TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 459
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....ct, 1961 ["the 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 made thereunder and accordingly allowing adjustment from the 'surplus' worked out as per "actuarial valuation" in Form-I? 2. "Whether, on the facts and circumstance of the case and in law, the Ld CITA) was correct in holding that the exemption under section 10(34) of the Act was allowable to the assessee while calculating its income under section 44 read with First Schedule of the Act based on the decision of Hon'ble Tribunal, Mumbai in assessee's own case for A.Y. 2014-15, when the Department has not accepted the said decision and is in appeal before the Hon'ble Bombay High court?" 3. "Whether, on the facts and circumstances of the case and in law, the Ld CIT(A) has erred in disregarding the AO's contention that if the claim of exemption of the assessee u/s 10(34) for dividend income earned is allowed during appellate proceedings then the provision of sec14A shall apply?" 4. Whether, on the facts and circumstances of the case and in law, the Ld CITA) has erred in interpreting that the ap....
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....circumstances of the case and in law, having allowed ground nos. 2 and 3 raised before him to the effect that entire income of the Appellant is taxable as income from life insurance business to be computed as per Rule 2 in the First Schedule to the Act in accordance with the regulations contained in Part-I and Part-II of the Fourth Schedule of the unamended Insurance Act, 1938, while deciding on ground nos. 4 and 5 raised before him, the learned CIT(A) ought to have directed the learned AO to rectify the errors in the manner of computation of income (resulting in double taxation) pointed by the Appellant in the income-tax computation sheet (annexed to the assessment order) rather than directing the learned AO to verify the errors pointed out by the Appellant. While directing the learned AO to verify the errors pointed by the Appellant in computation of income, the learned CIT(A) erred in issuing such directions under section 251(1)(c) instead of section 251(1)(a) of the Act applicable in case of an appeal against the assessment order. 3. On the facts and circumstances of the case and in law, having allowed ground nos. 2 and 3 raised before him and having held that entire income....
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....34) (E) 91,82,72,148 (D-E) (F) 1,31,6,94,355 Surplus/(Deficit) from insurance business (C-F) 1,06,32,03,378 Less: Chapter VIA deduction Section 80JJAA 2,13,95,768 Total Income/(Loss) 1,04,18,07,610 6. The assessee offered total income of INR 1,041,807,610 in the return of income whereas, the AO assessed the total income at INR 4,875,212,340. And consistent with the order of this Tribunal (Mumbai) in the assessee's own case for AYs 2002-03 to AY 2008-09 and AY 2014-15; and as per section 44 read with Rule 2 of the First Schedule to the Act, the assessee computed the taxable surplus of Rs. 237,58,97,733 from life insurance business by taking into account the incremental surplus/(deficit) disclosed in the Valuation Balance Sheet (i.e. Old Form) prepared in accordance with the Regulations contained in Part-I and Part-II of the Fourth Schedule of the un-amended Insurance Act, 1938. From the taxable surplus of INR 2,37,58,97,933/- the assessee claimed exemption in respect of the dividend income of INR 91,82,72,148 and the income from pension business of INR 39,44,22,207 under section 10(34) and section 10(23AAB) of the Ac....
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....rplus of INR 1,50,53,69,000 as per New Form I, and since the said surplus represented only policyholders' results, the AO added the surplus of INR 87,05, 28,733 as per the Profit & Loss Account (i.e. shareholders' account) to arrive at the total taxable surplus of INR 2,37,58,97,733 from life insurance business as per section 44 read with Rule 2 of the First Schedule to the Act. 10. Further, according to assessee, the AO denied exemptions claimed by the assessee under section 10(34) and section 10(23AAB) of the Act and pointed out that by the AO at para 8.5 on page 23 of the order, denied the exemption of INR 91,82,72,148 in respect of dividend income claimed by the assessee under section 10(34) of the Act. And as concluded the AO at para 9.7 on page 28 of the order, denied exemption of INR 39,44,22,207 in respect of surplus from pension business claimed by the Appellant under section 10(23AAB) of the Act; and assailed the action of AO computing Rs. 2,37,58,97,733/- as income from Life Insurance Business. 11. On appeal, the Ld. CIT(A) was pleased to partly allow the appeal of assessee. In respect of manner of computation of income as done by assessee vis-à-vis that by AO, ....
