LIC Receives Income Tax Demand Order of Rs4,899.35 Crore, Receives Rs25,464 Crore Refund on Interim Bonus
Moneylife Digital Team/ IANS 12 January 2024
Life Insurance Corporation of India (LIC) has received orders for Rs4,899.35 crore from Income Tax (I-T) authorities regarding tax demand issued by the assistant commissioner of I-T, Mumbai. So far, LIC has received tax demand notices worth Rs4,899.35 for assessment years (AYs)11-12 to AY19-20. The I-T department has also issued a refund intimation of Rs25,464.46 crore for seven assessment years to LIC.
 
"Corporation shall file an appeal before Commissioner (Appeals), Mumbai, against the said orders within the prescribed timelines. There is no material impact on financials, operations or other activities of the Corporation due to the abovementioned orders," LIC says in a regulator filing.
 
Pursuant to the issuance of the order giving effect to the order of ITAT, the I-T department has issued intimation for a refund of Rs25,464.46 crore. The ITAT had directed the assessing officer to examine the factual matrix or utilisation of surplus and decide in accordance with the law with respect to the issue of disallowance/addition on account of interim bonus made in the assessment order.
 
On reconsideration, the assessing officer disallowed the same. The tax effect of such disallowance comes to Rs2,133.67 crore. This pertains to AY12-13, AY13-14, AY14-15, AY16-17, AY17-18, AY18-19, and AY19-20.
 
The ITAT had directed the assessing officer to examine the factual matrix or utilisation of surplus and decide in accordance with the law with respect to the issue of disallowance or addition on account of interim bonus made in the assessment order. On reconsideration, the assessing officer disallowed the same. and issued a demand notice for Rs1,395.08 crore. This pertains to AY15-16.
 
For AY11-12, LIC received tax demand worth Rs1,370.60 crore from the I-T department in Mumbai.
 
LIC also says the I-T department has issued a refund intimation of Rs25,464.46 crore for seven assessment years. The refund pertains to the ongoing dispute between the tax department and LIC over allowing interim bonuses paid to policyholders by the corporation as deductible expenditures.

"The aggregate Rs25,464 crore refund pertains to AY12-13, AY13-14, AY14-15, AY16-17, AY17-18, AY18-19, and AY19-20," LIC says in a regulatory filing.

LIC had challenged the assessing officer’s decision in various appellate forums, including ITAT, which directed the I-T department to re-examine the case.

On reconsideration, the assessing officer, while issuing the refund for seven assessment years, also made a separate demand order of Rs2,133 crore for two other years.

So, as against the earlier expected refund of about Rs27,500 crore for seven assessment years, LIC has now got a refund of Rs25,464 crore after adjusting Rs2,133 crore.
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