TaxTMI 
TaxTMI 
2009 (2) TMI 240
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....while computing the income. The AO did not accept the assessee's contention that the TDS did not constitute income. 3. At the time of hearing of these appeals, the assessee has not pressed this ground. Accordingly, order of the CIT(A) on this issue for both the assessment years in question is upheld. 4. Next common ground in both these appeals relates to disallowance of investment written off. The CIT(A) following his predecessor's orders in assessee's own case for asst. yrs. 1989-90 to 1999-2000 sustained the addition made by the AO. 5. The learned counsel for the assessee filed copies of the orders de29th Sept., 2004of the Tribunal involving asst. yrs. 1990-91 to 1995-96. The Revenue sought approval of the CoD to file appeal against this order, which the CoD has not permitted. Our attention was drawn to p. 56 of the paper book. The learned counsel further relied upon the order dt.6th June, 2008of the Tribunal in asst. yr. 1998-99 wherein the Tribunal following its earlier order has again decided the issue in favour of the assessee. 6. The learned Departmental Representative on the other hand strongly supported the impugned orders. 7. We have gone through the record....
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....tments beyond any reasonable hope of recovery. In such circumstances, the guidelines permitted the insurance company to book the loss in the accounts rather than waiting for actual realization of loss on sale of investment. Thus, the amounts claimed by the assessee are to be understood as a loss on investments suffered by the assessee. Such 'loss' can neither be considered an 'expenditure' nor an 'allowance'. We find support in this view from the judgment of Hon'ble Supreme Court in the case of General Insurance Corporation of India vs. CIT (1999) 156 CTR (SC) 425 : (1999) 240 ITR 139 (SC). In that judgment Hon'ble Supreme Court held that 'spending' in the sense of 'paying out or away' of money is the primary meaning of 'expenditure'. 'Expenditure' is what is paid out or away and is something which is gone irretrievably. In that case, Hon'ble Supreme Court held that certain amounts set apart which is treated to be an expenditure for the purpose of Insurance Act, 1938 cannot be treated so for the purpose of r. 5(a) of the First Schedule for the reason that the amount set apart did not fall to be considered as an expenditure in the ordinary meaning of the expression. As we hold the v....
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....ned by the assessee, repair expenses will have to be allowed as deduction under s. 30(a)(ii) of the Act. Once the expenditure is allowable under s. 30(a)(ii), if the expenditure is incurred on repair and maintenance of guest house taken on lease should also be allowed. In the light of the aforesaid order of the Tribunal, we decide the matter, for the assessment years in question, in favour of the assessee. 13. The next common dispute relates to the addition on account of interest accrued on loans, bonds and debentures, the recovery of which was deferred or has remained outstanding. 14. The assessee is engaged in the business of general insurance. In its return of income for the assessment years in question the assessee did not include the amount of interest outstanding on term loan etc. on the plea that the debtors have deferred in making payments and recoveries were outstanding for more than one year. The Department went on to make addition relying upon the decision of the Hon'ble Supreme Court in the case of State Bank of Travancore vs. CIT (1986) 50 CTR (SC) 290 : (1986) 158 ITR 102 (SC) on the reasoning that the interest was still liable to be included in the assessee's t....
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....their Lordships of Delhi High Court have held that no question of law, much less a substantial question of law survives for their consideration. In other words, order of the Tribunal has been affirmed. Following the same reasoning, addition made by the AO is deleted. 18. The next common dispute relates to the order of the CIT(A) in sustaining the action of AO in making (sic) allowing only 50 per cent of the management expenses by invoking the provisions of s. 14A of the Act. The addition is made by the AO on the plea that the provision of s. 14A was inserted by Finance Act, 2001 w.e.f.1st April, 1962. It is stated that the investments made- by the assessee are both taxable as well as tax-free. An estimated disallowance of 50 per cent out of the management expenses incurred and as claimed in the P&L a/c is treated as expenses incurred in connection with the looking after tax-free investment. 19. The learned counsel for the assessee vehemently argued that the income of the assessee is to be computed under s. 44 r/w r. 5 of Sch. I of the IT Act. Sec. 44 is a non obstante clause and applies notwithstanding anything to the contrary contained within the provisions of the IT Act rel....
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....akes it very clear that s. 44 applies notwithstanding anything to the contrary contained within the provisions of the IT Act relating to computation of income chargeable under different heads. We agree with the learned counsel that there is no requirement of head-wise bifurcation called for while computing the income under s. 44 of the Act in the case of an insurance company. The income of the business of insurance is essentially to be at the amount of the balance of profits disclosed by the annual accounts as furnished to the Controller of Insurance. The actual computation of profits and gains of insurance business will have to be computed in accordance with r. 5 of the First Schedule. In the light of these special provisions coupled with non obstante clause the AO is not permitted to travel beyond these provisions. 24. Sec. 14A contemplates an exception for deductions as allowable under the Act are those contained under ss. 28 to 43B of the Act. Sec. 44 creates special application of these provisions in the cases of insurance companies. We therefore, agree with the assessee and delete the disallowance made by the AO which is based on the application of s. 14A of the Act as acc....
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....c is required to be added under cl. (a). This is what the assessee has done. The adjustment made by the assessee is as per r. 5(a). The judgment of the Hon'ble High Court of Madras in the case of United India Insurance Co. is distinguishable. We are, therefore, unable to sustain the order of CIT(A) the order is accordingly set aside and the claim of the assessee is allowed." 29. Following the same reasoning, we accept the claim of the assessee and direct the AO to compute the income and if the total income is positive then only the deduction to the extent of 5 per cent be allowed under s. 36(1)(viia) of the Act. We order accordingly. 30. The next common dispute relates to the disallowance made by the AO and confirmed by the CIT(A) out of depreciation claimed by the assessee. 31. The AO noted from the computation of depreciation claimed, as given in Annex. 'A' to the tax audit report filed under s. 44AB along with the return of income, that during the year under consideration additions to assets have taken place. The details of additions/deletions of assets have not been provided in Col. 14 of Form 3CA report. The statutory auditors have qualified report stating that inform....