2022 (11) TMI 118 - AT - Income Tax

Addition made in respect of Interim Bonus paid to the income of the appellant - Whether the appellant has correctly computed the amount of surplus in accordance with the provisions of section 44 of the Act r.w. Rule 2 of the First Schedule to the Act, wherein income is offered basis actuarial report as reported in Form - I - HELD THAT - We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2011-12 2017 (9) TMI 1994 - ITAT MUMBAI which is on identical issue and has been decided in favour of the assessee by remitting the issue back to the AO to examine the factual matrix/utilization of surplus and to decide in accordance with law Deduction u/s 80G - AO has disallowed on the ground that such deductions are duplicate in nature since the income is considered on the basis of actuarial valuation - CIT(A) also upheld the disallowance made by the AO - HELD THAT - This issue has already been decided against the assessee in its own case 2022 (4) TMI 1461 - ITAT MUMBAI as held a ssessee has not refuted contentions of the Revenue. It is a trait law that the Assessing Officer has no power to go behind accounts drawn in First Schedule applicable to insurance companies, however, the Assessing Officer can always examine correctness of the claim of the assessee with regard to deduction claimed after computation of income. The intent of Legislature while framing special provision for insurance companies can by no means be to allow the benefit of double deduction of the same amount. The CIT(A) in the impugned order has illustrated the impact of assessess e claim of donation as expenditure in P L account on actuarial valuation. The non-obstinate clause does not impinge the powers of Assessing Officer to examine deductions claimed after computation of income. The Assessing Officer after examining the treatment given by assessee to the donation made to the foundation concluded that the assessee has taken undue benefit of double deduction of the same amount, hence, disallowed assessee s claim made after computation of income. The findings of the Assessing Officer have been upheld by the CIT(A) . We concur with the findings of the CIT(A) on this issue - Decided against the assessee. Disallowance u/s 14A read with rule 8D - HELD THAT - When the Ld. CIT(A) has decided this issue in favour of the assessee by following the order passed by the Ld. CIT(A) in assessee s own case for A.Y. 2015-16 2022 (4) TMI 1461 - ITAT MUMBAI on identical facts which is covered by the decision rendered by co-ordinate Bench of the Tribunal in Birla Sunlife Insurance Company and Oriental Insurance Co. Ltd. 2010 (9) TMI 1117 - ITAT MUMBAI we find no illegality or perversity in deletion of addition made by the AO under section 14A read with rule 8D of the Act, hence grounds No.1, 2 3 raised by the Revenue are dismissed.

Summary

Issues Involved:

1. General ground of appeal.
2. Validity of reopening proceedings under section 147.
3. Addition of Rs. 1003,53,93,000 in respect of Interim Bonus paid.
4. Disallowance of claim of deduction under section 80G.
5. Initiation of penalty proceedings under section 271(1)(c).
6. Charging of interest under sections 234B, 234C, and 234D.
7. Deletion of disallowance under section 14A read with rule 8D by CIT(A).

Detailed Analysis:

General Ground of Appeal:
- Ground No.1 was deemed general in nature and did not require specific findings.

Validity of Reopening Proceedings under Section 147:
- Grounds No.2 to 6, which pertained to the reopening of assessment under section 147 of the Act, were not pressed by the assessee and thus were dismissed.

Addition of Rs. 1003,53,93,000 in Respect of Interim Bonus Paid:
- The assessee corporation paid a sum of Rs. 1003,53,93,000 as interim bonus to existing policyholders, which was disallowed by the AO and upheld by the CIT(A).
- The Tribunal noted that this issue had been previously decided in favor of the assessee in its own case for earlier assessment years. The Tribunal remitted the issue back to the AO to examine the factual matrix and utilization of surplus and to decide in accordance with the law, following the precedent set in the assessee's own case for A.Y. 2010-11.

Disallowance of Claim of Deduction under Section 80G:
- The AO disallowed the assessee's claim of deduction under section 80G amounting to Rs. 5,00,00,000 on the ground that such deductions were duplicate since the income was considered on the basis of actuarial valuation. This disallowance was upheld by the CIT(A).
- The Tribunal confirmed the CIT(A)'s decision, noting that the issue had already been decided against the assessee in its own case for A.Y. 2015-16. The Tribunal agreed that allowing the deduction under section 80G would result in a double deduction, which is not permissible.

Initiation of Penalty Proceedings under Section 271(1)(c):
- Ground No.15, related to the initiation of penalty proceedings under section 271(1)(c), was deemed premature and thus not decided.

Charging of Interest under Sections 234B, 234C, and 234D:
- Grounds No.16 to 18, concerning the levy of interest under sections 234B, 234C, and 234D, were deemed consequential and were to be addressed by the AO in accordance with the findings of the Tribunal.

Deletion of Disallowance under Section 14A Read with Rule 8D by CIT(A):
- The CIT(A) deleted the disallowance of Rs. 6,69,58,70,204 made by the AO under section 14A read with rule 8D, following the Tribunal's order in the assessee's own case for A.Y. 2009-10 and A.Y. 2015-16.
- The Tribunal upheld the CIT(A)'s decision, noting that it was consistent with the Tribunal's previous rulings in similar cases, including Birla Sunlife Insurance Co. Ltd. and Oriental Insurance Co. Ltd. vs. ACIT. The Tribunal found no illegality or perversity in the deletion of the addition made by the AO under section 14A read with rule 8D.

Conclusion:
- The appeal filed by the assessee was partly allowed for statistical purposes, and the appeal filed by the Revenue was dismissed. The Tribunal's order was pronounced in the open court on 29.09.2022.