In a significant triumph for the Life Insurance Corporation (LIC), the Income Tax Department has issued a refund intimation totaling Rs 25,464.46 crore, covering seven assessment years.
This refund is a resolution to the ongoing dispute between the Income Tax Department and LIC concerning the allowance of interim bonuses paid to policyholders by the corporation as deductible expenditure.
LIC, in a filing with stock exchanges, revealed that the substantial Rs 25,464 crore refund pertains to the assessment years 2012-13, 2013-14, 2014-15, 2016-17, 2017-18, 2018-19, and 2019-20.
The disagreement initially arose as LIC contended that these interim bonus payouts should be considered permissible expenditure for taxation purposes. However, the assessing officer of the Income Tax Department initially viewed it as taxable, asserting that surplus was being distributed in the form of an interim bonus.
LIC challenged this decision through various appellate forums, including the Income Tax Appellate Tribunal (ITAT), which directed the IT Department to re-examine the case.
Upon reconsideration, the assessing officer, while issuing the refund for the seven assessment years, concurrently issued a separate demand order of Rs 2,133 crore for two other years.
Consequently, LIC received a refund of Rs 25,464 crore after adjusting the Rs 2,133 crore, as opposed to the earlier anticipated refund of about Rs 27,500 crore for the seven assessment years, according to sources.
LIC intends to appeal to the Commissioner, Appeals against all the demand orders, namely Rs 2,133.67 crore, Rs 1,395 crore, and Rs 1,370 crore, for various assessment years, as disclosed in its filings with stock exchanges.
It's noteworthy that these demand orders are not expected to have any material impact on the financials, operations, or other activities of LIC, according to the corporation's statements.
(With Agency Inputs)
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