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TMI Blog2013 (10) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 2 of 1st Schedule r. w. s. 44 of the I. T. Act. The principle laid down by the Hon'ble Supreme Court in LIC vs. CIT [1963 (12) TMI 5 - SUPREME Court] about the power of the Assessing Officer also restricted the scope and adjustment by the AO – Decided against the Revenue. Loss from pension income to be adjusted from the business income – Exemption u/s 10(23AAB) – Held that:- Reliance has been placed upon the case of Life Insurance Corporation of India [2011 (8) TMI 47 - BOMBAY HIGH COURT], wherein it has been held that The fact that the income from such fund has been exempted under section 10(23AAB) with effect from April 1, 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of the insurance busi- ness covered under section 44 of the Income-tax Act, 1961 - pension fund like the Jeevan Suraksha Fund would continue to be governed by the provisions of section 44 of the Income-tax Act, 1961, irrespective of the fact that the income from such fund are exempted, or not. Therefore, while determining the surplus from the insurance business, the actuary was justified in taking into consideration the loss incurred under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal which are independent and without prejudice to one another: Ground No. 1: Taxation of profits from life insurance business On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the assessment order passed by the Deputy Commissioner of Income-tax-1(1)('DCIT') which was not in accordance with section 44 of, read with Rule 2 in the First Schedule to, the Act. He ought to have held that the Appellant should be assessed on a total income of ₹ 239, 95, 21, 874 (loss). Ground No. 2: Basis of computing surplus/deficit as per Rule 2 The Appellant prays that for the purposes of computing the surplus deficit disclosed by the actuarial valuation as per Rule 2 of the First Schedule, the surplus deficit should be computed based on Form I in the Fourth Schedule to the Insurance Act, 1938, prior to its amendment by the Insurance (Amendment) Act, 2002. Ground No. 3: Determination of taxable income from life insurance business Without prejudice to the above and in any event on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of the DCIT in taxing an amount of ₹ 138, 17, 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the CIT(A) erred in confirming the action of the DCIT of not allowing deduction for provision made as per the applicable accounting standard ('AS-15') towards incremental liability of ₹ 270, 32, 488 on account of employee retirement benefits pertaining to earlier years. Ground No. 12: Set off of brought forward business losses and unabsorbed depreciation allowance On the facts and circumstances of the case and in law, the CIT(A) ought to have directed the DCIT to set off brought forward business losses and unabsorbed depreciation allowance of earlier years, as assessed in the relevant years, while computing the total income of the Appellant. Ground No. 13: Applicable rate of tax On the facts and circumstances of the case and in law, the CIT(A) ought to have held that the income of the Appellant is taxable as per the provisions of clause (i) in sub-section (i) of section 115B of the Act. Ground No. 14: Interest under section 234B of the Act On the facts and circumstances of the case and in law, the CIT(A) ought to have held that the Appellant was not liable to pay interest under section 234B of the Act. Ground No. 15: Intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncomes returned, dates of assessment, assessed incomes, and dates of orders of the CIT(A), for all the AYs. involved, except for the AY. 2008-09:- AY. Dt. of filing of Return Returned Income (Rs. ) Date of assessment Assessed Income Dt. of orders of CIT(A) 2002-03 31. 10. 2002 (-) 21, 24, 32, 066/- 30. 12. 2009 38, 50, 68, 890/- 27. 02. 2012 2003-04 28. 11. 2003 (-) 52, 52, 19, 573/- 24. 12. 2010 35, 53, 78, 120/- 24. 02. 2012 2004-05 30. 10. 2004 (-) 26, 08, 48, 080/- 30. 12. 2009 128, 71, 69, 520/- 28. 02. 2012 2005-06 31. 10. 2005 (-) 36, 06, 38, 799/- 24. 12. 2010 2, 78, 57, 89, 140/- 27. 02. 2012 2006-07 27. 11. 