2021 (2) TMI 179 - AT - Income Tax

Tribunal Upholds Assessee's Stand: Section 44 Overrides Section 14A for Insurance; Pension Fund Losses Excluded in Actuarial Surplus.

Exide Life Insurance Company Ltd. (formerly known as ING Vysya Life Insurance Company Ltd.) Versus The Assistant Commissioner of Income Tax, Circle 1, LTU, Bangalore, The Deputy Commissioner of Income Tax, LTU, Circle 1, Bangalore

Exide Life Insurance Company Ltd. (formerly known as ING Vysya Life Insurance Company Ltd.) Versus The Assistant Commissioner of Income Tax, Circle 1, ... Issues:1. Disallowance u/s. 14A of the Income-tax Act, 1961.2. Relief in respect of provisions of section 10(23AAB) of the Act.Analysis:1. Disallowance u/s. 14A of the Income-tax Act, 1961:- The appeals involved cross appeals by the assessee and revenue against the CIT(Appeals) orders for different assessment years.- The main issue was the disallowance u/s. 14A of the Act, contested by the assessee engaged in life insurance business.- The AO and CIT(Appeals) made disallowances u/s. 14A for certain assessment years, which were challenged by the assessee.- The Hon'ble Delhi High Court's judgment in a similar case was cited, emphasizing that section 44 of the Act overrides section 14A, excluding its applicability to the computation of income of an insurance company.- The Tribunal upheld the assessee's contentions, ruling in favor of the assessee and against the department.- The Tribunal also addressed the objection raised by the ld. DR regarding raising the issue of disallowance u/s. 14A in the proceedings u/s. 154, highlighting that the AO had already dealt with this issue, leading to the allowance of the assessee's appeal on this ground.2. Relief in respect of provisions of section 10(23AAB) of the Act:- The revenue's appeal focused on allowing relief concerning section 10(23AAB) provisions.- The AO did not exclude the loss incurred from the pension fund, exempt u/s. 10(23AAB), while determining the actuarial valuation surplus u/s. 44 of the Act.- The CIT(Appeals) allowed the assessee's appeal based on earlier orders and judgments, leading to the revenue's appeal before the Tribunal.- The Tribunal, considering a similar issue in a previous case, ruled in favor of the assessee, directing the exclusion of the loss from the pension fund while determining the surplus.- The Tribunal dismissed the revenue's appeal on this ground, aligning with the consistent view taken in favor of the assessee in similar cases.In conclusion, the Tribunal allowed all the appeals of the assessee while dismissing the revenue's appeal, providing detailed reasoning and legal interpretations for each issue raised, ultimately resulting in a comprehensive and favorable judgment for the assessee.