TaxTMI 
TaxTMI 
2013 (8) TMI 664
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....him u/s. 263 of the Act was of the firm belief that the order of the AO is pre-judicial to the interest of the Revenue to the extent of exemption so granted by the AO and directed the AO to recomputed the income without such exemption. 3. The Ld. Counsel for the assessee submitted that the deduction allowed by the AO u/s. 10(34) of the Act is very much available to the assessee as per various decisions of the Tribunal Mumbai Bench as well as that of Hon'ble Jurisdictional High Court. The Ld. Counsel for the assessee submitted the decisions in the form of a Paper book. 4. The Ld. Departmental Representative could not bring any decision to rebut the submissions of the Ld. Counsel. 5. We have carefully considered the issues before us. We find that the Tribunal Mumbai Bench in the case of Life Insurance Corporation of India Vs ACIT in ITA Nos. 3702, 3703 & 6221/M/2012 for A.Yrs 2007- 08 to 2009-2010 while deciding ground No. 1 of that appeal at para 3.4 at page-3 of its order has held as under: We find that the issue of admissibility of provisions of Section 10(34) has been considered by the 'F' Bench of Mumbai Tribunal while deciding the appeals filed by the A....
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....vides that the profits and gains of any business of insurance of a mutual insurance company shall be computed in accordance with the rules in the First Schedule. Part 'A' of the First Schedule containing Rules I to 4 deals with profits of life insurance business while Part B consisting of Rule 5 deals with computation of profits and gains of Other insurance business. Rule 5 provides as follows: "5. The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, copies of which are required under the Insurance Act, 1938 (4 of 1938), to be furnished to the Controller of Insurance subject to the following adjustments: (a)Subject to the other provisions of this rule, any expenditure or allowance (including any amount debited to the profit and loss account either by way of a provision for any tax, dividend, reserve or any other provision as may be prescribed) which is not admissible under the provisions of section 30 to (43B) in computing the profits and gains of a business shall be added back;  ....
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....rance business. The effect of the non-obstante clause so far as the earlier part of section 44 is concerned, therefore, is that the provisions of section 44 will prevail notwithstanding the fact that there are contrary provisions in the Act relating to computation of income chargeable under the four heads mentioned in section 44. The only other overriding effect of section 44 is that its provisions operate notwithstanding the provisions of section 191 and of section 28 to 43A. Thus, the only effect of section 44 is that the operation of the provisions referred to therein is excluded in the case of an assessee who carried on insurance business and in -whose case the provisions of rule 2 of the First Schedule are attracted. If the deductions which are claimed by the assessee do not fall within the provisions which are referred to in section 44, it will have to be held that the applicability of those provisions in the case of an assessee whose assessment is governed by section 44 read with rule 2 in the First Schedule- is not excluded". This judgment is sought to be distinguished by the Assessing Officer while disposing of the objections on the ....
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....ion 44 of the Act of 1961 since section44 does not refer to the computation of tax but merely to the computation of profits and gains in the business of insurance The Division Bench held that this would however riot make any difference to- the principle laid - - - - --down by the Court in the earlier decision in the case of New India Assurance Co. Ltd. Accordingly, the decision of Life Insurance Corporation (Supra)could not have- been ignored by the Assessing- Officer on the supposition that the decision was rendered in the context of an assessee who carried on life insurance business and was, therefore, not available to an assessee which carries on general insurance business. 12. In General Insurance Corporation of India v. Commissioner of Income-Tax, the Supreme Court considered in an appeal arising out of a judgment of the High Court the issue as to whether a sum of Rs.3 crores, being a provision, for redemption of preference shares, was not liable to be added back in the total income of the assessee for AY 1977-78?. The Supreme Court held that a plain reading of rule 5(a) of the First Schedule made it clear that in order to attract the ap....