TaxTMI 
TaxTMI 
2026 (6) TMI 1157
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.... Kolkata [in short 'the Ld. CIT(A)'] for assessment year 201213. The Revenue's appeal challenges the deletion of additions made under Section 37(1) and Section 14A of the Income Tax Act, 1961 ['the Act']. The Assessee, through its Cross Objection, challenges the legal validity of the reassessment proceedings initiated under Section 147. The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) was justified in allowing expenditure claimed by the assessee u/s. 37(1) despite the same being in excess of the commission ceiling prescribed under Section 40(1) of the Insurance Act, 1938? 2. "Whether on the facts and circumstances of the case and in ....
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....me-tax (Appeals) [Addl./JCIT (A)-7, Kolkata) (hereinafter referred to as CIT(A)) erred in not quashing the order under section 147 r.w.s. 143(3) of the Act ("the order") passed by the Assistant Commissioner of Income Tax 1(1)(2) Mumbai, (hereinafter referred to as the "AO") having failed to appreciate that the order was illegal, void and otherwise bad in law. 2. The CIT(A) erred in not quashing the order passed by the AO having failed to appreciate that it was passed beyond the time limit for completion of reassessment proceedings as prescribed under section 153 of the Act. 3. Briefly stated that the facts are that the assessee filed its return of income for the year under consideration on 28.09.2012 declaring total income under....
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....de to motor car dealers via these aggregators were essentially "commissions" disguised as "professional charges," exceeding the statutory caps prescribed under Section 40(1) of the Insurance Act, 1938. Consequently, the AO invoked Explanation 1 to Section 37(1), which prohibits deduction of expenditure incurred for any purpose which is an "offence" or "prohibited by law," and disallowed Rs. 11,35,23,239/-. 5.2 The Ld. CIT(A) deleted the addition by following the binding precedent of this Tribunal in the Assessee's own case for several other assessment years (consolidated order dated 30.07.2025). The relevant finding of ld CIT(A) is reproduced as under: 5.3 Ground of appeal no. 4 is against disallowance of expenses u/s. 37 treati....
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....een declared to be guilty of any offence nor there is any penal action initiated against the assessee for violation of the provisions of the Insurance Act or IRDAI guidelines, in our humble opinion, the exceptions provided under Explanation-1 to Section 37(1) of the Act would not apply. In this context, we respectfully agree with the observations made by the coordinate Bench in case of Milestone Real Estate Fund (Supra). Pertinently, in case of M/s Cholamandalam MS General Insurance Co. Ltd. [2025] 174 taxmann.com 603 (Mad.), identical issue of disallowance of payment made to motor vehicle dealers u/s. 37(1) of the Act came up for consideration. While deciding the issue, the Hon'ble Court upheld the decision of the Tribunal restori....
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....ory body has taken any punitive or penal action against the Assessee for the alleged contravention of the Insurance Act. 6.1 Further, we find that the learned Commissioner (Appeals) has merely followed a binding precedent rendered in the assessee's own case on an identical issue. It is not the case of the Revenue that the said decision has been reversed or stayed by any higher judicial forum. In the absence of any distinguishing feature brought on record, judicial discipline demands that a consistent view be followed. We, therefore, find no infirmity in the order of the learned Commissioner (Appeals) in deleting the disallowance. Accordingly, Ground No. 1 of the Revenue's appeal stands dismissed. 7. The ground Nos. 2 to 4 of the appea....
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....tion of such disallowance by CIT(A), ITAT, in Para 22 and 23 held as under:- "22. In so far as the appeals by the Department are concerned, the common issue arising in all the appeals relate to deletion of disallowance of expenditure u/s. 14A of the Act read with Rule 8D. As could be seen from the facts on record, learned First Appellate Authority deleted the disallowance made u/s. 14A r.w.r. 8D of the reasoning that since the income of an assessee engaged in insurance business has to be computed u/s. 44 of the Act read with first schedule the provisions of Section 14A would not be applicable. 23. Having considered rival submissions, we find that issue is squarely covered in favour of the assessee by various judicial prece....