receipts were received and claimed as exempted. The assessee made
various submissions dated 15.06.2017, 09.10.2017, 23.10.2017 & 17.11.2017. The HarleenKaur
Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 contents of the submissions made by the
assessee in various dates are reproduced below:
Letter datedJune 15, 2017(Annexure A/6 of PAPER BOOK filed on 07.05.2019) 01]
The assessee has Electronically filed his return of total income for the year under
consideration on 31.03.2016 vide Ack. No. 143045360310316. Copy of
Acknowledgement of said Return along with computation of total income for the year
under consideration are enclosed. Enel.No. 01 to 06.
02] Assessee accounts are not audited U/s 44AB because assesse is not having any
business income and she is not fall in any category of section 44AB.

03] Assessee is an individual, copy of Statement of Affairs &Capital account for last 3
years i.e.AY. 2015-16, 2014-15 &2013-14 are enclosed herewith. Encl. No.07 to 13.
04] Your honour is asked to submit the ,evidence of payment of taxes.
04.1] In this regard we are enclosing here with copy of Form No. 26AS showing
payment of taxes is enclosed herewith. Encl. No.14 to17.
05] Assessee has claimed deduction under chapter VIA for payment of PPF of Rs.
150000/- Copy of the Pass Book is enclosed herewith for your ready reference. Elcl.
No.18 to 19 Letter dated 09.10.2017 (Annexure A/7of PAPER BOOK filed on
07.05.2019)
1. Copy of all bank statements maintained by the assessee along with reconciliation
statements where ever applicable are enclosed herewith HarleenKaur Bhatia
&GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19
2. Your honour is asked to submit the policy copy duly shows assignment clause.
2.1. Where are enclosing here with policy copy along with assignment 2.2 We are also enclosing here
with assignment letter issued by the Life Insurance Corporation of India in favour of assessee. Encl.
NO.32 to 32 Letter dated 23.10.2017( Annexure A/8 of PAPER BOOK filed on 07.05.2019) 01] This
is in continuation to our exemption claim in the return file for the above relevant year. As the return
is not comprised of all the relevant evidentry documents at the time of filing of regular return
therefore for facilitate scrutiny proceedings. We are enclosing here with copy of computation of total
income , acknowledgement along with all necessary evidentry document in support of our
exemption claim u/s 10(1OD). Encl. No. 33 to 35.
02] You honour is asked to submit the complete details of LIC Assignment in favor of beneficiaries
as well as also asked to submit relevant documents.
2.1 We are enclosing here with assignment letter issued by the Life Insurance Corporation of India
in favor of beneficiary along with related documents for your ready reference. Enel. No. 36 to 2.2 We
are also enclosing here with certificate issued by the LIC for payment of guaranteed surrender value
along copy of ledger account of payment of surrender value paid by the beneficiary. Encl. No. 43to
43A.
03J Copy of assignment letter issued by the Life Insurance Corporation of India in favor of assessee
is also enclosed here HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 3.1]
We are also enclosing here with Capital account of Shri A.S. Bhatia shows gift given to Smt. Harleen
Kaur Bhatia (wife) of LIC policy along with gift deed & assessee's Capital account for gift 3.2] We
relied on case law of High Court of Mumbai dated 26.09.2016 ITA No. 46/2014 Commissioner of
Income Tax V s Prashant J Agarwal. Copy of the same is enclosed here with .Enel. No. 57 to 60.

