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2024 (6) TMI 459 - AT - Income TaxExemption u/s 10(34) 10(23AAB) while computing income of insurance business of assessee u/s 44 of the Act - HELD THAT - Assessee s own case in earlier years 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 2012 (11) TMI 13 - ITAT MUMBAI this Tribunal has adjudicated similar grounds of appeal of the revenue and held that assessee is entitled to exemption under section 10. Therefore we do not see any reason to differ from the order of the CIT (A) where he has allowed assessee s claim of exemption under section 10(23AAB) of surplus of Participating Pension Business and also dividend under section 10(34). Accordingly Revenue ground on this issue is rejected. Rate of tax applicable - according to the assessee isro 12.5% as per section 115B instead of the rate of tax levied @ 30% - according to the assessee the assessee s income is admittedly from Life Insurance Business therefore it needs to be computed as per Rule-2 of the First Schedule to the Act in accordance with the Regulations contained in Part-I and Part-II of the Fourth Schedule of the un-amended Insurance Act 1938 and rate of taxation is as per section 115B @ 12.5% - HELD THAT - We note that the assessee carries on Life Insurance Business in India as stipulated by Insurance Regulatory and Development Authority of India (IRDA). On the strength of the license issued from the IRDA assessee is carrying on the Life Insurance business in India. And therefore it s income has to be computed as per section 115B of the Act. And we note that in the earlier years there was no dispute on this issue and the AO himself has applied the rate of tax @ 12.5% in accordance with section 115B of the Act. In such a scenario the AO ought to have levied tax @ 12.5% as per section 115B of the Act. This ground of assessee is allowed. Addition u/s 80(JJAA) - according to assessee it has claimed in its return deduction u/s 80(JJAA) and the AO didn t adjudicate on it - CIT(A) directed the AO to hear the assessee on this issue and pass speaking order but as assessee submits that Ld. CIT(A) ought to have decided on this issue - HELD THAT - 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.
Issues Involved:
1. Interpretation of Section 44 of the Income Tax Act, 1961 read with Rule 2 of the First Schedule and related insurance laws. 2. Exemption under Section 10(34) and Section 10(23AAB) of the Income Tax Act. 3. Applicability of Section 14A to Insurance Companies. 4. Rate of Tax Applicable under Section 115B of the Income Tax Act. 5. Deduction under Section 80(JJAA) of the Income Tax Act. Summary: Issue 1: Interpretation of Section 44 and Related Insurance Laws The Tribunal upheld that the computation of income by the assessee, based on actuarial surplus/deficit as per Rule 2 of the First Schedule to the Insurance Act, 1938, was correct. The Tribunal dismissed the revenue's ground, aligning with previous decisions in the assessee's own case and the case of ICICI Prudential Insurance Co. Ltd. Issue 2: Exemption under Section 10(34) and Section 10(23AAB) The Tribunal confirmed that the assessee is entitled to exemptions under Section 10(34) for dividend income and Section 10(23AAB) for pension business income. This decision was based on precedents, including the General Insurance Company of India case, which allowed such exemptions even when incomes are computed under Section 44. Issue 3: Applicability of Section 14A The Tribunal reiterated that Section 14A does not apply to Life Insurance Companies as their income is strictly assessable under the Insurance Act. This was consistent with previous rulings in the assessee's own case and other similar cases. Issue 4: Rate of Tax Applicable under Section 115B The Tribunal held that the correct rate of tax for the assessee, engaged in Life Insurance Business, is 12.5% as per Section 115B of the Act. The AO's application of a 30% tax rate was incorrect, and the Tribunal directed the AO to apply the correct rate of 12.5%. Issue 5: Deduction under Section 80(JJAA) The Tribunal directed the AO to verify and consider the assessee's claim for deduction of INR 2,13,95,768 under Section 80(JJAA) of the Act, as the AO had disallowed it without providing any reason. Additional Observations: - The Tribunal dismissed the revenue's grounds that were based on the non-acceptance of previous Tribunal decisions by the Department, emphasizing judicial discipline. - For AY 2013-14, the Tribunal's decisions were consistent with those for AY 2018-19, dismissing similar grounds raised by the revenue. - The Tribunal restored the issue of the correct amount of exempt income under Section 10(34) for AY 2013-14 to the AO for verification. Conclusion: The appeals of the revenue were dismissed, and the appeals/CO of the assessee were partly allowed for statistical purposes. The Tribunal's decisions were in line with established precedents and judicial discipline.
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