2018 (2) TMI 432 - AT - Income Tax

Tribunal affirms aggregation of policy holder & shareholder accounts for income determination under sec. 44

The Dy. Commissioner of Income-tax, Circle-5 (1) (2), Bengaluru Versus M/s PNB Metlife India Insurance Co. Ltd.

The Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) and dismissed the Revenue's appeal for the assessment year 2013-14. It ... Computing income from life insurance business - determining the income of the assessee u/s. 44 - Held that:- Following the orders of tribunal in the assessee’s own case for asst. year’s 2011-12 and 2012-13 we are of the view and hold that surplus/deficit of policy holders account may be aggregated with the surplus/deficit of the shareholders account for determining the income of the assessee u/s 44 of the Act. We find no reason to interfere with the finding/order of the ld CIT(A) on this issue and consequently dismiss the appeal filed by Revenue. Issues:1. Interpretation of sec. 44 of the Income Tax Act for aggregating surplus/deficit from policy holders and shareholders account in the computation of income from life insurance business.Analysis:The appeal before the Appellate Tribunal ITAT Bangalore involved the interpretation of sec. 44 of the Income Tax Act concerning the aggregation of surplus/deficit from policy holders and shareholders account for computing income from the business of life insurance. The case revolved around the denial of aggregation benefit by the Assessing Officer (AO) in determining the assessee's income for the assessment year 2013-14. The Commissioner of Income-tax (Appeals) - 5, Bangalore allowed the appeal filed by the assessee, relying on the decision of a co-ordinate bench in the assessee's own case for the assessment year 2011-12. The Revenue challenged this decision on various grounds, questioning the interpretation of sec. 44 and the aggregation of income components.Upon careful consideration, the Tribunal analyzed the relevant provisions of the Act and referred to previous decisions in the assessee's case for the assessment years 2011-12 and 2012-13. The Tribunal noted that the co-ordinate bench had held that surplus/deficit from policy holders account should be aggregated with surplus/deficit from shareholders account for determining the profit/loss of the assessee under sec. 44 of the Act. The Tribunal reiterated this position, emphasizing the aggregation of income components as per the previous decisions. Consequently, the Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) and dismissed the Revenue's appeal for the assessment year 2013-14, affirming that surplus/deficit of policy holders account can be aggregated with the surplus/deficit of shareholders account for determining the income of the assessee under sec. 44 of the Act.In conclusion, the Tribunal's judgment clarified the interpretation of sec. 44 of the Income Tax Act regarding the aggregation of surplus/deficit in the computation of income from the business of life insurance. The decision was based on consistent precedents in the assessee's own case for previous assessment years, affirming the permissibility of aggregating income components as prescribed by the Act.