Letter dated 17.11.2017 (Annexure A/9 of PAPER BOOK filed on 07.05.2019)
1. Bhatia International Ltd. "BIL"( Employer) has taken a Keymen Insurance Policy from LIC of
India named as "Jeevan Anand" on life assurance of Director Amandeep S. Bhatia in the Year 2005
(April 2005) with a sum assurance of Rs. 5 crores.
2. Bhatia International Ltd. has regularly paid premium on above plan and claimed in profit &loss
account up to Oct. 2010 &thereafter above plan assign to Mr. Amandeep S. Bhatia on surrendered
value of Rs. 1.72 crores as per certificate dated 23.02.2012. Copy of certificate issued by the LIC of
India for surrender value is enclosed here with. Encl. No .
3. That above surrender value is duly offered by the Company " Bhatia International Ltd." in books
of accounts as income . Copy of the ledger account, profit &loss account along with order passed by
the ITSC are enclosed. Enel.No.
4. Further Mr. A.S.Bhatia has assign policy to his wife Smt. Harleen K. Bhatia on 30.01.2013.
Your honour please note that at the time when the policies were taken, the nature of the policies
were "keyman insurance policies" as defined in section .JO(lOD). The persons on whose life policies
were taken were directors. They were keyman as explained in Boards circular no. 762, dated
February 18, 1998 (supra). When the policies were assigned to them in April 2012, by BIL , they
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 got converted into ordinary
policy as assignment was accepted by LIC. For this proposition we may derive support from the
decision of Hon'ble Delhi High Court in CIT vs. Rajan Nanda [2012] 18 taxmann.com 98 (Delhi)) .
Later dated 17.11.2017 (Annexure A/10 of PAPER BOOK filed on 07.05.2019) 01] Your honour is
asked to submit the details of share purchase during the year along with source of investments. 1.1]
Statement giving details of the shares purchase along with source of Investment is enclosed. Encl
No.61 1.2] Copy of relevant pages of bank statement of assessee duly highlighting the payment of
shares purchase is enclosed. Encl No.62 to 63.
1.3] Copy of share certificate is enclosed. Encl. No.64.
25. The various replies submitted by the assessee during the course of assessment proceedings u/s
143(3) of the Act mentioned above duly supported by documentary evidences were intended to
convince the Ld. Assessing Officer that the Keyman Insurance Policy taken by the Company namely
"BIC" were assigned to the Mr.A.S. Bhatia thereby the company offered surrender value of the policy
as income in FY 2011-12. This policy was subsequently gifted to assessee by her husband in January
2013. On this assignment the characteristic of the Policy changed from Keyman Insurance Policy to
normal Life Insurance Policy The total formality of the assignment of Insurance Policy is duly
recorded by Life Insurance Corporation of India and it was before 1.4.2014 which was the effective
date of the Amendment brought in Explanation (1) of HarleenKaur Bhatia &GurvinderKaur Bhatia
ITA Nos.150 & 151 /Ind/19 section 10(10D) of the Act by Finance Act 2013 and this amendment was
claimed to be prospective in nature placing reliance on various judgements .These submissions of

the assessee were found to acceptable by the Ld. Assessing Officer and he took one of the
permissible view provided in the law and in the light of the judicial pronouncements accepted the
assessee's claim of the maturity proceeds of LIC Policy (originally taken as Keyman Insurance
Policy) as exempted income.
26. It undoubtedly proves that the assessee had fully demonstrated through various documentary
evidences as can be seen above that Bhatia International Ltd. ( Employer) had taken a Keyman
Insurance Policy from LIC of India named as "JeevanAnand" on life assurance of Director Mr. A.S.
Bhatia in the Year 2005 (April 2005) with a sum assurance of Rs. 5 crores. Premium payment
tenure was 10 years i.e. last payment comes on 01.01.2015.The date of maturity is 28th April 2015.
The due date of premium payment is quarterly for Rs. 14.69 lacs yearly totalling to Rs. 58.76 lacs.
Bhatia International Ltd. had regularly paid premium on above plan and claimed in profit & loss
account & thereafter above plan was assigned to Mr. A.S. Bhatia on surrendered value of Rs. 1.72
crores which has been offered to tax by the Company Bhatia International Ltd. in the profit and loss
account (PB. 184 of the Paper Book dated 07.05.2019).Mr. A.S. Bhatia had then assigned policy to
his wife Smt. H.K. Bhatia on 30.01.2013.Assignee Smt. H.K. Bhatia had taken surrender value
during the month of HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19
February 2015 just before the 2 month of maturity date as maturity date of the policy was April
2015. Surrender Value received in the hands of Smt. H.K. Bhatia was Rs. 6.49 crores after deducting
TDS @ 2% u/s 194DA of Income Tax Act. After verifying the claim of the assessee through various
documentary evidences produced by the assesse and computation of income, replies dated
15.06.2017, 09.10.2017, 23.10.2017 and 17.11.2017 and various judicial pronouncements Ld. AO
formed the opinion that the said claim of the assessee is bonafide. Thus, looking to the facts of the
case we are of the view that sufficient and adequate enquiry was conducted by the Ld. AO before
accepting that the proceeds from prematurity of alleged life insurance policy are exempt from tax
and thus the assessment order passed u/s. 143(3) of the Act, by no stretch can be held to be
erroneous in nature.
27. Now we move on to examine as to whether the assessment order is prejudicial to the interest of
revenue. Issue relates to taxability of proceeds of a LIC policy which before assignment was
originally a keyman Insurance Policy.
28. Key man insurance policies are life insurance policies taken by a company on the life of some of
its keyperson. As per Paragraph 14 of Explanatory Notes to the Finance (No. 2) Act, 1996 issued by
Central Board of Direct Taxes (Circular No. 762, dated February 18, 1998 ([1998] 230 ITR (St.) 12))
akeyman insurance policy of the LIC of India means an insurance policy taken by a business
organisation on the life of an employee, in order to protect the HarleenKaur Bhatia &GurvinderKaur
Bhatia ITA Nos.150 & 151 /Ind/19 business against the financial loss, which may occur from the
employee's premature death. The 'keyman' is defined in the circular as 'an employee or a director,
whose services are perceived to have a significant effect on the profitability of the business'. The
premium paid by the employer on such policy is to be allowed as business expenditure. In case of
keyman policy there are two contracting parties, one is the payer organisation and other is the LIC
(or insurance company), and there are three affected parties, the two being the contracting parties
and the third one is the person on whose life the insurance policy is taken. Thus in Keyman