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....llowing the same judicial precedence which would apply on the facts of the present case also, we decide the issues raised vide ground no. 1&2 in the department's appeal in favour of the assessee and against the Department." 15. Since there is no change in law, respectfully following the order of Tribunal (supra), we dismiss ground no. 1 of the revenue and therefore ground no. 8 of the revenue doesn't require adjudication being infructuous. Therefore, both grounds 1 & 8 are dismissed. 16. Ground no. 2 & 6 of the revenue are against the action of the Ld. CIT(A) allowing the assessee exemption u/s 10(34) & 10(23AAB) of the Act while computing income of insurance business of assessee u/s 44 of the Act. 17. At the outset, it was brought to our notice that both these issues are no longer res-integra. And drew our attention to the assessee's own case in earlier years (supra) wherein similar grounds were raised by revenue, and the Tribunal followed the ratio of the decision on these issues in the case of M/s. ICICI Prudential Insurance (supra) wherein at para 47, this Tribunal has adjudicated similar grounds of appeal of the revenue and held as under: - "47. The Revenue in its appeal ....
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....mitted that the deduction under section 10(38) in respect of long term capital gain was available. When this issue came up before the CIT (A), the CIT (A) not only rejected the claim under section 10(38) but also considered and elaborately discussed how and why the assessee was not eligible for deductions already allowed by the Assessing Officer in respect of 'interest on tax free bonds' amounting to Rs. 3,45,19,352/- under section 10(15) and dividend income amounting to Rs. 270,66,46,489/- under section 10(34). He has elaborately discussed this issue from Para 6 onwards and ultimately made an enhancement of income to an extent of Rs. 274,11,65,844/- the amount which was allowed by the Assessing Officer as exempt under section 10. The contention of the CIT (A) was that the assessee was not eligible for deduction under section 10, once the incomes are brought to tax under section 44 r.w. Rule 5 of First Schedule to the Income Tax Act, 1961. 8. There is no need to consider the arguments of the CIT (A) and how he has arrived at that conclusion in this order as this issue was decided by the Hon'ble Bombay High Court in favour of the assessee in writ petition No.2560 of 20....
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....ibed in this behalf shall be allowed as a deduction". The Assessing Officer has in the reasons for reopening the assessment proceeded on the premise that in computing the profits and gains of business for an assessee who carries on general insurance business no other section of the Act would apply and that the computation could be carried out only in accordance with section 44 read with Rule 5 of the First Schedule. In Life Insurance Corporation of India, Bombay v. Commissioner of Income Tax Bombay City-III, a Division Bench of this Court construed the provisions of section 44 and of the First Schedule. The assessee in that case which carried on life insurance business had made a claim to exemption under section 10(15) and section 19(1). In a reference before the Court, the questions referred included whether in computing the profits and gains of the business of insurance under section 44 read with the First Schedule certain items which were ordinarily not includible in the total income were rightly included in the taxable surplus. The Division Bench of this Court held as follows: "The question which essentially falls to be determined in this reference is whether, in view of th....
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.... According to the Assessing Officer, Rule 5 would not permit any adjustment to the balance of profit as per annual accounts prepared under the Insurance Act, and hence the judgment would not be applicable. The Assessing Officer has clearly not noticed that the decision in Life Insurance Corporation (supra) though rendered in the context of an assessee which carries on life insurance business, followed an earlier decision of a Division Bench of this Court in Commissioner of Income-Tax v. New India Assurance Co Ltd. That was a case of an assessee which carried on non life insurance business. In New India Assurance Co. Ltd. the Division Bench dealt inter alia with the provisions of section 19(7) of the Income Tax Act, 1922. The questions referred to this Court included whether the assessee was entitled to claim an exemption from tax under section 15B and 15C (4) and in respect of interest on a government loan under a notification issued under section 60. Section 10(7) of the Income Tax Act, 1922 provided that notwithstanding anything to the contrary contained in section 8,9,10,12 or 18, the profits and gains of any business of insurance and the tax payable thereon shall be computed in....
