2018 (4) TMI 1522 - AT - Income Tax

Treatment of loss - fund under the pension scheme - Computation of income of the assessee u/s 10(23AAB) - CIT-A allowing inclusion of loss arising from fund under the pension scheme in the assessed loss from remaining sources - Held that - CIT(A) correctly directed AO to follow the direction given by the ITAT in assessee s own case. We found that the Tribunal by following the order of the Bombay High Court in case of Life Insurance Corporation of India Ltd., 2011 (8) TMI 47 - BOMBAY HIGH COURT wherein held even if the Income from pension business of an insurance company is exempt u/s. 10(23AAB) of the Act, if there is a loss from pension business, the same has to be allowed to be carried forward and set off. The Court held that the object of inserting section 10(23AAB) of the Act was to promote insurance companies to offer attractive terms of the contributors - Thus direction to the AO to consider the plea raised by assessee afresh is correct. - Decided against revenue

Summary

Issues:
- Appeal by Revenue against CIT(A) order for A.Y. 2005-06, 2006-07, and 2007-08 under IT Act.
- Inclusion of loss from fund under pension scheme in the assessed loss.
- AO not following ITAT order in assessee's case.
- Direction to AO to consider plea afresh in light of Bombay High Court decision.
- Applicability of High Court decision on loss from pension business.
- Relief to be given to the appellant by AO.

Analysis:
1. The Revenue filed appeals against the CIT(A) order for the assessment years 2005-06, 2006-07, and 2007-08 under the IT Act, challenging the inclusion of loss from a fund under the pension scheme in the assessed loss.
2. The AO did not give effect to the ITAT order dated 19/12/2013 in the assessee's case during the scrutiny assessment.
3. The CIT(A) directed the AO to consider the plea afresh in light of the Bombay High Court decision, which held that even if the income from the pension business is exempt under section 10(23AAB) of the Act, any loss from the pension business must be allowed to be carried forward and set off.
4. The High Court decision emphasized that the objective of section 10(23AAB) was to promote insurance companies to offer attractive terms to contributors, allowing for the carry forward and set off of losses from the pension fund.
5. The Tribunal found that the AO should have followed the High Court decision and granted relief to the appellant accordingly.
6. The Tribunal noted that the issue was covered by its decision in the assessee's own case, and the Direction given to the AO by the CIT(A) was deemed appropriate.
7. Consequently, all the appeals by the Revenue were dismissed, affirming the direction to the AO to provide relief to the appellant as per the High Court decision and the Tribunal's ruling in the assessee's case.