insurance policy which is accepted as such by LIC, the payer of the premium is the organisation and
life insured is the keyman.
29. Section 10(10D) of Act provides that any sum received under life insurance policy including sum
allocated by way of bonus on such policy will be exempt except in certain cases. One of the
exceptions is that the sum received under keyman insurance policy will not get exemption.
Explanation to that section provides the definition of "Keyman insurance policy", which means a life
insurance policy taken by a person on the life of another person who is, or was his, employee, or is or
was, connected in any manner what so ever with the business of the first mention person.
Expenditure incurred by the organisation by way of premium on keyman insurance policies will be
allowed as deduction u/s 37 in its hands.[Re: CIT v. B.N. Exports [2010] 190 Taxman 325 (Bom.)].
In CIT v. Rajan Nanda [2012] 18 taxmann.com 98 (Delhi)] regarding HarleenKaur Bhatia
&GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 sum received on maturity of keyman insurance
policies, it was held that the Act lays down that such will be taxed u/s 28 as business profits in its
hands or where payment of premium is not part of business expenditure then sum received on
maturity will be taxed u/s 56. Thus when there is "no assignment", Section 37 and Section 28 or
Section 56 of the Act operate in the case of employer.
Now in case there is assignment of the Keyman Insurance Policy
30. A policy initially taken on the life of the keyman of the organisation may be assigned to that
person or to some other person. The premium thereafter has to be paid by that person. No
deduction is allowed as business expenditure in the hands of the organisation in respect of premium
paid after assignment. When the policies is assigned to the employee then surrender value received
from the assignee i.e. employee will be taxed in the hands of the employer u/s 10(10D)(b) of the Act.
Therefore, at the time of assignment if the surrender value of the policy is much less as compared to
the total amount of premium paid by the organisation, then the surrender value received from the
individual (keyman) will be taxable in the hands of the organization as held in the case of ( Dr.
NareshTrehan v. DCIT [2014] 48 taxmann.com 21 (Delhi - Trib.))
31. In case of other persons to whom policies are assigned, which is actually the case we are dealing
in the instant appeal, the organisation will be taxed on the surrender value received from that
assignee (even though it may be less than the premium paid by the HarleenKaur Bhatia
&GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 organisation) which in this case has been done
by "BIL" offering the surrender value of policies on the date of assignment to tax .
32. In the instant case at the time when the policies were taken, the nature of the policies were
"keyman insurance policies" as defined in section 10(10D). The persons on whose life policy was
taken was director and was keyman as explained in Boards circular no. 762, dated February 18, 1998
(supra). When the policy was assigned to him by BIL and later on by the Keyman to his wife , it
apparently got converted into ordinary life insurance policy as assignment was accepted by LIC on
30.01.2013. For this proposition we may derive support from the decision of Hon'ble Delhi High
Court in CIT vs. Rajan Nanda [2012] 18 taxmann.com 98 (Delhi)wherein it was observed as under:

