TaxTMI 
TaxTMI 
2021 (10) TMI 928
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.... of law raised in the appeals:- "(1) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in deciding that assessee - company has correctly computed profits of Life Insurance business even though the assessee - company was not complying with the provision of Section 44 red with First Schedule of the IT Act and Section 115B of the IT Act ? (2) Whether on the facts and in the circumstances of the case, Tribunal is correct in law in interpreting the special provision under Section 44 of the IT Act while granting benefits to assessee- company?" 4. The assessee Company is engaged in the business of life Insurance and filed return of income declaring loss which was computed by aggregating its reporting under shareholders account and policy holders account as prescribed under Insurance Regulatory and Development Authority (IRDA for short). 5. The Assessing Officer completed the assessment under Section 143(3) of the Act, treating the surplus under shareholders account as income from business and taxed at normal rates. 6. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The first appellate authority d....
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....arately taxed and the losses if any arise in the course of business, the same has to be carried forward and set off against the profits derived under the same head as per the provisions under Sections 71,72 and 73 of the Act. The learned counsel further argued that the Judgment of ICICI Prudential Insurance Company Ltd., supra is not applicable to the facts of the present case. However, the Tribunal erred in placing reliance on the said Judgment in allowing the appeal filed by the assessee, holding that when Section 44 of the Act is applied, distinction between various heads of income pales into insignificance. 8. The learned Senior counsel Sri Percy Pardiwala, representing the assessee submitted that the Tribunal has rightly observed that in the assessee's very own case in ITA No.756/Bang/2015, the CIT himself has held the assessee was engaged in life Insurance business. Referring to the order of ICICI Prudential Insurance Company Ltd., supra, allowed the appeal holding that the surplus/deficit as per the shareholders account should be credited with surplus/deficit in the policy holders account for determining the profit/loss of the assessee under Section 44 of the Act. 9. The l....
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....e with the provisions of the Insurance Act, 1938 [4 of 1938], or rules made thereunder or the provision of the Insurance Regulatory and Development Authority Act, 1999 [41 of 1999], or regulations made thereunder] subject to the following adjustments: - [a] subject to the other provisions of this rule, any expenditure or allowance including any amount debited to the profit and loss account either by way of a provision for any tax, dividend, reserve or any other provision as may be prescribed which is not admissible under the provisions of sections 3o to 43B in computing the profits and gains of a business shall be added back; [b] [i] any gain or loss on realisation of investments shall be added or deducted, as the case may be, if such gain or loss is not credited or debited to the profit and loss account; [ii] any provisions for diminution in the value of investment debited to the profit and loss account, shall be added back; [c] such amount carried over to a reserve for unexpired risks as may be prescribed in this behalf shall be allowed as a deduction. Provided that any sum payable by the assessee under section 43B, which is added back in accordance with clause [a] of t....
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....rder of the CIT that policyholder's account and Shareholders' account has to be considered separately and the benefit of Section 115B of the Act could be given only to the profits from life insurance business, Tribunal in the Assessee's own case relating the earlier year has held that there is no dispute that assessee was doing only life insurance business as regulated by the IRDA. It has been categorically observed that CIT himself has mentioned that assessee was engaged in life insurance business. The question whether policyholders' account and shareholders' account, in the case of an assessee carrying on only the business of life insurance business was to be separated or consolidated, being considered by the Tribunal of Mumbai Bench in ICICI Prudential Insurance Co. Ltd., supra, applied the same to the assesse's case thereby allowing the appeal of the assessee and the same has reached finality. 18. The order of the Tribunal of the Mumbai Bench in ICICI Prudential Insurance Co. Ltd., supra, was challenged by the Revenue before the High Court of Bombay wherein it is held thus: "5. So far as Question No.8 is concerned, the grievance of the revenue is that the income on sharehold....