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2019 (7) TMI 1857
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.... in all the three assessment years, the cross appeals of the Revenue and the assessee for assessment year 2012-13, being ITA No.70/Mum/2018 & 1044/Mum/2018 respectively are taken up as the lead appeals. ITA NO.70/MUM/2018 & 1044/MUM/2018: 3. The first issue in the appeal of Revenue is against the order of CIT(A) allowing adjustment from the actuarial valuation relying on the decision of ITAT in the case of ICICI Prudential Life Insurance Co. Ltd. Vs. ACIT, (2013) 140 ITD 41 (Mum). For this, the Revenue has raised the following Ground of appeal: - "1. On the facts and in the circumstances of the case and in Law the Ld.CIT(A) erred, in relying on the order of ITAT in the case of ICICI Prudential Life Insurance CO. Ltd. for earlier years and in the case of IDBI Federal Life Insurance CO. Ltd. for A.Y. 2009-10 and 2010-11 respectively, in interpreting the provisions 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 'surplus' worked as per "actuarial valuation" [and as show....
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....he earlier years. Accordingly, the AO did not accept the computation of profit and gains from the life insurance business made by the assessee. Aggrieved, the assessee preferred an appeal before the CIT(A). 5. The CIT(A) relying on the decision of ITAT in the case of ICICI Prudential Life Insurance Co. Ltd.(supra) allowed the claim of the assessee. The CIT(A) also relied upon the ITAT order dated 09/08/2017 in assessee's own case for assessment years 2009-10 & 2010-11 in ITA Nos. 6282/Mum/2012, 6281/Mum/2012, 5567/Mum/2014 (assessee's appeal) & ITA Nos. 6306/Mum/2012 & 5378/Mum/2014 (Revenues appeal). Accordingly, the CIT(A) directed the AO to compute the surplus/deficit in share holders account without adding back the amount of Rs. 122.41 crores that has been transferred from the share holders account to the policy holders account. Aggrieved, now the Revenue is in appeal before the Tribunal. 6. We have heard the rival submissions and gone through the facts and circumstances of the case. We noted that this issue is squarely covered by the decision of ITAT in assessee's own case for assessment years 2009-10 and 2010-11 in ITA Nos. 6282/Mum/2012, 6281/Mum/2012, 5567/Mum/2014 (a....
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.... Rule-2 of the First Schedule. It was the contention of the Revenue that the Revenue has not accepted the decision of the ITAT and further appeals have been filed before the Hon'ble High Court. We noted that it is an admitted position that this issue is squarely covered in favour of the assessee in assessee own case vide orders of the Tribunal, hence, are not interfering in the finding of CIT(A) allowing the claim of the assessee. Even before us, now also the Ld. DR could not distinguish the facts of the present case vis-à-vis the orders of the Tribunal in earlier years. Therefore, this issue in Revenue's appeal is dismissed. 9. The third issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made on account of claim of 100% depreciation. In this regard Revenue has raised the following Ground of appeal: - "3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred 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 th....
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....e. We noted that the AO made a disallowance of exemption made by the assessee in respect to dividend income under section 10(34) of the Act. The assessee has claimed that exemption of dividend income of Rs. 12.70 crores under section 10(34) of the Act. The AO disallowed the claim by noting that as the assessee's computation of total income of life insurance business is governed by special provision contained in section 44 of the Act and, therefore, exemption provision contained in section 10 of the Act is not applicable. The CIT(A) allowed the claim of the assessee relying on the decision of ITAT in assessee's own case for assessment years 2009-10 and 2010-11 in ITA Nos. 6282/Mum/2012, 6281/Mum/2012, 5567/Mum/2014 (assessee's appeal) & ITA Nos. 6306/Mum/2012 & 5378/Mum/2014 (Revenues appeal) and for assessment year 2008-09 vide ITA Nos.1562/Mum/2013 &1488/Mum/2013. We note that this issue has been consistently decided in favour of the assessee by allowing the claim of exemption on account of dividend u/s. 10(34) of the Act by the Tribunal in earlier years and hence, taking a consistent view, we confirm the order of CIT(A) and this issue of Revenue's appeal is dismissed. 13. The ....
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....sallowed. We are aware that we have already adjudicated the issue of exemption claimed by the assessee u/s.10(34) of the Act in respect of dividend income and allowed the same as exempt. However, we noted that this issue has been adjudicated by the Tribunal in assessee's own case for assessment years 2009-10 and 2010-11 in ITA Nos. 6282/Mum/2012, 6281/Mum/2012, 5567/Mum/2014 (assessee's appeal) & ITA Nos. 6306/Mum/2012 & 5378/Mum/2014 (Revenues appeal) and for assessment year 2008-09 vide ITA Nos.1562/Mum/2013 &1488/Mum/2013 and on that basis CIT(A) held that no disallowance is attracted u/s. 14A of the Act in assessee's own case even if it is held that the assessee is entitled to claim u/s.10(34) of the Act in respect of dividend income. We noted that the Tribunal is consistently taking a view that no disallowance u/s.14A of the Act r.w. Rule 8D of the Rules can be made while computing a total income of the person engaged in the business of insurance whose profits and gains from insurance business is computed in terms of the provision of section 44 of the Act r.w. First Schedule of the Act. As the Tribunal is consistently taking a view on this issue, we confirm the order of CIT(A)....