"52. Thus, the issue depends on the question as to whether on assignment of the
insurance policy to the assessee, it changes its character from Keyman insurance also
to an ordinary policy. It is because of the reason that if it remains Keyman insurance
policy, then the maturity value received is subjected to tax as per Section 10(10D) of
the Act. On the other hand, if it had become ordinary policy, the premium received
under this policy, in view of the aforesaid Section 10(10D) itself, the same would not
be subjected to tax.
53. Once there is no assignment of company/employer in favour of the individual, 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 HarleenKaur Bhatia
&GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 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 conversion and the character
of policy changes. The insurance company has itself clarified that on assignment, it
does not remain a keyman policy and gets converted into an ordinary policy. In these
circumstances, it is not open to the Revenue to still allege that the policy in question
is keyman policy and when it matures, the advantage drawn there from is taxable.
One has to keep in mind on maturity, it does not the company but who is an
individual getting the matured value of the insurance."
33. Following this decision the ITAT in DCIT v. Rajan Nanda [2013] 37 taxmann.com 335 (Delhi -
Trib.)held as under:
"9. Thus, the Hon'ble High Court has effectively held in favour of the assessee to the
effect that once there is assignment of the employer in favour of the individual, the
character of the insurance policy changes and it gets converted into an ordinary
policy; that such assignment is duly permitted by law; that even the LIC accepted the
assignment, itself clarifying that on assignment, the policy no longer remains a
Keyman Policy and gets converted into an ordinary policy; that as such, it is not open
to the Department to still allege that the policy is a Keyman Policy and when it
matures, the advantage drawn there from is taxable; that on maturity of the policy, it
is not the employer, but the individual, who is getting the maturity value of the
insurance; that no doubt, the employer as well as the individual take huge benefit by
such assignment, but it cannot be treated as a case of tax evasion, rather it is a case of
arranging the affairs in such a manner as to avail the state exemption as provided in
Section 10 (10D) of the Act; that benefit inured owing to the combined effect of a
prudent investment and the statutory exemption provided u/s 10 (10D) of the Act
does not call for any bifurcation in the amount received on maturity on any basis
whatsoever; and that nothing can be read into Section 10 (10D) of the Act, if it is not

specifically provided therein, since any such attempt would HarleenKaur Bhatia
&GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 tantamount to legislation and not
interpretation. It is on the basis of the above enunciation of law by the Hon'ble High
Court in the assessee's own case, that the Ld. CIT (A) has held and, in our considered
opinion, rightly so, that after assignment of the policy in favour of the assessee, it
changes its character from that of a Keyman Insurance Policy to that of an ordinary
policy and that once it has become an ordinary policy, the proceeds received there
under would not be subject to tax in view of Section 10 (10D) of the Act, due to which
nothing is taxable out of the maturity value received from the insurance policy"
34. Thus after the assignment the policies changed the character to ordinary life insurance policy
and the sum received by the assignees on maturity should not have been taxed in their hand as these
were exempt u/s 10(10D) of the Act. If for the sake of argument the amendment brought in
explanation 1 to section 10(10D) of the Act by Finance Act 2013 is treated as prospective in nature as
has been accepted by Ld. AO then the assessment order in question will not be prejudicial to the
interest of revenue as the Ld. AO adopted one of the permissible view provided in law after
considering the judgements, as has been held by Hon'ble Apex Court in the case of CIT Vs.Max India
Ltd (295 ITR 282).
34A. However, Ld. Pr. CIT while setting aside the assessment order in question took a view that the
amendment brought in by Finance Act 2013 Explanation 1 is retrospective and clarificatory in
nature and thus the alleged maturity proceeds are taxable as they were received subsequent to the
amendment. In order to adjudicate this HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 &
151 /Ind/19 issue ,we find that in the notes on clauses to amendment by Finance Act 2013 it was
observed that:
"5.1 The provisions of clause (10D) of section 10 of the Income Tax Act, 1961 before
amendment by Act, inter alia, exempt any sum received under a life insurance policy
other than a keyman insurance policy. Explanation 1 to the said clause (10D) defines
a keyman insurance policy to mean a life insurance policy taken by a person on the
life of another person who is or was the employee of the first-mentioned person or is
or was connected in any manner whatsoever with the business of the first-mentioned
person.
5.2 It has been noticed that the policies taken as keyman insurance policy are being
assigned to the keyman before its maturity. The keyman pays the remaining premium
on the policy and claims the entire sum received under such policy as exempt on the
ground that the policy is no longer a keyman insurance policy.
5.3 The exemption under section 10(10D) is claimed for policies which were
originally keyman insurance policies but during the term these were assigned to some
other person. The Courts have also noticed this loophole in law.

