My foreign life policy matured and the department has taxed the proceeds under the Black Money Act. Does s.10(10D) help when the insurer is foreign?
Yes. The Tribunal held that s.10(10D) of the Income-tax Act draws no distinction between an Indian and a foreign insurer, and that where the premiums were paid out of income not chargeable to tax in India and out of income that had already suffered tax, the maturity proceeds of the policy could not be treated as undisclosed foreign income or an undisclosed foreign asset under the Black Money Act.
Decided by the ITAT (Shri S. Rifaur Rahman, Accountant Member and Shri Vimal Kumar, Judicial Member) on 2026-07-31, reported as BMA No. 8/Del./2024, assessment year 2017-18. It bears on section BMA s.10(3), section BMA s.2(11), section BMA s.6(3), section 10(10D), section 2(28BB), section Circular No. 13 of 2015 of the Income Tax Act 1961, in Assessment & Scrutiny, Capital Gains Exemptions and Residence & Treaty Benefit matters.
Foreign life and investment-linked policies taken while working abroad are a standing source of Black Money Act notices. This is the first located decision holding that an explained source of premium plus s.10(10D) takes the maturity proceeds outside the Act altogether, rather than merely reducing the penalty.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee took a life insurance policy from Scottish Life International, a Royal London company, on 4 March 2005 while employed in Dubai, paying an annual premium of USD 8,898. The policy matured in 2015 and yielded USD 52,896.76, being Rs 35,25,453.18. The Revenue assessed Rs 40,03,212.78 as undisclosed foreign income under s.10(3) of the Black Money Act. The Assessing Officer invoked s.10(10D) and s.2(28BB) of the Income-tax Act to contend that the maturity proceeds of a policy from a foreign insurer were taxable in India (para 16). One of the grounds raised was that the DDIT was not the Assessing Officer empowered under s.6(3) of the Black Money Act.
The appeal was allowed (para 17). The Tribunal held that once it was established that the maturity proceeds came out of declared sources, and the assessee had taken the policy and met the premiums out of income not chargeable to tax in India and out of income which had already suffered tax, the issue could not be treated as undisclosed income or an undisclosed asset under the Black Money Act (para 14), and that the maturity of the policy could not be treated as an undisclosed asset (para 15). Grounds 9 and 10 were allowed and the remaining grounds were kept open.
The Tribunal went to the source of the premiums and found it explained, which took the case outside the definition of an undisclosed asset located outside India. On the exemption, it held that the legislature had not restricted s.10(10D) or attached any condition as to the identity of the insurer, so that the benefit is available to a policyholder whether the insurer is Indian or foreign, and that the authorities cannot interpret the section differently (para 16). It also applied the answers to Questions 18, 24 and 32 of the Board's Circular No. 13 of 2015 dated 6 July 2015, observing that the explanations given by the Board apply not only to the public but equally to the tax authorities (para 14).
the maturity of the policy cannot be treated as undisclosed assets
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Handle my notice → Ask a CA on WhatsAppYes. The Tribunal held that s.10(10D) of the Income-tax Act draws no distinction between an Indian and a foreign insurer, and that where the premiums were paid out of income not chargeable to tax in India and out of income that had already suffered tax, the maturity proceeds of the policy could not be treated as undisclosed foreign income or an undisclosed foreign asset under the Black Money Act. This was decided by the ITAT (Shri S. Rifaur Rahman, Accountant Member and Shri Vimal Kumar, Judicial Member) and bears on section BMA s.10(3), section BMA s.2(11), section BMA s.6(3), section 10(10D), section 2(28BB), section Circular No. 13 of 2015 of the Income Tax Act 1961. It is reported as BMA No. 8/Del./2024, assessment year 2017-18. Foreign life and investment-linked policies taken while working abroad are a standing source of Black Money Act notices. This is the first located decision holding that an explained source of premium plus s.10(10D) takes the maturity proceeds outside the Act altogether, rather than merely reducing the penalty. If it applies to you, the first step is this: Trace the premiums to their source and show, year by year, that they came out of income not chargeable in India or income already taxed.
