2018 (1) TMI 1585

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....ovisions of Section 44 of the I T. Act read with Rule 2 of the First Schedule along with provisions of Insurance Act 1938, Insurance Regulatory and Development Authority Act 1999 and regulations there under and accordingly allowing adjustment from the "actuarial valuation'' [and as shown by the assesses in Form-I] in violation of the ratio of the Apex Court in the case of LIC vs CIT 51 ITR 778, without appreciating the fact that this decision of the ITAT was not accepted by the Department and appeal u/s 260A of the Income Tax Act. 1961 has been filed. 2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying on the order of the ITAT in the case of ICICI Prudential Life Insurance Co Ltd for A.Y. 2005-06 to A.Y. 2008-09, in concluding that transfer between Share Holders Account and Policy Holder's Account is tax neutral and not taxable u/s.44 of the Act r.w. Rule 2 of the First Schedule, without appreciating the fact that this decision of the ITA T was not accepted by the Department and appeal u/s 260A of the Income Tax Act, 1961 has been filed. 3 On the facts and in the circumstances of the case and in law, the Ld. ....

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....e case of ICICI Prudential Life Insurance Co Ltd for AY 2005-06 to A Y 2008-09 in allowing the carry forward of losses which is assessed under the head "Income from Other Sources" by treating it as business income from insurance business and allowing set off against the business income in the current year, without appreciating the fact that this decision of the ITAT was not accepted by the Department and appeal u/s 260A of the Income Tax Act. 1961 has been filed. 7 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying on the order of the ITAT in the case of ICICI Prudential Life Insurance Co. Ltd. for AY 2005-06 to AY 2008-09 in deleting the addition made on account of claim of 100% depreciation ignoring the facts that Actuarial surplus is determined on the basis of the total assets of the company and therefore by not capitalizing the above assets, the assets of the assessee-company are under-stated in the books and thereby it has an impact of reducing the surplus or increase in the deficit and therefore, the assets so written off are also accordingly required to be considered as part of the surplus and taxable under section 44 of th....

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....lowing the judgment of the Supreme Court in UOI v. Kamlakshi Finance Corporation Ltd. AIR 1992 SC 711, 712 has ruled thus: "The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the Department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws".  Carrying this principle further, the Hon'ble Gujarat High Court in Sayaji Iron and Engineering Co. v. CIT 253 ITR 749 reiterated that no Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another bench of the same Tribunal on the same facts, and if a bench of a Tribunal on identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another bench of the Tribunal on an earlier occasion, th....

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....on the relief himself, and directed the ACIT to assess the total income of the appellant based thereon, without the necessity of any further verification of facts. 5. Without prejudice to ground nos. 2 to 4 above, on the facts and circumstances of the case and in law, the CIT(A) ought to have held that an amount of Rs. 10,18,60,000/- which was transferred from the Shareholders' Account and formed part of the surplus computed by the ACIT, was allowable as a deduction in computing the loss in the Shareholders' 6. Without prejudice to ground nos. 2 to 5 above, the CIT(A) ought to have held that the transfer from the Shareholders' Account of Rs. 10,18,60,000/- to the Policyholders' Account, does not result in income chargeable to tax. 7. On the facts and circumstances of the case and in law, the CIT(A), having himself allowed ground no. 5 raised before him, ought to have directed the ACIT to assess the total income of the Appellant on the basis that the income in the Shareholders' Account was assessable under the head 'Profits and gains from business or profession' and not under the head income from other sources', without the ....