5.4 With a view to plug the loophole and check such practices to avoid payment of
taxes, the provisions of clause (10D) of section 10 of the Income Tax Act, 1961 have
been amended to provide that a keyman insurance policy which has been assigned to
any person during its term, with or without consideration, shall continue to be
treated as a keyman insurance policy and consequently would not be eligible for any
exemption under section 10(10D) of the Income Tax Act, 1961."
35. Accordingly existing Explanation to section 10(10D) renumbered as Explanation 1, was amended
as under:
[Explanation 1].--For the purposes of this clause, "Keyman insurance policy" means a
life insurance policy taken by a HarleenKaur Bhatia &GurvinderKaur Bhatia ITA
Nos.150 & 151 /Ind/19 person on the life of another person who is or was the
employee of the first-mentioned person or is or was connected in any manner
whatsoever with the business of the first-mentioned person [and includes such policy
which has been assigned to a person, at any time during the term of the policy, with
or without any consideration];]
36. The fate of the instant appeal depend a lot on the nature of amendment brought in by Finance
Act 2013 in explanation 1 to section 10(10D) of the Act as to whether it is prospective or
retrospective or clarificatory in nature and the same needs to examined in the light of judicial
pronouncements.
37. Hon'ble Apex court in the case of CIT vs. Essar Teleholding Ltd. (2018) 3 SCC 253 while
adjudicating the issue as to whether the applicability of Rule 8D as inserted by the Notification
dated 24.03.2008 is only prospective in nature held as follows:
Important Principles of Statutory Interpretation
23. The legislature has plenary power of legislation within the fields assigned to
them, it may legislate prospectively as well as retrospectively. It is a settled principle
of statutory construction that every statute is prima facie prospective unless it is
expressly or by necessary implications made to have retrospective operations. Legal
Maxim "nova constitutiofuturisformamimponeredebet non praeteritis", i.e. 'a new
law ought to regulate what is to follow, not the past', contain a principle of
presumption of prospectively of a statute.
24. Justice G.P. Singh in "Principles of Statutory Interpretation" (14th Edition, in Chapter 6) while
dealing with HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 operation of
fiscal statute elaborates the principles of statutory interpretation in the following words: "Fiscal
legislation imposing liability is generally governed by the normal presumption that it is not
retrospective and it is a cardinal principle of the tax law that the law to be applied is that in force in
the assessment year unless otherwise provided expressly or by necessary implication. The above rule
applies to the charging section and other substantive provisions such as a provision imposing

penalty and does not apply to machinery or procedural provisions of a taxing Act which are
generally retrospective and apply even to pending proceedings. But a procedural provision, as far as
possible, will not be so construed as to affect finality of tax assessment or to open up liability which
had become barred. Assessment creates a vested right and an assessee cannot be subjected to
reassessment unless a provision to that effect inserted by amendment is either is either expressly or
by necessary implication retrospective. A provision which in terms is retrospective and has the effect
of opening up liability which had become barred by lapse of time, will be subject to the rule of strict
construction. In the absence of a clear implication such a legislation will not be given a greater
retrospectivity than is expressly mentioned; nor will it be construed to authorize the Income tax
Authorities to commence proceedings which, before the new Act came into force, had by the expiry
of the period then provided become barred. But unambiguous language must be given effect to, even
if it results in reopening of assessments which had become final after expiry of the period earlier
provided for reopening them. There is no fixed formula for the expression of legislative intent to give
retrospectively to a taxation enactment......" "11. Now it is a well settled rule of interpretation
hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so
provide or necessarily require it, retrospective operation should not be given to a statute so as to
take away or impair an existing right or create a new obligation or impose a new liability otherwise
than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws
of England (3rdEdn.) and reiterated in several HarleenKaur Bhatia &GurvinderKaur Bhatia ITA
Nos.150 & 151 /Ind/19 decisions of this Court as well as English courts is that "all statutes other than
those which are merely declaratory or which relate only to matters of procedure or of evidence are
prima facie prospective" and retrospective operation should not be given to a statute so as to affect,
alter or destroy an existing right or create a new liability or obligation unless that effect cannot be
avoided without doing violence to the language of the enactment. If the enactment is expressed in
language which is fairly capable of either interpretation, it ought to be construed as prospective only.
38. In the case of Commissioner of Income-tax Vs. Ayodhyakumari (Mrs.) (1985) 154 ITR 604
(Raj):It was held that all provisions are considered to be prospective except when made
retrospective by express words or by necessary intendment. In case of ambiguity, the provisions
should be construed as being prospective.
39. In the case of Controller of Estate Duty Vs. Merchant (M.A.) (1989) 177 ITR 490 (SC) :Hon'ble
Court held that subsequent legislation should not to affect vested rights, unless legislation is made
retrospective expressly or by necessary implication. There is a well-settled principle against
interference with vested rights by subsequent legislation unless the legislation has been made
retrospective expressly or by necessary implication.
40. In the case of Ritz Ltd. Vs. Union of India (1990) 184 ITR 104 (Bomb.) :Irrespective of the
language in which amending provisions are couched, an amendment cannot be retrospective with
effect from a date earlier to the date on which the provision sought to be amended itself was brought
on the statute book.

