2020 (4) TMI 543 - AT - Income Tax

Following orders of the higher appellate authorities to decide the issue - Issues decided relying on assessee's own case and identical issues were decided by the Tribunal in the case of ICICI Prudential s case 2012 (11) TMI 13 - ITAT MUMBAI - all grounds of appeal raised by the Revenue are covered in favour of the assessee - HELD THAT - As decided in AGARWAL WAREHOUSING AND LEASING LTD. (NOW ADMANUM FINANCE LTD.) 2002 (7) TMI 86 - MADHYA PRADESH HIGH COURT relying on KAMLAKSHI FINANCE CORPORATION case 1991 (9) TMI 72 - SUPREME COURT principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the Department - in itself an objectionable phrase and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws. Hon ble Gujarat High Court in Sayaji Iron and Engineering Co. v. CIT 2001 (7) TMI 70 - GUJARAT HIGH COURT reiterated that no Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another bench of the same Tribunal on the same facts, and if a bench of a Tribunal on identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. We follow the decision of the Tribunal mentioned hereinbefore and dismiss all the grounds of appeal filed by the Revenue in its appeal.

Summary

Issues:
1. Interpretation of provisions of Section 44 of the Income Tax Act along with Insurance Act and regulations for adjustment from "actuarial valuation."
2. Tax neutrality of transfer between Shareholders Account and Policy Holders Account.
3. Impact of negative reserves on taxable surplus calculation.
4. Exemption for dividend income and its inclusion in the income of Life Insurance Business.
5. Disallowance under section 14A for exempted dividend income.
6. Treatment of assets write-off in actuarial surplus calculation.

Analysis:
1. The appeal involved the interpretation of Section 44 of the Income Tax Act regarding the adjustment from "actuarial valuation." The Revenue contended that decisions in other cases were not accepted by the Department. However, the Tribunal found that similar grounds were decided in favor of the assessee in previous cases, citing the principle of judicial discipline to follow higher appellate authorities' orders unreservedly. Consequently, the appeal grounds raised by the Revenue were dismissed.

2. The issue of tax neutrality concerning transfers between Shareholders Account and Policy Holders Account was raised. The Tribunal referenced previous decisions and reiterated the principle that no Tribunal has the jurisdiction to reach a conclusion contrary to another bench's decision on identical facts. Following this principle, the Tribunal dismissed the Revenue's appeal grounds on this issue.

3. Regarding the impact of negative reserves on the taxable surplus calculation, the Tribunal found that this issue was also covered in favor of the assessee by previous decisions. The Tribunal upheld the decisions made in the earlier cases and dismissed the Revenue's appeal grounds related to negative reserves.

4. The question of exemption for dividend income and its treatment as part of the income of the Life Insurance Business was addressed. The Tribunal referred to specific pages in previous decisions where this issue was discussed and decided in favor of the assessee. Consequently, the appeal grounds on this issue were dismissed.

5. The Tribunal considered the disallowance under section 14A for exempted dividend income. By referring to earlier decisions, the Tribunal found that this issue was also decided in favor of the assessee. Therefore, the appeal grounds related to disallowance under section 14A were dismissed.

6. Lastly, the Tribunal examined the treatment of assets write-off in the actuarial surplus calculation. By following the decisions made in previous cases, the Tribunal dismissed the Revenue's appeal grounds concerning the write-off of assets.

In conclusion, the Tribunal dismissed all the grounds of appeal filed by the Revenue, as the facts were found to be identical to previous cases where decisions were made in favor of the assessee. Consequently, the cross objection filed by the assessee was also dismissed, and the order was pronounced on February 7, 2020.