The assessee took a life insurance policy from Scottish Life International, a Royal London company, on 4 March 2005 while employed in Dubai, paying an annual premium of USD 8,898. The policy matured in 2015 and yielded USD 52,896.76, being Rs 35,25,453.18. The Revenue assessed Rs 40,03,212.78 as undisclosed foreign income under s.10(3) of the Black Money Act. The Assessing Officer invoked s.10(10D) and s.2(28BB) of the Income-tax Act to contend that the maturity proceeds of a policy from a foreign insurer were taxable in India (para 16). One of the grounds raised was that the DDIT was not the Assessing Officer empowered under s.6(3) of the Black Money Act. The matter was decided on 2026-07-31 by the ITAT (Shri S. Rifaur Rahman, Accountant Member and Shri Vimal Kumar, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed (para 17). The Tribunal held that once it was established that the maturity proceeds came out of declared sources, and the assessee had taken the policy and met the premiums out of income not chargeable to tax in India and out of income which had already suffered tax, the issue could not be treated as undisclosed income or an undisclosed asset under the Black Money Act (para 14), and that the maturity of the policy could not be treated as an undisclosed asset (para 15). Grounds 9 and 10 were allowed and the remaining grounds were kept open.
The Tribunal went to the source of the premiums and found it explained, which took the case outside the definition of an undisclosed asset located outside India. On the exemption, it held that the legislature had not restricted s.10(10D) or attached any condition as to the identity of the insurer, so that the benefit is available to a policyholder whether the insurer is Indian or foreign, and that the authorities cannot interpret the section differently (para 16). It also applied the answers to Questions 18, 24 and 32 of the Board's Circular No. 13 of 2015 dated 6 July 2015, observing that the explanations given by the Board apply not only to the public but equally to the tax authorities (para 14). In the words reproduced by the source cited on this page: "the maturity of the policy cannot be treated as undisclosed assets"
It was decided by the ITAT on 2026-07-31 and is reported as BMA No. 8/Del./2024, assessment year 2017-18. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section BMA s.10(3), section BMA s.2(11), section BMA s.6(3), section 10(10D), section 2(28BB), section Circular No. 13 of 2015, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed (para 17). The Tribunal held that once it was established that the maturity proceeds came out of declared sources, and the assessee had taken the policy and met the premiums out of income not chargeable to tax in India and out of income which had already suffered tax, the issue could not be treated as undisclosed income or an undisclosed asset under the Black Money Act (para 14), and that the maturity of the policy could not be treated as an undisclosed asset (para 15). Grounds 9 and 10 were allowed and the remaining grounds were kept open. It arises in Assessment & Scrutiny, Capital Gains Exemptions and Residence & Treaty Benefit matters, on section BMA s.10(3), section BMA s.2(11), section BMA s.6(3), section 10(10D), section 2(28BB), section Circular No. 13 of 2015 of the Income Tax Act 1961, and was decided by Shri S. Rifaur Rahman, Accountant Member and Shri Vimal Kumar, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the policy documents, the premium remittance trail and the employment record abroad on the file at the s.10 stage, not at appeal. Rely on s.10(10D) in terms and point out that the section does not distinguish between an Indian and a foreign insurer. Cite the Board's own answers in Circular No. 13 of 2015 - they bind the tax authorities as much as they inform the public.
Searched for later treatment; none was found. That is not the same as a source affirming it. The order is of July 2026 and no later decision applying or doubting it was located, nor any appeal against it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Ground 2 challenged the DDIT's jurisdiction on the footing that he was not the Assessing Officer empowered under s.6(3) of the Black Money Act. The Tribunal did not decide it; it allowed the appeal on the merits and kept the other grounds open. This order is therefore not authority on s.6. The assessed figure of Rs 40,03,212.78 is larger than the maturity proceeds of Rs 35,25,453.18 and the order does not explain the difference. The policy matured in 2015 but the assessment is for assessment year 2017-18; the order does not deal with the choice of year. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed (para 17). The Tribunal held that once it was established that the maturity proceeds came out of declared sources, and the assessee had taken the policy and met the premiums out of income not chargeable to tax in India and out of income which had already suffered tax, the issue could not be treated as undisclosed income or an undisclosed asset under the Black Money Act (para 14), and that the maturity of the policy could not be treated as an undisclosed asset (para 15). Grounds 9 and 10 were allowed and the remaining grounds were kept open.
TaxSphere, “Sarvesh Naidu v DDIT (Inv)”, https://taxnotice.vittsphere.com/caselaw/case/sarvesh-naidu-v-ddit-bma-foreign-life-policy-maturity/ (validity last checked 2026-09-16)
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