41. In the case of Saurastra Agencies Pvt. Ltd. Vs. Union of India (1990) 186 ITR 634 (Cal) :Rule is
against retrospectively. Unless provided in the statute, the law is always presumed to be prospective
in nature. There cannot be any implicit inference of any retrospective operation of law. The
retrospective operation must be clear and unambiguous.
42. The expression "such" in the added portion "and includes such policy which has been assigned to
a person, at any time during the term of the policy, with or without any consideration "is significant.
This word indicates those policies which were keyman insurance policies at the time of assignment.
Any policy which was assigned prior to 01-04-2014 will no longer remain keyman insurance policies
as it has become an ordinary policy after the assignment in view of Rajan Nanda's case (supra). The
amendment will alter the character of only those ordinary policies into keyman policies if they were
Keyman policies before assignment. The amendment will not alter the character of any and every
policy into keyman insurance policy. In other words if an ordinary policy is assigned to someone
then its character will not become keyman policy by the force of amendment. It must be a keyman
insurance policy at the time of assignment only then the amendment will maintain a continuity in its
character of keyman insurance policy.
43. Thus the effect of amendment on the facts of the present case would be that when the first
assignment was done in October 2010, the amendment by Finance Act 2013 in Section 10(10D)
cannot HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 bring back the
character of the policy as Keyman insurance policy as the amendment is effective from 1-04-2014.
The amendment is prospective in character as pointed out above. Therefore if a policy is an ordinary
policy before the amendment either by contract ab- initio or by operation of law, it will not be
affected by the amendment. In other words if an assignment is done after amendment i.e. after
01-04-2014, only then effect of assignment will be neutralized and the policy will continue to hold
the character of keyman insurance policy. In view of this, the policies after assignment in October
2010 will continue to hold the character of ordinary policies till February 2015.
44. Thus, if an ordinary policy is assigned to other person, it will remain an ordinary policy after
assignment. Therefore, the assigned policies in the hands of Smt. H.K. Bhatia (assigned on
30.01.2013) will continue to be ordinary policies and sum received by them on maturity will not be
taxable even by amended section 10(10D). The said amendment in Section 10 (10D) is prospective in
nature since it enlarges the scope of taxability in the hands of assessee and any act of assignment
done before the effective date of amendment will not have any impact.
45. Even in the notes on clause toAmendment in finance Act 2013 in para 5.2 takes note of the fact
that various policies taken as Keyman Insurance Policy are being assigned to the Keyman before its
maturity and thereafter, maturity amount is claimed as exempt.
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 In para 5.3 of the notes also
notice that this is loophole in law which needs to be removed. These observations cannotes that
before this amendment various assessees were claiming exemption of the maturity proceeds of
Keyman Insurance Policy which were assigned to other person. Same is the situation in the case of
the assessee in the instant appeal wherein the policy was assigned in her favour on 30.01.2013 from

her husband which was originally taken as a keyman insurance policy by Bhatia International
Company. Since the assignment in favour of assessee duly recorded by LIC happened before the
effective date of amendment in explanation 1 to section 10(10D) of the Act the same will have no
adverse effect on the assessee and the alleged amount received on prematurity of insurance policy
will be exempted. Though Ld. Pr. CIT has questioned about the source of premium paid by the
assessee for the insurance policy, in our view there is hardly any effect on the fate of the case if the
premium is paid by assessee's husband as a gift or it is paid by assessee herself. Even otherwise
Hon'ble Delhi High Court in the case of CIT vs. Rajan Nanda (Supra)has already adjudicated this
issue in detail and the same is squarely applicable on the facts of the assessee so much so that the
policy assigned in favor of assesee was an ordinary life insurance policy and not a Keyman Insurance
policy which lost it characteristic at the time when surrender value was offered to tax by the
company "BIL". Coordinate Bench Jaipur in the case of Ravi Poddar V/s. CIT, ITA 130/JP/2016
dated 24.3.2017 has held that :-
HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 6.9 Further,
it is noted that the legislature has taken note of the said gaping holes in the taxing
provisions and has brought in suitable amendment by way of the Finance Act, 2013.
In this regard, useful reference can be drwan to the memorandum explaining the
Finance Bill 2013 which reads as under:
"The existing provisions of clause (10D) of section 10, inter alia, exempt any sum
received under a life insurance policy other than a keyman insurance policy.
Explanation 1 to the said clause (10D) defines a keyman insurance policy to mean a
life insurance policy taken by a person on the life of another person who is or was the
employee of the first-mentioned person or is or was connected in any manner
whatsoever with the business of the first-mentioned person.
It has been noticed that the policies taken as keyman insurance policy are being
assigned to the keyman before its maturity. The keyman pays the remaining premium
on the policy and claims the sum received under the policy as exempt on the ground
that the policy is no longer a keyman insurance policy. Thus, the exemption under
section 10(10D) is being claimed for policies which were originally keyman insurance
policies but during the term these were assigned to some other person. The Courts
have also noticed this loophole in law.
With a view to plug the loophole and check such practices to avoid payment of taxes,
it is proposed to amend the provisions of clause (10D) of section 10 to provide that a
keyman insurance policy which has been assigned to any person during its term, with
or without consideration, shall continue to be treated as a keyman insurance policy.
The above amendment will take effect from 1st April, 2014 and will, accordingly,
apply in relation to assessment year 2014-15 and subsequent assessments years."

