WHETHER DEDUCTION U/S 80C IS AVAILABLE EVEN IF THE PAYER IS NOT A PROPOSER OF LIC POLICY?

WHETHER DEDUCTION U/S 80C IS AVAILABLE EVEN IF THE PAYER IS NOT A PROPOSER OF LIC POLICY?”

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Section 80C

Query 1]

Section 80C of the Income Tax Act-1961 allows payment of Life Insurance Premium paid by an individual for the policy in his name or in the name of his/her spouse or children. Is it necessary under Income Tax Act that, to be eligible for this deduction, the person making the payment of the premium should be the Proposer of the life policy? I have not proposed the policy of my child, my wife is the proposer but I am making the payment, would it be acceptable to IT Authorities? If the authorities reject such a claim, what defense I would have? Please examine and share the views. [CA. SP]

Opinion:

  1. Deduction u/s 80C is available to an individual &HUF.

  2. For life insurance payment, deduction is available
    a] to an individual if it is paid to keep in force the insurance on the life of Assessee himself or the Spouse or any child of the individual,
    b] to the HUF if it is paid to keep in force the insurance on the life of any of the member.
  3. The payer need not necessarily be the proposer so as to be eligible for deduction u/s 80C.
  4. The claim cannot be rejected on the grounds of payer being a non-proposer. If rejected, Appeal would be the option available with the Assessee.

Query 2]

Sir, the factors such as purchase/sale value, Brokerage, Taxes etc. are involved in the trading of shares/ future options. Please issue the guidelines for computation of short/long term gain or loss considering the above factors. Please advice

[rameshsabnani44@gmail.com]

Opinion:

  1. The Profit/Loss arising from the transactions in shares could either be treated as Business Income or could yield Capital gain Income. Income from Future & Option is normally taxable as “Income from Business& Profession”.
  2. The treatment of the Brokerage, Service Tax & Securities Transactions Tax (STT), would be as under:
    a] If the Income is to be treated as Business Income:
    If profit on share trading is offered as business income, then all the expenses, i.e., brokerage, service tax, T.O. Charges, Stamp Charges,. STT etc are allowed as business expenditure.
    b] If the Income is to be treated as Capital Gain Income:
    Brokerage, Service tax, T.O charges & stamp charges paid at the time of purchase of shares will be added to your cost of acquisition and those paid at the time of sale will be deductible from sale consideration. It may be noted that STT cannot be added as your cost of acquisition and is not deductible while selling the shares.
Query 3]
Is there any provision under the Income Tax Act -1961. So as to enable the Assessee to get back the refund of excess T.D.S.? [CA. AR]

Opinion:

Income Tax Act prior to Asst Year 2010-11 had no express provision of processing of TDS returns, as it has for income tax return. There was also no express provision under I T Act for refund of excess TDS deposited till A.Y. 2010-11.

However, section 200A of the I T Act introduced from 01/04/2010 has brought in very much required amendment. It not only sets in motion a process of  prima-facie Assessment of TDS retun (read statement) .

The provision is as under:

200A. (1) Where a statement of tax deduction at source has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:—

(a)   the sums deductible under this Chapter shall be computed after making the following adjustments, namely:—

(i)   any arithmetical error in the statement; or

(ii)   an incorrect claim, apparent from any information in the statement;

(b)   the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;

(c)   the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest;

(d)   an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and

(e)   the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor :

Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.

Section 80C


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