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80 - C

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)

01 February 2010

I know its basic Q.., but i cant recall any solution.... Can someone tell me that if an assessee's wife issued cheque from her bank account against LIC policy of assesseee.., can assessee still avail the deduction????

I mean, wife is not having any income from any source, so clubbing is not feasible.. What can be done????

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15 Replies

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 01 February 2010

i dont think deduction can be calimed. When income of wife is clubbed, deduction can ben availed. however, in this case, premium s not paid from the assessee's income. For claiming ded. under chapter vi-A, it is mandatory that amount must be paid out of income. Hence,no deduction can be availed

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Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear Dhiraj,

If wife is not having any source of Income that simply means that the premium is paid out of Husband's income..And the fact that it is paid by a cheque which is signed by his wife will not affect the applicability of Deductions..

Another thing, even if wife was having income then also Deduction can be claimed by the husband, by prooving it as a transaction of loan (in the form of direct payment made by wife )..

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CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 01 February 2010

HI amir, i was also thinking d same, that deduction is eligilbe.... But few of GOOD FRIENDS confused me.... U have any source or something to prove??

Amir (Learner) (4016 Points)
Replied 01 February 2010

Brother let me search

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 01 February 2010

deduction can be claimed only by the payer and not the owner of the policy. i will search and given you the link of the same(if available)

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CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 01 February 2010

hi mukund.. i dont diagree wid ur arguements.. but i just need some source... hope u give it as early as possible...

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 01 February 2010

Please have a look at the follg, Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscripttion to certain equity shares or debentures, etc. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one lakh rupees. (2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee (i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4); Hence only the payer can claim deduction. Suppose if husband claims deduction, the wife does not lose the right to claim deduction(As she is the payer). By doing so, it will amount to double deduction

sushil (ARTICLE) (27 Points)
Replied 01 February 2010

agreed by amir's post........ deduction can be claimed by husband.............. in practical life, but according to law he can not claimed for deduction bcoz he was not pay the insurance premium, deduction can be claimed by the assessee who pays such premium amt.

manish bairagi (practice & coaching) (106 Points)
Replied 01 February 2010

Ded. can b claimed by the assessee.....as it has already in knowledge that wife is not earning from anywhere.....

Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear Mukund,

U r rite in saying that deduction can be claimed only by the payer & not the owner...

what i meant is if it can be proved that payment has actually been made by the husband's income and just that the cheque was made by wife, then deduction will be allowed...

Brother, remember like for claiming depreciation "ownership on paper is not material" same way substance has to be looked in & not mere form.

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CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 01 February 2010

dear sushil, In the given case, u say husband can claim ded. (because he is the owner of the policy). But as per Chapter VI-A, the payer(Wife) has the inherent right to claim ded.This will lead to double deduction. Then suppose husband pays premium for wife policy, do u mean to say wife can clai ded. In that case, definition of INDIVIDUAL in sec.80c is redundant(ie)life of spose, children etc.). Instead they could have given as ONLY POLICY OWNER CAN CLAIM DEDUCTION

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 01 February 2010

arey mukund bhai, when wife is not filing any ITR... then how she's gonna claim deduction on that..... and if she's filing ITR., then they can go for clubbing.... simple hai buddy

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 01 February 2010

ye sab kuch jyada hi ho raha hai... Y r u discussing to this great extend???

(Guest)

Husbank can cliam even if wife has income. As amir rightly said it will be treated as loan or gift. But only one condition, if husband claims deduction then wife can't claim deduction on same policy. Department doesn't loose in this. So they will accept and bound to accetp as there are no specific section disqualifying above view.