LI Network
Published on: January 13, 2024 at 13:19 IST
In a significant victory for the Life Insurance Corporation (LIC), the Income Tax Department has issued a refund intimation amounting to Rs 25,464.46 crore for seven assessment years.
This refund is linked to an ongoing dispute between the Income Tax Department and LIC concerning the treatment of interim bonuses paid to policyholders by the corporation as deductible expenditure.
The substantial refund, totaling Rs 25,464 crore, pertains to the assessment years 2012-13, 2013-14, 2014-15, 2016-17, 2017-18, 2018-19, and 2019-20, as disclosed in LIC’s filing with stock exchanges.
While LIC contends that interim bonus payouts fall under permissible expenditure for taxation purposes, the assessing officer of the Income Tax Department initially deemed it taxable, arguing that it constituted the distribution of surplus as an interim bonus.
LIC challenged the assessing officer’s 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, also issued a separate demand order of Rs 2,133 crore for two other years.
Contrary to the earlier anticipated refund of approximately Rs 27,500 crore for seven assessment years, LIC has now received a refund of Rs 25,464 crore after adjusting Rs 2,133 crore, according to sources.
LIC intends to appeal to the Commissioner, Appeals against all demand orders, totaling Rs 2,133.67 crore, Rs 1,395 crore, and Rs 1,370 crore, for various assessment years, as per LIC’s filings with the stock exchanges.
LIC has assured that these demand orders have no material impact on its financials, operations, or other activities.
