TaxTMI 
TaxTMI 
2019 (10) TMI 840
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Hon'ble Commissioner of Income-tax (Appeals)-22, New Delhi ('Hon'ble CIT (A)') has erred in confirming the addition made by Assistant Commissioner of Income Tax, Large Tax Payer Unit, New Delhi ('learned AO') (amounting to Rs. 2,70,19,000/-, Rs. 6,35,02,000/- & Rs. 6,53,52,580/- for AYs 2007- 08, 2008-08 & 2009-10 respectively) representing income from sale of investment. 1.1 That on the facts and circumstances of the case and in law, the Hon'ble CIT (A) has erred in treating the income from sale of investment as an income not in the nature of income from life insurance business without appreciating the fact that as per the Insurance Regulatory Development and Authority Act, 1999 ('IRDA Act') a life insurance company cannot carry on any other business other than the business of life insurance in India. 1.2 That on the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in completely disregarding the provisions of Section 44 of the Act read with the First Schedule, which is a self-contained code in the Act for computation of income for asses sees engaged in Life Insurance business, and the judici....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee has come up before the Tribunal by way of filing the present appeals. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1 & 2 OF AYs 2007-08, 2008-09 & 2009-10 6. At the very outset, the ld. AR for the assessee contended that the issue in controversy has already been decided in favour of assessee by the coordinate Bench of the Tribunal vide order dated 22.04.2019 in ITA No.5643/Del/2010 for AY 2006-07 in assessee's own case. This factual position has not been controverted by the ld. DR for the Revenue who has not brought on record any decision from the higher forum in contradiction to the decision relied upon by the ld. AR for the assessee rendered in case of the assessee for AY 2006-07 (supra). 7. Coordinate Bench of the Tribunal decided the issue in controversy in assessee's own case for AY 2006-07 (supra) by returning following findings :- "23. Now we come to ground number 4 of the appeal wherein the addition of INR 9 048000/- from sale of investments credited....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accordance with the return's and derives interest income from those investments and further similarly any profit or loss on realization of such investment also draws the same treatment as is applicable to other business income earned by the assessee. The assessee also referred to circular number 22 dated 23/09/1947 wherein it is provided that any income derived by the life insurance company from sale of any investment which forms part of investment of insurance business would be treated at par with the business income even if the main section governing taxation of insurance company does not cover specifically so. Assessee also relied on the decision rendered by the authority of advance ruling in case of potential. It was therefore submitted that provisions of income tax act relating to computing the taxability of income of a life insurance company as provided under section 44 read with 4 schedule are harmonious with the above requirements as they preclude the application for other chapters of the income tax act. It was further argued by the assessee that the above petition has been accepted by the revenue in earlier years and also consistent with the various decisions of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ain agitated by the AO. iii. He also stated that all the investment made by the assessee are as per the direction of a mandate of the act to carry on the insurance business only and therefore the profit arising from such sale of investments does not fall into the category of a separate business but of insurance business. He further stated that had this investment been not paid by the assessee it would not have been allowed to carry on the insurance business itself and therefore these are a mandatory investment made by the assessee for the purpose of carrying on the business of insurance. iv. He further referred to the decision of the coordinate bench in assessee's own case for assessment year 2010 - 11 wherein the coordinate bench has held that investment are integral part of the insurance business and inexplicable to the business of life insurance. He therefore submitted that the claim of the AO is patently wrong that profits arising to the assessee on sale of investment are altogether a separate business. v. He further stated that identical issue has been considered by authority of advance ruling in petition number 445 of 98 dated 30/04/2001 with square....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iv) securities issued or guaranteed fully as regards principal and interest by the Government of any Part B State and specified as approved securities for the purposes of this Act by the Central Government by notification in the Official Gazette; ^7[and] (v) ^8[***]. ^9[Explanation.-In sub-clauses (i) and (iii), "Government of a State" in relation to any period before the 1st November, 1956, means the Government of a Part A State;] [ (7A ) "Indian insurance company" means any insurer, being a company which is limited by shares, and,- (a) which is formed and registered under the Companies Act, 2013 (18 of 2013) as a public company or is converted into such a company within one year of the commencement of the Insurance Laws (Amendment) Act, 2015; (b) in which the aggregate holdings of equity shares by foreign investors, including portfolio investors, do not exceed forty-nine per cent of the paid-up equity capital of such Indian insurance company, which is Indian owned and controlled, in such manner as may be prescribed. Explanation.-For the purposes of this sub-clause, the expression "control" shall include the right to a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty, plant or equipment of any company where either the book value or the market value, whichever is less, of such property, plant or equipment is more than three times the value of such debentures 3. first debentures secured by a floating charge on all its assets of any company which has paid dividends on its equity shares 4. preference shares of any company which has paid dividends on its equity shares for at least two consecutive years immediately preceding 5. equity shares of any listed company on which not less than ten percent dividends have been paid for at least two consecutive years immediately preceding 6. immovable property situated in India, provided that the property is free of all encumbrances; 7. loans on policies of life insurance within their surrender values issued by him or by an insurer whose business he has acquired and in respect of which business he has assumed liability; 8. Fixed Deposits with banks included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) and; such other investments as the Authority may, by notification in the Official Gazette, declare ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the provisions of Section 27A (2) (ii) of the Act, may delegate to Investment Committee, for investments already made and the continuance of such investments from controlled fund/assets, in otherwise than in an approved investments, and in All India Financial Institutions recognized as such by RBI for investments carrying a rating of less than AA and being part of Approved Investment. The investment committee shall be responsible for the details, analysis and review of non-performing assets of investments on a quarterly periodicity. The insurer shall report compliance of this provision to the Authority through Form 4. (d) Unless specifically permitted by the Authority, no investment shall be made in any entity not formed under laws relating to companies in India and in any private limited company or one person company or a company formed under section 8 of the Companies Act, 2013 or erstwhile Section 25 of the Companies Act, 1956. 30. As provided under the insurance act 1938 any company carrying on the life insurance business shall invest or keep invested any part of his controlled fund in a specified securities as under:- Further provisions rega....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sequently, we are of the considered view that AO/CIT(A) have erred in making addition on account of income from sale of investment and as such are ordered to be deleted, thus grounds no.1 & 2 of AYs 2007-08, 2008-09 & 2009-10 are determined in favour of the assessee. GROUND NO.3 OF AYs 2007-08, 2008-09 & 2009-10 9. At the very outset, ld. AR for the assessee contended that the disallowance made by the AO on account of Fringe Benefit Tax (FBT) provisions by AO and confirmed by the ld. CIT (A) is not sustainable as this issue has been decided in favour of the assessee in its own case for AY 2006-07 (supra), which position of facts and law has not been controverted by the ld. DR for the Revenue by bringing on record any other case law. 10. Coordinate Bench of the Tribunal decided the issue in controversy in favour of the assessee by returning following findings :- "22. Now coming to the 3rd issue of this ground with respect to the disallowance of provision of the fringe benefit tax, it is clear that fringe benefit tax is not allowable as a deduction under the provisions of section 40 (ic) of the act, which falls under the bracket of the provisions of section 28 to....