TaxTMI 
TaxTMI 
2019 (11) TMI 516
X X X X Extracts X X X X
X X X X Extracts X X X X
....se the ld. CIT(A) erred in deleting the addition of Rs. 8,62,47,181/- being income from investment not included. 2. On the facts and in the circumstances of the case the ld. CIT(A) erred in deleting the addition on account of Rs. 75,29,079/- being disallowance u/s 14A of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] r.w.r 8D of the I.T. Rules." 3. Briefly stated, the facts of the case are that the assessee company has been set up to provide financial security to persons engaged in agriculture and elite activities, through insurance product and other support services, as per declared policy of the Government of India. The assessee company is promoted by the General Insurance Corporation of India (GIC), ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The claim of the assessee did not find any favour with the Assessing Officer who proceeded by making an addition of Rs. 8,62,47,181/-. Proceeding further, the Assessing Officer noticed that in the preceding Assessment Year, the assessee has suo moto disallowed a sum of Rs. 43,88,951/- and u/s 14A of the Act r.w.r 8D of the Rules, further disallowed a sum of Rs. 2,50,038/-. However, the Assessing Officer found that during the year under consideration, no such disallowance was made. The Assessing Officer, accordingly, proceeded by computing the disallowance u/s 14A r.w.r 8D of the Act at Rs. 75,29,079/-. 8. The assessee carried the matter before the ld. CIT(A) and in respect of addition of Rs. 8.62 crores, the assessee reiterated its conte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ein it is mentioned that CAG has raised objections on the accounts of the appellant company and suggested that interest earned to be credited to corpus fund and it was to be accepted by the appellant company being a public sector company. The remark sheet has been attached by the appellant as Annexure B to the submission. It is submitted by the appellant that corpus fund belonged to and owned by the Government.' The company used the funds as per the investment guidelines of IRDA along with the normal business investment and credited the proportionate interest amount directly to the corpus fund as directed by the Government of India vide its letter dated 28.06.2007. Copy of the same is attached as Annexure A to the submission. Following ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lied upon the judgment of Hon'ble Supreme Court in the case of Associated Power Vs. CIT 218 ITR 195 (SC) wherein the doctrine of diversion of income by overriding titles has been explained by the Hon'ble Supreme Court. In this case a consent decree was passed in favour of stepmother directing the son to pay fixed monthly sum to her and declared that maintenance was charge on ancestral estate. The Privy Council held that the sum received and paid as maintenance was not his income at all and it is diversion of income, thus not overriding title applies when, by reason of an overriding title or obligation income is diverted and never reaches the person in whose hands it is sought to be assessed; the profit earned by him is not really his profit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ministry of Agriculture, Department Agriculture and Co-operation, which reads as under: "I am directed to say that the funds under the Corpus Fund are provided by the Central and State Governments on 50:50 basis. As the Corpus Fund belongs to the Central and State Government, the interest accrued thereon also belong to the Government. Therefore, interest accrued on the Corpus Fund is required to be added in the Corpus Fund." 13. We have given thoughtful consideration to the orders of the authorities below and have carefully considered the letter of the Government of India referred to hereinabove. The facts of the case, read with the aforesaid letter of the Government, clearly demonstrates that this is a case of diversion of income by ov....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... coordinate bench has followed the earlier order of the coordinate bench in ITA No. 3115/DEL/2013. The relevant findings of the coordinate bench read as under: "We have considered the rival contentions and gone through the records. The provisions of section 44 read as under. 'Insurance business, - 44 : Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head 'interest on securities', 'income from house property', 'capital gains' or 'income from other sources' or profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a cooperative society, shall be ....