TaxTMI 
TaxTMI 
2017 (8) TMI 1644
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....nce, are being not adjudicated. Ground No.1 deals with negative reserves amounting to Rs. 50.18 crores.During the assessment proceedings,the AO observed that there was a negative reserve of Rs. 51.34 crores as per report of Actuary,that the figure of incremental negative reserve for the year under consideration was Rs. 50.18 crores,that the negative reserve would have impact of reducing taxable surplus as Form-I i.e.of the (Actuarial Report).After considering the submission of the assessee,the AO held that the negative reserve was taxable as business income of the assessee and added the same to the total income. 2.1. In the appellate proceedings,the assessee made elaborate submissions before the First Appellate Authority(FAA)and relied upon certain case laws.The FAA after considering the available material and case laws deleted the addition. 3 .During the course of hearing before us,representatives of both the sides agreed that identical issue has been dealt with by the Tribunal in the case of HDFC Standard Life Insurance Company (2203 & Ors/Mum,AY.s 2002-03 to 2009-10.,Dtd.20/09/13).We are reproducing para No.6.3(Pg. 20-21)of the order and it reads as under :- "6.3.We have hea....
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....and the surplus as discussed in Form-I under Regulation 4 takes in to consideration this mathematical reserve also. Therefore the order of the order of the CIT(A) is approved.Moreover the Assessing Officer has no power to modify the amount after actuarial valuation was done, which was the basis for assessment under Rule 2 of 1st Schedule r.w.s.44 of the I.T. Act.The principle laid down by the 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 AO. Accordingly,Ground No.1 is decided against the AO. 4. Ground No.2 is about setting aside of case to the AO with regard to Ground No.8 raised before the FAA.The DR fairly conceded that the FAA had directed the AO to make certain verifications and had not set aside the order.It was brought to our notice that AO while giving effect to order of FAA had allowed claim made by the assessee.Considering this,we hold that Ground No.2 does not need adjudication. 5. Third Ground of appea....
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....essee and, therefore, while determining the distributable profits of the assessee, the loss from the Jeevan Suraksha Fund ought not to be allowed to be adjusted against the taxable income. It is not in dispute that the Jeevan Suraksha Fund is a pension fund approved by the Controller of Insurance appointed by the Central to perform the duties of the Controller of Insurance under the Insurance Act, 1938. The loss incurred in the Jeevan Suraksha Fund has been considered by the actuary as a business loss, as per the valuation report as on the last day of the financial year, allowable under section 44 read with the First Schedule to the Income-tax Act, 1961. The fact that the income from such fund has been exempted under section 10(23AAB) with effect from April 1, 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of the insurance busi- ness covered under section 44 of the Income-tax Act, 1961. In other words, the pension fund like the Jeevan Suraksha Fund would continue to be governed by the provisions of section 44 of the Income-tax Act, 1961, irrespective of the fact that the income from such fund are exempted, or not. Ther....
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....t, 1938. Para-2.5.1.;Pg.10-11 Para 12-14; pg-6-8 5 Surplus in the shareholders account to be taxed separately as income from other sources Para 2.5.2; and para 2.5.6; pg- 11-13 Para-12-14 pg. 6-8 6 Write -off of assets (cost less than Rs. 20,000) ... Para 12-14, pg-6-8 7 Negative reserves have impact on taxable surplus Para-6-6.3,Pg. 20-21 Para 12-14,pg-6-8 8 Exemption of dividend income .. ... Para-12-14,Pg.6-8 7.1.On a query by the Bench,the DR stated that the department has filed an appeal challenging the order of the Tribunal in the case of ICICI-Prudential (supra),that case has not been heard by the Hon'ble Bombay High Court. Unless and until the order of the Tribunal is reversed,the FAA is bound to follow the order.In our opinion,all the grounds raised by the AO have to be disallowed,as the FAA followed the order of the Tribunal.Respectfully following the orders of the Tribunal in the case of HDFC Standard Life Insurance Company and ICICI-Prudential (supra),we decide Grounds of appeal No. 1 to 8 against the AO. Grounds of appeal No. 9 and 10 being general in nature, are not being adjudicated. ITA/6282/Mum/2012,AY-2009-10: 8. In its appeal the assess....