2015 (7) TMI 317 - AT - Income Tax

Rectification application u/s 154 rejected - assessee claiming of a mistake in reducing the loss of its pension business in-as-much as the same was also a part of its insurance business and, thus, liable to be taken into account in computing income from the same u/s. 44 of the Act r/w First Schedule citing the decision of CIT vs. Life Insurance Corporation of India Ltd. (2011 (8) TMI 47 - BOMBAY HIGH COURT) in support. - Held that - The proposition that a subsequent decision by the jurisdictional high court renders an order by the subordinate court under its jurisdiction mistaken, liable for rectification, is well accepted, The object of inserting section 10(23AAB) as per the Board Circular No. 762, dated 18-2-1998 was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10(23AAB) was not with a view to treat the pension fund like Jeevan Suraksha Fund outside the purview of insurance business but to promote insurance business by exempting the income from such fund. Therefore, in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the pension fund like Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted. our purview in the present proceedings is only to see if the issue under reference is the same as arising before and answered by the hon ble high court, so that, where so, an order (by a court under its jurisdiction) inconsistent therewith is liable to be deemed as mistaken. This would also meet the argument by the ld. CIT(A) to the assessment having attained finality; we having already found an identity of the issue under reference. The Revenue when confronted therewith was unable to controvert the same, i.e., the said proposition as well as the identity of the issue. As regards the other contention raised by the Revenue, i.e., of the assessee having taken a well considered stand in the matter, the same would again be of no consequence. True, both the assessee and the Revenue in the instant case were of the considered view that income including loss , the loss of the pension fund had to be excluded in determining the business income under Chapter IV-D, i.e., in terms of section 44, of the Act. However, it is the correct legal position that is relevant and not the view that the parties may take of their rights in the matter. See CIT v. C. Parakh & Co. (India) Ltd. (1956 (3) TMI 1 - SUPREME Court ). - Decided in favour of assessee.

Summary

Issues:
Appeal against rejection of application u/s. 154 of the Income Tax Act, 1961 for A.Y. 2009-10.

Analysis:
1. The appeal was filed by the Assessee against the rejection of their application u/s. 154 by the Assessing Officer, confirmed by the CIT(A), for the assessment year 2009-10. The Assessee, a company providing life insurance services, claimed a mistake in reducing the loss of its pension business, contending it should be included in computing income from insurance business u/s. 44 of the Act. The Assessee cited a recent decision by the jurisdictional High Court in support. The AO rejected the application, stating there was no inadvertent mistake as the Assessee had taken a considered view. The CIT(A) upheld the rejection, leading to the Assessee's second appeal (Para 2).

2. The Tribunal considered the proposition that a subsequent decision by the jurisdictional High Court can render a prior order mistaken and liable for rectification. The Tribunal noted that the High Court had addressed similar issues in the case of LIC of India Ltd., which formed the basis of the Assessee's case. The High Court clarified that the loss from the pension fund should be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Act. The Tribunal found an identity of the issue under reference with the High Court's decision, making the Revenue's case meritless (Para 3.1-3.3).

3. The Tribunal emphasized that the concept of income under the Act includes loss, as established by apex court decisions. It explained that income specified under Chapter III does not form part of total income, and thus, the exclusion of pension fund loss in determining business income under Chapter IV-D was justified. The Tribunal referenced Circular No. 762 dated 18.02.1998, stating its limited interpretative value. It concluded that the High Court's decision was binding and rendered the Revenue's case dismissible (Para 3.4-3.5).

4. Ultimately, the Tribunal allowed the Assessee's appeal, highlighting the identical issue addressed by the High Court and dismissing the Revenue's contentions (Para 4).