2018 (1) TMI 231 - AT - Income Tax

Tribunal Upholds CIT-A's Decision on Revenue Appeals, Cites Income Tax Act

The Tribunal dismissed both appeals filed by the Revenue, upholding the CIT-A's decisions on all issues. The Tribunal found that the CIT-A's orders were ... MAT computation - Reserve for unexpired risk created as per requirement by law not to be added in computing book profit u/s. 115JB of the Act - Held that:- We find that the issue in hand is squarely covered by the order in assessee’s own case [2016 (8) TMI 326 - ITAT KOLKATA], which has rightly pointed out by the ld.AR of the assessee, wherein the Tribunal had held that reserve created for unexpired risk need not be added back for the purpose of computation of book profit u/s. 115JB. Addition being investment written off - Held that:- CIT-A was justified in holding that a sum being investment written off is an allowable deduction. Amortization of premium paid on investment - Held that:- We find that this Tribunal in assessee’s own case supra deleted the said disallowance on the ground that the CIT-A has given relief to assessee by placing his reliance on the decisions of the Hon’ble Supreme Court in the cases of General Insurance Corporation of India Vs. CIT reported in (1999 (9) TMI 3 - SUPREME Court) and CIT Vs. Oriental Fire & General Insurance Co. Ltd reported in (2007 (5) TMI 193 - SUPREME Court), wherein it was held that the AO had no general power to make any adjustment in the accounts of a general insurance company. We further find that the revenue was not able to controvert the detailed findings of the CIT-A. - Revenue appeal dismissed. Issues Involved:1. Condonation of delay in filing appeals.2. Whether the Reserve for Unexpired Risk should be added in computing book profit under section 115JB of the Income Tax Act.3. Deletion of addition related to investment written off.4. Deletion of addition related to amortization of premium paid on investment.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing Appeals:The Revenue filed an application to condone a 7-day delay in filing both appeals. The Tribunal reviewed the petition and affidavit supporting the condonation request. Convinced that the Revenue had sufficient cause for the delay, the Tribunal condoned the delay and admitted both appeals.2. Reserve for Unexpired Risk and Computation of Book Profit under Section 115JB:The primary issue was whether the Commissioner of Income Tax (Appeals) [CIT-A] was justified in holding that the Reserve for Unexpired Risk, amounting to Rs. 87,78,52,000, should not be added back when computing book profit under section 115JB. The Tribunal referred to its previous order dated 05-08-2016 in the assessee's own case for earlier assessment years (2005-06, 2007-08, and 2008-09), which held that the reserve created for unexpired risk need not be added back for the purpose of computing book profits under section 115JB. The Tribunal found no infirmity in the CIT-A's decision and dismissed the Revenue's ground, thus upholding the CIT-A's order.3. Deletion of Addition Related to Investment Written Off:The issue was whether the CIT-A was correct in deleting the addition of Rs. 1,67,74,000 related to investment written off. The Tribunal noted that this issue was covered by its order dated 05-08-2016 in the assessee's own case for earlier assessment years. The Tribunal reiterated that the write-off of investments should not be considered as an expenditure or allowance that could be added back under section 44 read with Rule 5 of the First Schedule to the Income Tax Act. The Tribunal upheld the CIT-A's decision and dismissed the Revenue's ground.4. Deletion of Addition Related to Amortization of Premium Paid on Investment:The issue was whether the CIT-A was justified in deleting the addition of Rs. 4,62,08,000, which was claimed as amortization of premium paid on investment. The Tribunal referred to its previous order dated 05-08-2016, where it was held that such amortization should not be disallowed, based on the Supreme Court decisions in General Insurance Corporation of India vs. CIT and CIT vs. Oriental Fire & General Insurance Co. Ltd. The Tribunal found no reason to differ from its earlier decision and upheld the CIT-A's order, dismissing the Revenue's ground.Conclusion:The Tribunal dismissed both appeals filed by the Revenue, upholding the CIT-A's decisions on all the issues. The Tribunal found that the CIT-A's orders were consistent with previous judicial decisions and the specific provisions of the Income Tax Act relevant to the insurance business. The Tribunal pronounced the order in open court on 23-08-2017.