46. We, can thus, safely concluded that the amendment brought in by Finance Act 2013 in
explanation 1 to section 10(10D) of the Act is prospective in nature and by no stretch can be termed
as retrospective or clarificatory in nature and shall only apply on the keyman insurance policy
assigned after 01.04.2014. Even otherwise HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150
& 151 /Ind/19 it has been submitted before us that has the policy been not assigned by the company
to its Keyman and maturity proceeds offered to tax by the company , their would have been no loss
to revenue as the company had huge losses much above the maturity proceeds during the
Assessment Year 2015-16.
47. Though Ld. Pr. CIT in the impugned order has referred to various judgments on merits as well as
legality of the case but in our considered view they are not squarely applicable on the facts of the
instant case and thus have no applicability on the issues raised before us.
48. Action of the Ld. Pr. CIT invoking the provision of section 263 can be tested on twin conditions
having been satisfied or not an order sought to be revised should be erroneous and prejudicial to the
interest of Revenue. In the present case as per the Pr. CIT the assessment order is erroneous and
prejudicial to the interest of revenue on the ground that by virtue of the amendment introduced in
the Explanation 1 to section 10(10D) inserted w.e.f. 01.04.2014 would also be applicable in the
present case as well on the basis that such explanation is clarificatory in nature. The issue related to
taxability of such Keyman Insurance policies assigned in favor of Keyman or other individual has
been examined has been examined by Hon'ble Delhi High Court in the case of CIT vs. Rajan Nanda
(2012) (supra) holding them to be exempted u/s.10(10D) of the Act . In view of this binding
precedence we do not find any fault with the assessment order as the assessing officer has taken a
view HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19 expressed by the
Hon'ble Delhi High Court which was law of the land. Pertaining to the assessment year under appeal
no view was expressed by any of the authority or the court that the clarification was introduced by
the amending Act would be retrospective in nature. Therefore, it cannot be inferred that the
assessment order is erroneous. Even no such clarification by the CBDT was available at the time of
passing of assessment order. Thus the view expressed by the Ld. CIT(A) is not supported by any of
the binding precedence.
49. We, therefore, in the given facts and circumstances of the case and following the ratio laid down
in various judgment referred hereinabove are of the considered view that the assessment order
dated 13.12.2017 which has been set aside by the Ld. Pr. CIT invoking the powers u/s 263 of the Act
is not erroneous in nature since the assessing officer has conducted adequate enquiry relating to the
issue of proceeds from prematurity of LIC policy claimed to be exempted by the assessee after
providing detailed information in the computation of income and various replied to the satisfaction
of the assessing officer during the course of assessment proceedings. Assessee has given detailed
replies on numerous occasions which have been duly considered by the Ld. AO. We are also of the
view that the assessment order dated 13.12.2017 is also not prejudicial to the interest of revenue
since proceeds are on prematurity of the life insurance policies which was noted by LIC of India on
its assignment changing the characteristic from Keyman Insurance Policy to Life insurance policy
and no expenditure has been claimed HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 &
151 /Ind/19 post its assignment and also in our view as the Amendment brought in by Finance Act

