2019 (8) TMI 370 - AT - Income Tax

Revenue's Appeals Dismissed, Assessee's Cross Objections Partially Allowed on Section 14A

The Deputy Commissioner of Income Tax, Circle-1 (1), Pune Versus M/s. Bajaj Allianz General Insurance Company Ltd.

The Tribunal dismissed the Revenue's appeals and partially allowed the assessee's cross objections for assessment years 2013-14 and 2014-15, concerning ... Disallowance u/s 14A - case of Insurance companies like assessee where provisions of Section 44 of the Act apply - HELD THAT:- It is the case of the assessee, where computation of income was done u/s.44 of the Act relating to “Insurance business”, the provision of section 14A cannot be invoked for making disallowance. Stating that this is covered issue, assessee submitted that the CIT(Appeal) granted relief to the assessee on this issue as per discussion given in Para 6 stating the Tribunal has decided this issue in favour of the assessee relying on the earlier order of Tribunal in assessee‟s own case for assessment year 2003-04. CIT(Appeals) granted relief to the assessee relying on the various decisions of the Tribunal as well as the Hon‟ble Delhi High Court in the case of Dy. CIT Vs. Oriental General Insurance Co. Ltd. [2004 (9) TMI 323 - ITAT DELHI-C] Allowability educational cess paid on income tax as expenses - HELD THAT:- Education Cess, which is not disallowable item, on its payment, the cess is an allowable expenditure as per provision of section 40(a)(ii) of the Act. Considering the settled nature of the issue as per the ratio laid down in the above referred case by CHAMBAL FERTILISERS AND CHEMICALS LTD., PR. COMMISSIONER OF INCOME TAX, KOTA. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] Issues involved:Cross appeals regarding the applicability of section 14A of the Income Tax Act, 1961 for assessment years 2013-14 and 2014-15.Analysis:1. ITA No.1111/PUN/2017 (By Revenue - A.Y. 2013-14):- The Revenue challenged the CIT(Appeal) order regarding the disallowance under section 14A of the Income Tax Act. The issue revolved around the applicability of section 14A in the case of Insurance companies under Section 44 of the Act. The CIT(Appeal) granted relief to the assessee based on previous Tribunal decisions and the Delhi High Court ruling. The Tribunal found the issue settled and upheld the CIT(Appeal) order, dismissing the Revenue's appeal.2. CO No.23/PUN/2019 (By Assessee - A.Y. 2013-14):- The assessee raised cross objections challenging the disallowance under section 14A and the computation under Rule 8D of the Income Tax Rules for AY 2013-14. The issue of applicability of revised Rule 8D was also contested. The Tribunal dismissed the grounds as academic due to the relief granted earlier. Regarding the deduction for Education Cess, the Tribunal referred to a Rajasthan High Court decision, allowing the cross objection partially.3. ITA No.1112/PUN/2017 & CO No.24/PUN/2019 (By Revenue & Assessee - A.Y. 2014-15):- The Revenue and the assessee raised similar grounds as in the previous appeal for AY 2013-14. The Tribunal applied the decision from the earlier appeal, dismissing the Revenue's appeal and partially allowing the cross objection by the assessee.In conclusion, the Tribunal dismissed both appeals by the Revenue and partly allowed the cross objections by the assessee for both assessment years. The judgment was pronounced on July 25, 2019, by the ITAT Pune.