Tribunal rules in favor of assessee, dismissing revenue's appeal. Order pronounced on October 23, 2013.

The Tribunal allowed the assessee's appeal, dismissing the revenue's appeal and the assessee's cross objection. The order was pronounced on October 23, 2013.

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Issues Involved:
1. Disallowance of liability towards Environmental Relief Fund under Section 43B.
2. Deletion of addition on account of disallowance of claim exemption of profit on sale/redemption of investments.
3. Applicability of Section 14A in the case of the present assessee.

Issue-wise Detailed Analysis:

1. Disallowance of liability towards Environmental Relief Fund under Section 43B:

The assessee challenged the CIT(A)'s decision upholding the Assessing Officer's (AO) action of disallowing the liability towards the Environmental Relief Fund amounting to Rs.69,76,873/- under Section 43B of the Income Tax Act. The AO noted that the assessee had added back the amount in the statement of income as it was not paid before the date of furnishing the return. The AO rejected the assessee's claim for deduction, citing the Supreme Court decision in Goetz (India) Ltd. vs. CIT, which mandates that claims for deduction can only be made by filing a revised return. The CIT(A) upheld the AO's action. The Tribunal found that a similar issue had been restored to the AO for fresh consideration in the assessee's own case for A.Y. 2006-07. Respectfully following this precedent, the Tribunal restored the issue to the AO for fresh decision in accordance with the law, allowing the ground raised by the assessee for statistical purposes.

2. Deletion of addition on account of disallowance of claim exemption of profit on sale/redemption of investments:

The revenue appealed against the CIT(A)'s decision to delete the addition of Rs.11,23,922/- made by the AO on account of disallowance of claim exemption of profit on sale/redemption of investments. The AO had added the amount, arguing that the profit realized on the sale of investments should be considered as business income and not exempt, as Rule 5(b) of the First Schedule had been deleted. The CIT(A) deleted the addition, following the Tribunal's order for A.Y. 2003-04, which was upheld by the Tribunal for A.Y. 2006-07. The Tribunal found that the issue had been consistently decided in favor of the assessee in previous years and followed the rule of consistency, dismissing the revenue's grounds.

3. Applicability of Section 14A in the case of the present assessee:

The revenue contested the CIT(A)'s conclusion that Section 14A of the Income Tax Act was not applicable to the assessee. The AO had made an addition of Rs.18,14,03,633/- under Section 14A, rejecting the assessee's explanations. The CIT(A) allowed the assessee's claim, following the Tribunal's decision in the assessee's own case for previous years, which held that Section 14A did not apply to insurance companies assessed under Section 44. The Tribunal found that the issue had been consistently decided in favor of the assessee in previous years, including A.Y. 2003-04 and A.Y. 2006-07, and upheld the CIT(A)'s decision, dismissing the revenue's ground.

Cross Objection by Assessee:

The assessee's cross objection challenged the computation of disallowance under Section 14A at Rs.18,14,03,633/-. The CIT(A) had held that Section 14A was not applicable to the assessee, a view upheld by the Tribunal. Consequently, the cross objection became infructuous and was dismissed.

Conclusion:

The Tribunal allowed the assessee's appeal (ITA No.1508/PN/2012), dismissed the revenue's appeal (ITA No.1406/PN/2012), and dismissed the assessee's cross objection (CO No.42/PN/2013), pronouncing the order on October 23, 2013.

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