2016 (11) TMI 1256

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d Counsel appearing for the Revenue, Revenue urges only the following question of law for our consideration: " Whether on the facts and in the circumstance of the case and in law, the Tribunal was correct in holding that the CIT was not justified in invoking the provisions of section 263 on the issue of disallowance of provision made for contribution to Solatium Fund?". 3. The Respondent-Assessee is engaged in the business of General Insurance. For the subject Assessment Year, the Respondent-Assessee had filed its return of income, declaring an income of Rs. 83.34 Crores. During the assessment Proceedings, it was noted by the Assessing Officer that the Respondent-Assessee had debited an amount of Rs. 3.46 Crores being a provisio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... passed under Section 263 of the Act, revised the order dated 24th December, 2008, of the Assessing Officer. This Revision was inter alia, on the ground that the same is erroneous and prejudicial to the interest of the Revenue. This on the ground that a deduction was claimed by debiting a provision made not on any scientific basis. Further, the requirement of setting apart of 1% of premium received towards Solatium fund was scaled down in May, 2005 by the IRDA to only 0.1%. Therefore, the provision made for contribution to the Solatium fund in the subject Assessment Year was in the nature of contingent liability and cannot be allowed as expenditure. Therefore, the amount of Rs. 3.46 Crores being the expenditure provided for as contribution ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nly grievance urged on behalf of the Revenue before us is that the payment was made to the Solatium fund only in September 2005 at 0.1%. Therefore, during the subject Assessment Year, the provision could not be allowed as an expenditure as it was a contingent liability. 7. We note that the impugned order of the Tribunal has after elaborate discussion come to the conclusion that in facts of this case, the order passed by the Assessing Officer dated 24th December, 2008, cannot be said to be erroneous in law. The provision made for contribution to the Solatium fund during the subject Assessment Year were as per the scheme introduced by the Central Government and as directed by IRDA. This provision was to be made at the rate of 1% of the pre....