2019 (5) TMI 1992 - AT - Income Tax

Appellate Tribunal Upholds Decisions of Coordinate Bench, Revenue's Appeal Dismissed

DCIT - 9 (3) (2), Mumbai Versus M/s Future Generali India Life Insurance Co. Ltd.

The Appellate Tribunal upheld the decisions of the Coordinate Bench of Hon'ble ITAT, dismissing the revenue's appeal on both issues. The Tribunal ... Taxation of life insurance business - transfer from share holders account to Policy Holder’s account and shown as part of ‘surplus’ in the ‘actuarial valuation’ - only transfer of capital asset and not taxable u/s 44 of the Act r.w.r. 2 of the First Schedule - HELD THAT:- We find that the identical ground has already been decided by the Coordinate Bench of Hon’ble [2017 (3) TMI 1696 - ITAT MUMBAI] in assessee’s own case as held held that (i) amount set apart by insurance company towards solvency margin as per the direction given by IRDA is to be excluded while computing actuarial valuation surplus, and (ii) pension fund like Jeevan Suraksha Fund would continue to be governed by provisions of section 44 irrespective of the fact that income from such fund is exempted, or not and, therefore, even after insertion of section 10(23AAB), loss incurred from pension fund like Jeevan Suraksha Fund has to be excluded while determining actuarial valuation surplus from insurance business u/s 44 of the Act. Thus we apply the same findings which are applicable mutatis mutandis in the present case. Resultantly, this ground raised by the revenue stands dismissed. Issues:1. Challenge to the order regarding the transfer from shareholders account to Policy Holder's account.2. Challenge to the deletion of addition made by AO on account of loss from Pension Fund.Transfer from Shareholders Account to Policy Holder's Account:The appeal by the revenue challenged the order of Ld. CIT(A) regarding the transfer from shareholders account to Policy Holder's account. The issue was whether this transfer, shown as part of 'surplus' in the 'actuarial valuation,' constituted a transfer of capital asset taxable under section 44 of the Act read with rule 2 of the First Schedule. The Ld. AR for the assessee contended that this issue had already been decided by Hon’ble ITAT in ITA No. 4373/Mum/15 for AY 2011-12 in the assessee’s own case. The Hon’ble ITAT had held that income from shareholders account was to be taxed as part of the life insurance business. The decision was based on precedents such as ICICI Prudential Insurance Co. Ltd. and LIC of India vs. CIT. The Tribunal, following the earlier decision, dismissed the revenue's appeal, maintaining judicial consistency and applying the same findings.Deletion of Addition on Account of Loss from Pension Fund:The revenue also challenged the deletion of the addition made by the AO on account of loss from the Pension Fund. The issue revolved around whether income includes loss and whether income from the Pension Fund forms part of the total income of the assessee corporation u/s 10(23AAB) of the I.T. Act. Similar to the previous issue, the Ld. AR argued that this matter had already been decided by the Hon’ble ITAT in ITA No. 4373/Mum/15 for AY 2011-12 in the assessee’s own case. The Tribunal referred to the case of Life Insurance Corporation of India Ltd. where it was held that the loss incurred from the Pension Fund had to be excluded while determining actuarial valuation surplus from the insurance business u/s 44 of the Act. Following the precedent set by the Hon’ble Bombay High Court, the Tribunal dismissed the revenue's appeal on this ground as well.In conclusion, the Appellate Tribunal upheld the decisions of the Coordinate Bench of Hon’ble ITAT and maintained judicial consistency in dismissing the revenue's appeal on both issues. The Tribunal pronounced the order on 24th May 2019, with no order as to cost.