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C/SCA/19328/2019 JUDGMENT 4.3 Further, the assessee has claimed that provision of section 80CCC(2) is not applicable as he has not claimed deduction U/s 80CCC(1) of the I.T. Act. In this connection, it is stated that Interest or bonus received by the assessee on account of surrender of annuity plan of LIC of India or any other insurer should be taxable where no deduction claimed U/s 8OCCC(1) of the I.T. Act. Whereas any amount standing to the credit of assessee's account including interest or bonus in respect of which deduction U/s 8OCCC(1) of the Income Tax Act has been allowed should be taxable U/s 80CCC(2) r.w.s. 56 of the Income Tax Act when received on account of surrender of the annuity plan. In the case of the assessee, the assessee has stated that he has not claimed deduction U/s 8OCCC(1) of the I.T. Act, accordingly only interest and bonus amount were considered as taxable income in the case of the assessee. In view of the same, the contention of the assessee is not acceptable and is not correct."

12 The second contention, as raised by Mr. Vora, is that as no deduction under Section 80CCC(1) was claimed, there is no question of the applicability of Section 80CCC(2) of the Act. In other words, when no deduction under Section 80CCC(1) is claimed or allowed, Section 80CCC(2) would not be applicable.

13 On the other hand, this writ application has been vehemently opposed by Ms. Mauna Bhatt, the learned Senior Standing Counsel appearing for the Revenue. Ms. Bhatt would submit that the return was processed under Section 143(1) of the Act on 6 th May 2013. The same was not subjected to scrutiny assessment under Section 143(3) of the Act. She would submit that the assessee had obtained policy No.854168988 on 28th June 2006 and had paid annual premium of Rs.10,00,000/­ per year up to the financial year 2010­11. The total amount paid by the assessee was Rs.50,00,000/­. The date of commencement of policy was 28th June 2006 and date of last premium was 28th June 2020. The assessee had surrendered the policy prematurely on 15th April 2011. The assessee received the surrender value of Rs.67,65,558 on 15th April 2011, which included an amount of Rs.17,65,558/­ being accretion on account of interest and bonus on the credit of the assessee in the policy fund. The assessee did not offer this accretion value of Rs.17,65,558 for taxation. The accretion value of Rs.17,65,558 was taxable under section 56 of the I.T. Act, 1961.

● Section 80CCC of the Act:

23 Section 80CCC of the Act reads thus:

"80CCC. Deduction in respect of contribution to certain pension funds. ­ (1) Where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India [or any other insurer] for receiving pension from the fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to, the provisions of this section, be allowed & deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee's account, if any) as does not exceed the amount of [one hundred and fifty thousand] rupees in the previous year.

(ii) HUF or Hindu Undivided Family is not eligible for exemption under Section 80CCC.

C/SCA/19328/2019 JUDGMENT

(iii) These provisions apply to both residents as well as non­ residents.

25 In our opinion, the reference to Section 80CCC(2) is thoroughly misconceived for two reasons: first, Section 80CCC deals with annuity plans whereas we are concerned with life insurance policy; secondly, Section 80CCC(2) of the Act makes any sum received by the assessee from the insurer towards contract for any annuity plan, taxable provided premium paid for such plan is claimed as allowable deduction under Section 80CCC(1) of the Act. In the facts of the present case, there is no such averment or findings that the amount of premium paid has been claimed and allowed as deduction under Section 80CCC(1) of the Act.