2013 explanation 1 to section 10(10D) of the Act w.e.f. 01.04.2014 is prospective in nature , same is
not applicable on the assessee since assignment of policy in favour of the keyman Mr. A.S. Bhatia
was in October 2010 and thereafter assignment recorded by the LIC in favour of the assessee on
30.01.2013 were much before the amendment brought in the Explanation 1 to section 10(10D) of the
Act effective from 01.04.2014 and thus Ld. Assessing officer was justified in accepting the claim of
the alleged receipts as exempted income u/s 10(10D) of the Act.
50. Therefore, since twin conditions which are mandatorily required to be fulfilled by Ld. Pr. CIT
before passing the order u/s 263 of the Act remains unfulfilled as the order of the Ld. AO is neither
erroneous nor prejudicial to the interest of Revenue. We, therefore, are of the view that Ld. Pr. CIT
was not correct in law in exercising the jurisdiction u/s 263 of the Act and cancelling the
assessment. We, accordingly quash the impugned order passed u/s 263 of the Act dated 21.12.2018
and restore the assessment order passed u/s 143(3) of the Act on 13.12.2017. Thus, all grounds of
appeal raised by the assessee in the case of HarleenKaur Bhatia in ITANo.150/Ind/2019 for A.Y.
2015-16 stands allowed.
Now we take up appeal for another assessee namely Smt. Gurvinder Kaur Bhatia in
ITANo.151/Ind/2019 HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19
51. Since the facts and issues involve are similar to the facts and issues adjudicated by us in the case
of Smt. Harleen Kaur Bhatia in ITANo.150/Ind/2019,we, thus apply our decision mentioned above
mutatis mutandisin this appeal also and accordingly quash the impugned order u/s 263 passed by
the Ld. Pr. CIT on 24.12.2018 and restore the assessment order passed u/s 143(3) of the Act dated
13.12.2017. Thus, all the grounds of appeal raised in the case of assessee namely Smt. Gurvinder
Kaur Bhatia in ITANo.151/Ind/2019 stands allowed.
52. In the result, both the appeals of the assessee(s) in ITANo.150 & 151/Ind/2019 stands allowed.
The order pronounced in the open Court on 18 .12.2019.
Sd/- Sd/-
( KUL BHARAT) (MANISH BORAD)

JUDICIAL MEMBER ACCOUNTANT MEMBER
/Dated : 18th December, 2019
Patel/PS
Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard

file.
By Order, Asstt. Registrar, I.T.A.T., Indore

Gurvinder Kaur Bhatia Indore Vs PR Cit 2 Indore On 18 December 2019

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Gurvinder Kaur Bhatia , Indore vs Pr.

Cit-2, Indore on 18 December, 2019

Income Tax Appellate Tribunal - Indore

Smt. Harleen Kaur Bhatia Pr.CIT-2

Assessee by S/Shri Sumit Nema & Shri

2. Assessee(s) haveraised following grounds of appeals;

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HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19

1. Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC)

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2. Abhishan Entereprises Vs CIT (2016) 28 ITJ 139 (Trib.-Indore)

3. M/s Gupta Spinning Mills vs. CIT in ITANo.3398/Del/2010

4. CIT vs. Max India Ltd. 295 ITR 282 (SC)

5. CIT vs. Gabriel India Ltd. (1993) 203 ITR 108(Bom)

6.CIT vs. R.K. Construction Co. 313 ITR 65 (Gujarat)

7. CIT vs. Arvind Jewellers (2003) 259 ITR 502(Gujarat)

1. Nirmal Textiles (1997) 224 ITR 378 (Gujarat High Corut)

2. CIT vs. Essar Teleholding Ltd. (2018) 3 SCC 253

4. CIT vs. Vatika Township Private ltd. (2015) 1SCC 1

5. CIT vs. Sarkar Builders (2015) 7 SCC 579

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enhancing or modifying the assessment, or cancelling the assessment and directing a

(i) an order of assessment made by the Assistant Commissioner or Deputy

HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19

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Court in the case of the assessee or any other person.

HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19

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HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19

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4. AnujJayendra Shah, vs. PCIT-35, Mumbai (67 Taxman.com 38)

3. Jagdish Kumar Gultai (2204) 139 Taxman 369 (All.)

4. Malabar Industrial Co. Ltd. (2000) 109 Taxman 66 (SC)

5. Crompton Greaves ltd. (2017) 82 Taxmann.com 246 (Mumbai- I.T.A.T., Bench C)

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04] Your honour is asked to submit the ,evidence of payment of taxes.

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Letter dated 17.11.2017 (Annexure A/9 of PAPER BOOK filed on 07.05.2019)

1.3] Copy of share certificate is enclosed. Encl. No.64.

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Now in case there is assignment of the Keyman Insurance Policy

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53. Once there is no assignment of company/employer in favour of the individual, the

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Important Principles of Statutory Interpretation

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HarleenKaur Bhatia &GurvinderKaur Bhatia ITA Nos.150 & 151 /Ind/19

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The order pronounced in the open Court on 18 .12.2019.