2016 (3) TMI 1367

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....aring income of Rs. 247,79,13,474/-. The AO while completing the assessment made disallowance of Rs. 4,28,13,369/- u/s 14A and also made addition of Rs. 14,54,000/- on account of provision for stock holding and other charges. 3. Ld. CIT(A) in his order has noted that the AO reduced that amount and added only Rs. 58,11,413/- in the rectified order as against original disallowance of Rs. 4,28,13,369/-. 4. Before ld. CIT(A) it was submitted that section 44 provided for application of special provisions for computation of profits and gains of insurance business in accordance with Rule 5 of the first schedule and, therefore, it was not permissible for the AO to travel beyond sec. 44 and the First Schedule and make disallowance u/s 14A. The a....

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....ection 14A of the Income tax Act are not applicable to the appellant case in view of the special provisions of See 44 of the Income Tax Act and in accordance with the judgments in following cases GIC v. Addl. CIT Range 13, T. Bom, 2012(ID2) ITA no. 6260/MUM GIC Vs. ACIT. Kotak Mahindra Old Mutual Life Insurance Ltd. v. ACIT dated 30.09.2011, ITA no. 2901/Mum/2010. CIT v. Kribhco dated 18.07.2012 (Delhi HC) 2012-(349)-ITA- 0618-DEL. 7. First we take up the additional ground. In this regard ld. counsel referred to the decision of ITAT Delhi Bench "C" in the case of Oriental Insurance Co. Ltd. vs. ACIT (ITA no. 5462 & 5463/Del/2003 dated 27.2.2009) 130 TTJ (Del) 388., wherein the Tribunal in paras 22 to 24 has observed as under: ....

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....itted to travel beyond these provisions. 24. Section 14A contemplates an exception for deductions as allowable under the Act are those contained u/s 28 to 43B of the Act. Section 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 sec. 14A of the act as according to us, it is not permissible to the AO to travel beyond section 44 and First Schedule of the Income-tax Act. 8. Respectfully following the decision of the ITAT in the case of Oriental Insurance Co. Ltd. (supra), the additional ground raised by assessee is allowed. Accordingly, it is held that the provisions of section 14A ar....