2006 (-) 58, 65, 27, 766/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from insurance business and on additions to be made of Incremental Negative Result (INR)were not acceptable. He further held that as per the provisions of section 44 of the Act income of life insurance business alone was taxable on the basis of actuarial surplus, that the income of life insurance was accounted by the assessee in Form A- RA, that the actuarial report in the case of the assessee was prepared on the basis of assets in Policy-holders'accounts only, that the taxation of surplus as per the actuarial report was taxation of income of the assessee from the business of life insurance only, that the assessee was earning income from the activities other than the life insurance business i. e. from account of share-holders, that the income from the Share-holders' account had to be taxed separately, that the assessee was not permitted to do any business activity other than the life insurance, that the income in Share- holders'account had to be taxed as income from other sources. He found that assessee had gross income from investments amounting to ₹ 30. 88 Crores, that the expenditure incurred for earning this income was of ₹ 1. 25 Crores, that the Net inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st schedule of the Act provided that the profits and gains of life insurance business could be taken together as annual average of the surplus arrived at by adjusting the surplus for deficit disclosed by the actuarial valuation made in accordance with Insurance Act, that the main controversy was whether the surplus of ₹ 138. 17 Crores as declared in Form I (IRDA) Regulation 2000) should be adopted as the surplus or only the incremental surplus disclosed by the valuation balance sheet, that the assessee had not given any explanation to the AO for not adopting the surplus at ₹ 138. 17Crores. Referring the Regulation No. 8 of the IRDA Guidelines, he, held that the revenue account relating to policy holder as on 31. 03. 2008 in Form A-RA revealed a surplus on ₹ 164. 81 Crores, that the P L Account also called Share-holders' account in Form A-PLrevealed investment income of ₹ 30. 88 Crores and expenditure of ₹ 1. 26 Crores, that there was a surplus of ₹ 29. 62 Crores, that the life insurance companies were mandated to prepare the accounts as per Form A-RA and A-PL besides the balance sheet in form A-BS, that the Hon'ble Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue and the other was a capital item, that such adjustment was not permitted by the IRDA regulation, that there was no provision in the IRDA Act to reduce the funds transferred from share-holderd' account to Policy-holder'saccount to determine the surplus of the Insurance Company. Finally he endorsed the views of the AO that surplus of ₹ 138. 17 Crores was to be adopted as the taxable surplus. With regard to basis of comp -uting surplus/deficit as per Rule 2 (ground no. 2. ), he held that the income of the assessee had to be assessed as per the provisions of section 44 of the IT Act from life insurance business on the basis of surplus/deficit determined as per actuarial report submitted before IRDA, that the it had derived income of Rs. ₹ 29. 62 Crores on investment from activities other than life insurance business, that Section 115B provided that the gains from life insurance business were taxable at 12. 5%whereas the other income was taxable at the corporate rate, that the income from share holder account had to be treated as income from business other than life insurance, that same was taxable at 30%. 2. 3. Before us, Authorised representative(AR) submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparing profit and loss account in particular format. AO and FAA were of the opinion that treatment given to certain items in the new format had to be taken as part of taxable income or taxable at higher rate. As stated earlier, issues raised in Grounds no. 2-7 are basically about the treatment to be given to certain 2. 5. 1. So, we would like to decide the issue of computing surplus/deficit disclosed by the actuarial valuation as per rule 2 of the First Schedule. As per the assessee, surplus/deficit had to be calculat -ed in form I of the fourth schedule to the Insurance Act, 1938 prior to its amendment by the Insurance(Amendment)Act, 2002. We find that similar issue had arisen in the case IPLIC (supra). Deciding the matter Mumbai Bench of the Tribunals has dealt the issue as under : 27. Respectfully following the above principles and examining the provisions of IT Act, we are of the opinion that the 'actuarial valuation made in accordance with the Insurance Act, 1938' do mean that the actuarial valuation done in accordance with the Insurance Act, 1938. In arriving at the above decision we have also taken into consideration that Rule-5 in Part-B of the first schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porated into the Income Tax Act as far as life insurance business is concerned. Therefore, AO's action in following the format prescribed under the Regulations of IRDA Act is not in accordance with the spirit of Rule-2 and provisions as made applicable under the Income Tax