11 May 2009
there is an agreement between A-TAXPAYER and B-LIC POLICY HOLDER vide which because mr.B is in need of money, instead of surrendiring his policy to LIC he enter into agreement with MR.A who pays him the agreed amount towards MR.B LIC POLICY. The policy is in force and now onwards MR.A will pay the premium and all benefits received in MR.B LIC POLICY will be available/payble to MR.A. There is written agreement to the above.
now the question is whether MR.A can claim the deduction under section 80-c of I.T. as techinically he is paying the LIC PREMIUM
11 May 2009
No, In my opinion Mr. A can not claim deduction u/s 80 C. Following is the basis of my opinion- As per section 80C(1) in computing the total income of an assessee amount referred in sub section (2) shall be allowed as deduction-
As per sub section (2)clause (I) "to effect or keep in force an insurance on the life of persons specified in sub section (4).
In your case although Mr. A are getting all the benifit of policy and he is paying premium also but that premium is not paid to "keep in force an isurance of the life of persons specified in sub section (4) " (only relatives and individual r specified under sub section (4)
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