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....der rule 5(a). In that context the Supreme Court held as follows: "There is another approach to the same issue. Section 44 of the Income-tax At read with the rules contained in the First Schedule to the Act lays down an artificial mode of computing the profits and gains of insurance business. For the purpose of income-tax, the figures in the accounts of the assessee drawn up in accordance with the provisions of the First Schedule to the Income-tax Act and satisfying the requirements of the Insurance Act are binding on the Assessing Officer under the Income-tax Act and he has no general power to correct the errors in the accounts of an insurance business and undo the entries made therein". The question whether an assessee who carries on general insurance business would be entitled to avail of an exemption under section 10 did not arise. The issue as to whether the assessee which carries on the business of general insurance would be entitled to the benefit of an exemption under clauses (15), (23G) and (33) of section 10 is directly governed by the decision rendered by the Division Bench in Life Insurance Corporation v. Commissioner of Income-tax (Supra) following the earlier deci....
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....e is rejected." 18. Respectfully following the ratio of the decision of this Tribunal on identical lis, we dismiss ground no. 2 & 6 of revenue. 19. Ground nos. 3, 4 & 7 are regarding disallowance made by AO u/s 14A of the Act. The Ld. AR pointed out that these issues are also covered in favour of assessee in assessee's own case (supra) wherein at para 10 it was held as under: - "10. Lastly, with regard to ground no. 4, that is, disallowing exemption under section 10(34) with regard to the dividend income earned, we find that the Ld. CIT(A) after relying upon various decisions held that section 14A is not applicable to Life Insurance Company. The Tribunal has reiterated the same view in the above cases that provisions of section 14A will not apply to Insurance companies, whose income are strictly assessable in terms of Rules of the Insurance Act. Thus, respectfully following the same, we affirm the order of the CIT(A) and dismissed the ground raised by the revenue. Accordingly, grounds raised by the revenue are dismissed." 20. Respectfully following the order of the Tribunal (supra), these grounds of revenue stands dismissed. 21. Ground no. 5 of the revenue is against the acti....
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....sessee in respect of its claim of deduction of Rs. 2,13,95,768/- u/s 80(JJAA) of the Act. On this issue, according to assessee, it has claimed in its return deduction of Rs. 2,13,95,768/- u/s 80(JJAA) of the Act and the AO didn't adjudicate on it. Therefore, the Ld. CIT(A) directed the AO to hear the assessee on this issue and pass speaking order. Aggrieved, the assessee submits that Ld. CIT(A) ought to have decided on this issue. We note that assessee had filed the requisite Form-10DA before the AO for making claim u/s 80(JJAA) of the Act. But AO has not examined/adjudicated the claim and has disallowed it without giving any reason. And the Ld. CIT(A) has directed the AO to verify and pass speaking order on this claim. We note that the assessee has filed Form-10DA as required by statute to make the claim of deduction u/s 80(JJAA) of the Act and AO without any contrary material has disallowed the same without any whisper/reason for disallowing the same. In such a scenario, we direct the AO to verify the claim of the assessee and consider the claim in accordance to law after giving opportunity to assessee. 26. In the result, appeal of the revenue is dismissed and appeal of the asse....
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....ecision of Hon'ble ITAT in a common order passed in assessee's own case for AY 2002-03 to AY 2008-09 even though the department is in appeal against the said common order?" 7. "Whether, on the facts and in the circumstance of the case and in law, the Ld. CIT was correct in holding that the exemption under section 10(34) of the Act and 10(23AAB) was allowable to the assessee while calculating its income under section 44-read with First Schedule of the Act without considering its impact on Section 14A wrt to disallowance that needs to be made when part of the income earned. is exempt income?" 8. 'The appellant craves leave to amend or alter any ground or add a new ground that may be necessary." 28. Cross Objection of the assessee for AY. 2013-14 are as under: - "1. As across objection to ground no. 4 raised by the Appellant in its appeal, the Respondent prays that where the surplus as per the Form I prepared in accordance with the provisions of the Insurance Regulatory and Development Authority Act, 1999 [i.e., 'new Form I'] is considered, the amount of Rs. 2,30,35,570/- transferred from the Shareholders' Account to the Policyholders' Account should be reduced from the said su....