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2020 (12) TMI 434 - AT - Income TaxCorrect head of income - profit on sale of investments - Income from Capital Gain or income from other sources - claim of exemption u/s 10(38) on the profit on sale of investments - HELD THAT - As decided in own case 2019 (11) TMI 1544 - ITAT MUMBAI CIT(A) was right in law and the facts of the assessee in allowing the assessee s claim of exemption u/s 10(38) on the profit on sale of investments. Disallowance u/s 14A r.w.r. 8D - HELD THAT - Provisions of Sec. 14A has no applicability in the cases of General Insurance Companies, which are governed by the special provisions laid down in Sec. 44. Disallowance of amortization of premium on securities - HELD THAT - As relying on assessee's own case 2019 (11) TMI 1544 - ITAT MUMBAI no infirmity in the vacation of the disallowance of amortization of premium on securities. Provisions of Sec. 115JB not applicable in the case of the assessee company
Issues Involved:
1. Taxation of profit on sale of investments. 2. Exemption of income under Section 10(38) of the Income-tax Act, 1961. 3. Disallowance of expenditure under Section 14A read with Rule 8D of the Income-tax Rules, 1962. 4. Allowability of amortization of premium on government securities as revenue expenditure. 5. Applicability of Section 115JB (Minimum Alternate Tax) to the assessee. Issue-wise Detailed Analysis: 1. Taxation of Profit on Sale of Investments: The revenue challenged the CIT(A)'s decision that profit on sale of investments should be taxed as "Income from Capital Gain" and not as "Income from other sources." The ITAT upheld the CIT(A)'s decision, referencing the Bombay High Court's ruling in the assessee's own case for A.Y 2006-07, which confirmed that profit from the sale of investments is exempt under Section 10(38). The Tribunal reiterated that this position was consistent with earlier decisions and there was no change in the facts or law to warrant a different conclusion. 2. Exemption of Income Under Section 10(38): The revenue disputed the CIT(A)'s ruling that income of ?639,06,24,962/- for A.Y 2012-13 and ?907,55,94,005/- for A.Y 2013-14 is exempt under Section 10(38). The ITAT found that the issue was covered by previous decisions, including the Bombay High Court's ruling in the assessee's favor. The Tribunal noted that the assessee's claim for exemption was consistent with the law and upheld the CIT(A)'s decision. 3. Disallowance of Expenditure Under Section 14A Read with Rule 8D: The revenue contended that the CIT(A) erred in not computing disallowance under Section 14A as per Rule 8D. The ITAT upheld the CIT(A)'s decision, referencing its own rulings in the assessee's previous cases, which held that Section 14A does not apply to general insurance companies governed by Section 44 of the Act. The Tribunal reiterated that the specific provisions for insurance companies override the general provisions of Section 14A. 4. Allowability of Amortization of Premium on Government Securities: The revenue argued that the premium paid on government securities should not be allowed as revenue expenditure. The ITAT upheld the CIT(A)'s decision, noting that the issue was settled in favor of the assessee in previous years. The Tribunal cited its own rulings and the Supreme Court's decision, which supported the amortization of premium as a legitimate revenue expenditure for insurance companies. 5. Applicability of Section 115JB (Minimum Alternate Tax): The revenue challenged the CIT(A)'s ruling that Section 115JB does not apply to the assessee. The ITAT upheld the CIT(A)'s decision, referencing its own and the Bombay High Court's rulings in the assessee's previous cases. The Tribunal confirmed that the accounts of insurance companies are prepared as per the Insurance Act, 1938, and thus, Section 115JB does not apply. Conclusion: The ITAT dismissed the revenue's appeals for both A.Y 2012-13 and A.Y 2013-14, upholding the CIT(A)'s decisions on all issues. The Tribunal's rulings were consistent with previous decisions in the assessee's own cases and supported by higher judicial authorities, including the Bombay High Court and the Supreme Court.
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