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.... assessment years were filed within the due date as specified u/s.139(1) of the Act. The AO is therefore directed to verify the same and allow set off of the brought forward business losses against the business income of the present A.Y 2012-13 as per the provisions of the Act. This ground of appeal of the appellant is accordingly partly allowed." 17. We noted that this issue is covered in favour of the assessee by Co-ordinate Bench decision in assessee's own case for assessment year 2008-09 in ITA No.1562/Mum/2013, wherein the Tribunal vide para 3.1 has allowed the carry forward of losses u/s. 72 of the Act. The relevant finding of Tribunal in Para 3.1 reads as under: - "3.1 As regards the 6th ground of appeal, we find that the Ld. CIT(A) has directed the AO to assessee the total income of the assessee in accordance with the order of the ITAT in ICICI Prudential Life Insurance Co. Ltd. and then give effect to the provisions of section 72 of the Act in respect of carry forward of losses. As the above direction of the Ld. CIT(A) is based on facts and law, we uphold the same. Accordingly, we dismiss the 6th ground of appeal." 18. We, following the same, direct the AO t....
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....espect of the surplus in SHA by treating the same as part of the profits and gains of Life Insurance business and in respect of the income assessed as Profits and gains of life insurance business." We noted that this issue is covered in favour of the assessee and, hence, we also uphold the findings of CIT(A). This issue of Revenue's appeal is dismissed. 22. The next issue in assessee's appeal is as regards to the order of CIT(A) in affirming the action of the AO in disallowing the claim of deduction on account of decrease in negative reserve. For this issue, assessee has raised the following Ground of appeal: - "1."Deduction for decrease in negative reserve On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in not directing the Deputy Commissioner of Income tax ("DCIT or AO") to allow deduction for an amount of Rs. 45,04,33,880 representing the decrease in the Negative Reserves from last year, despite the fact that the DCIT had himself treated an increase in the Negative Reserves as taxable income in the earlier years' assessments. The Appellant prays that decrease in Negative Reserves be allowed as a deductio....
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.... computing the profits and gains of the business of the Life Insurance cannot be considered to be legally tenable. Hence, this ground of appeal of the appellant is dismissed." 24. During the course of hearing before us, both the sides agreed that this issue has been dealt with by the Co-ordinate Bench of the Tribunal in the case of HDFC Standard Life Insurance Company Ltd., ITA No.2203/Mum/2012, A.Y. 2002-03 and Others, wherein the Tribunal has considered this issue and finally following the decision of ICICI Prudential Insurance Co. Ltd., ITA No. 6059/Mum/2010 & Others A.Ys 2005-06 to 2008-09 allowed the claim of the assessee, observing in para 6.3 as under:- "6.3. We have heard rival submissions and perused the material before us. We are of the opinion that treatment given to negative reserves by actuary cannot be disturbed by the AO. Here, it would be useful to understand meaning of negative reserve in simple terms. While making actuarial valuation, requirement of reserve to service insurance policies issued is ascertained. Such reserve (called mathematical reserve or value of liability) is equal to present value of future benefits payable and future expenses to be i....
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....he Hon'ble Supreme Court in LIC vs.CIT 51ITR773 about the power of the Assessing Officer also restricted the scope and adjustment by the AO. In view of this uphold the order of the CIT(A) and dismiss the Revenue's ground." Respectfully, following the above we decide effective ground of appeal against the Assessing Officer" 25. The CIT(A) only on this basis allowed the claim of assessee of negative reserve. Since the issue is covered in favour of the assessee in regard to actuarial valuation, we uphold the order of CIT(A). The issued raised by the assessee in regard to negative reserve has become academic and, hence, infructuous. ITA No.71/MUM/2018 & ITA No.6948/MUM/2017 26. Now we may take up the appeals of the Revenue for assessment years 2013-14 & 2014-15. Since the Grounds raised by the Revenue for both assessment years are identical, the grounds raised for assessment year 2013-14 are reproduced below: - "1. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred, in relying on the order of ITAT in the case of ICICI Prudential Life Insurance CO. Ltd. for earlier years and in the case of IDBI Federal Life Insurance CO. Ltd. for....
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.... appreciating the fact that the Ld. CIT(A) has allowed dividend as exempt income, then , the disallowance has to be made u/s 14A r.w.r. 8D of the Act and on the contrary, the department is in appeal for allowing the claim of assessee u/s 10(34) of the Act, 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of exemption u/s. 10(23AAB) of the I T Act o Rs. 0.97 crs in respect of surplus in pension line of business? 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of provision of wealth Tax as it is not allowable expense as per I T Act, 1962? 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the carry forward of losses which is assessed under the head "Income from Other Sources" without considering the restriction of carry forward of losses under section 74A of the Act to set off against the business income in the current year." 9. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in allowing relief to the assessee by holding that surplus available in Share Ho....