TaxTMI 
TaxTMI 
2010 (9) TMI 1051
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....the general insurance business had earned profit on sale of investments amounting to Rs. 6,10,00,234/- and the same was claimed as exempt in the return of income. The profit in case of insurance business is required to be computed under the provisions of section 44 of the I.T. Act read with rule of 5, Part B of the 1st Schedule. The Rule 5(b) which specifically dealt with the taxability of gains on realization of investment is reproduced below as under : "5(b) any amount either written off or reserved in the accounts to meet depreciation of or loss on the realization of investments shall be allowed as a deduction and any sums taken credit for in the ....
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....inance Act has amended sub-rule(b) of Rule 5 of the First Schedule to provide for exemption of the profits earned by them on the sale of investment shall not be allowed as a deduction in computing the profits chargeable to tax. 45.2 This amendment will take effect from the 1st April, 1989, and will accordingly apply in relation to the assessment year 1989-90 and subsequent year." 4. The assessee submitted before the AO that in view of deletion of Rule 5(b) and the clarification given by the CBDT in the circular No.528 (supra) the profit on sale of investment was not taxable in case of general insurance business. The AO however did not accept the explanation given. It was observed by him that the assessee had two distinct activities i.e. g....
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....nd pointed out that the issue was covered in favour of the assessee by the decision of Pune Bench of the Tribunal in case of Bajaj Allianz General Insurance Co. Vs Addl.CIT in ITA No.1447/PN/2007 for assessment year 2003-04. The said decision of the Tribunal it was further submitted was followed by the Mumbai Bench of the Tribunal in case of JCIT Vs Reliance General Insurance Co.Ltd. in ITA No.3083/M/2008 in assessment year 2001-02 and in subsequent years. It was accordingly urged that the appeal of the assessee should be allowed. The Learned DR fairly conceded that the issue was covered by the decision of the tribunal aforesaid. 6. We have perused the records and considered the rival contentions carefully. The dispute is regarding t....