Life insurance income computation excludes section 14A disallowance under the special regime of section 44 and the First Schedule.

In the computation of income from life insurance business governed by section 44 and the First Schedule to the Income-tax Act, a further disallowance under section 14A read with rule 8D is not permissible. Taxable profits under this special regime are determined in the manner specifically prescribed by the Act, and coordinate benches had consistently held that where no separate expenditure has been allowed against exempt income under that computation, section 14A has no further application. The Revenue did not dispute that consistent view before the Tribunal, and the issue was decided in favour of the assessee.

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Issues: Whether disallowance under section 14A read with rule 8D can be made in the case of computation of income from life insurance business governed by section 44 and the First Schedule to the Income-tax Act, 1961.

Analysis: The assessment of life insurance business income is governed by section 44 read with the First Schedule, under which taxable profits are determined in the special manner prescribed by the Act. The issue had already been consistently decided by coordinate benches in favour of the assessee, holding that where no expenditure has been separately allowed as a deduction against exempt income in the special computation regime, no further disallowance under section 14A is warranted. The revenue did not dispute the consistency of that view before the Tribunal.

Conclusion: Disallowance under section 14A read with rule 8D was not permissible in the computation of income from life insurance business under section 44 and the First Schedule, and the issue was decided in favour of the assessee.

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