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2018 (3) TMI 589 - HC - Income TaxExemption to the assessee u/s. 10(38) - Whether profits on sale of investments are liable to be (included) taxed in the hands of the assessee i.e. profits on sale of investments being liable to be tax. It does not deal with the benefit of exemption under Section 10(38) - Held that - The question as raised herein proceeds on the basis that even if sale of investments is liable to be taxed, yet to the extent it relates to long term capital gain falling under Section 10(38) of the Act, the exemption would be available. The question arising for our consideration in this appeal is different from the question on which the appeal of the GIC in ITX No. 201 of 2011 (2013 (2) TMI 852 - BOMBAY HIGH COURT) was admitted. We find that this Court in General Insurance Corporation (2011 (12) TMI 70 - BOMBAY HIGH COURT) had also relied upon the communication dated 21st February, 2006 of the CBDT to the Chairman of the Insurance Regulatory and Developing Authority. In the above communication, it has been clarified that exemption available to any other assessee under clause 10(38) relating to long term capital, would also be available to a person carrying on non-life Insurance business. Mr. Suresh Kumar very fairly states that the CBDT communication dated 21st February, 2006 addressed by the CBDT to the Chairman, IRTA, as well as the decision of this Court in GIC (supra) would be binding upon the Revenue. - Decided in favour of assessee.
Issues:
1. Challenge to order of Income Tax Appellate Tribunal regarding exemption under Section 10 of the Income Tax Act, 1961 for Assessment Year 2006-07. Analysis: The appeal challenges the order of the Income Tax Appellate Tribunal (Tribunal) dated 27th October, 2014 concerning the Assessment Year 2006-07. The main question raised by the Revenue for consideration was whether the Tribunal was justified in allowing exemption to the assessee under Section 10 of the Income Tax Act, 1961. The Tribunal's decision was based on the benefit of Section 10(38) of the Act in relation to the sale of investments as long term capital gains. This case originated from a reopening notice dated 17th March 2011, seeking to reassess the assessment completed under Section 143(3) of the Act on 31st December, 2017. The Tribunal dismissed the Revenue's appeal by following a previous decision of the Court in General Insurance Corporation v/s. DCIT 342 ITR 27, where it was held that the corporation was entitled to exemption under Section 10(38) of the Act. The Revenue's grievances included the Tribunal ignoring previous decisions and admission of a similar case for consideration. However, the Court clarified that the previous decisions did not directly apply to the present case, as they were not related to the specific exemption under Section 10(38) for long term capital gains. The Court highlighted that the question raised in the similar case admitted for consideration was different from the issue at hand, as it focused on whether profits on the sale of investments should be taxed, not on the exemption under Section 10(38) for long term capital gains. Additionally, the Court referred to a communication from the CBDT clarifying the availability of exemption under Section 10(38) to entities carrying on non-life insurance business, which supported the assessee's claim for exemption. Ultimately, the Court concluded that the question raised did not give rise to any substantial question of law, leading to the dismissal of the appeal with no order as to costs.
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