Act. 30. The First to Fourth Schedule of the Insurance Act 1938 was omitted by the Insurance Amendment Act 2002 after incorporation of the relevant schedules in the IRDA Act. Even though the said schedules were omitted from the Insurance Act, 1938, we are of the opinion that as far as Rule-2 is concerned by the principle of 'Legislation by incorporation' unamended Insurance Act, 1938 is applicable and the actuarial valuation has to be made in accordance with the then existing Part-I of the Fourth Schedule and in conformity with the requirements of Part-II of that schedule. Therefore, assessee's contention that the IRDA Regulations even though are applicable to assessee since it has commenced business after the commencement of the IRDA Act, 1999, for the purpose of Rule-2, the actuarial valuation has to be done in accordance with the Regulations contained in erstwhile Fourth schedule Part-I and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the life insurance business, the computation has to be made in accordance with the Rule-2as per provisions of section 44. Therefore, there is a valid argument raised by assessee that both the Policy-holders' Share-holders' account has to be consolidated into one and transfer from one account to another is tax neutral. What AO has done is to tax the surplus after the funds have been transferred from Share-holders' account to the Policy-holders' account at the gross level while ignoring such transfer in Share-holders' account, while bringing to tax only the incomes declared in the Share-holders' account that too under the head 'other sources of income'. In fact while giving the finding that assessee is in the life insurance business only and incomes are to be treated as income from life insurance business, the CIT (A) surprisingly in subsequent assessment years appeals accepted AO's contention that surplus in Share-holders' account is to be taxed as other sources of income. But once the provisions of section 44 of IT Act are invoked anything contained in the heads of income like income from other sources, capital gains, house property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insurance Ltd. (KMOMLIL) while deciding Appeal no. ITA/2551/Mum/2010). Respectfully following the orders of IPLIC and KMOMLIL (supra), we decide ground no. 3 in favour of the assessee. 2. 5. 3. Ground of appeal no. 4 is about transfer of ₹ 324. 82 Crores from Share-holders'account to the Policy-holders'account. We find that similar issue has been adjudicated by ITAT Mumbai in the case of IPLIC(supra). Holding that transfer of funds from Share-holders' account to the Policy -holders'account did not result in income chargeable to tax, Tribnal, in the matter of IPLIC, (supra), held as under: . . . . As seen from the orders of the authorities, the 'Total surplus' prepared under Regulation 8 was taken as basis ignoring the Form-I of Regulation 4. While accepting the Ld. CIT DR argument that for the purposes of Life insurance business the act provides for surplus of valuation to be taxed at lesser rate, we cannot accept the argument that surplus is Total surplus including Transfers from share holder's account. Basically transfers are tax neutral as a credit in one account gets cancelled by debit in other account when accounts are consolidated. Wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o balance the deficit in the policy holder's account, that the assessee had issued fresh capital to the extent of ₹ 250 crores and transferred funds to the extent of ₹ 233 crores from the Share-holders' account to Policy-holders' account in that year, that assessee was having only one business of life insurance, that the entire transactions both under the Policy-holders' and Share-holders' account pertained to the life insurance business only, that the assessee was not permitted to do any other business, that once assessee was in the life insurance business the computation had to be made in accordance with the Rule-2 as per provisions of section 44, that both the Policy-holders' and Share -holder's account had to be consolidated into one and transfer from one account to another was tax neutral, that the AO had taxed the surplus after the funds had been transferred from Share -holder's account to the Policy-holders' account at the gross level while ignoring such transfer in share holder's account, that as per the provisions of section 44 of Act heads of income like income from other sources, capital gains, house property or even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted to do business but presentation of accounts and reports were modified. . . . . . . . . The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938, in respect of the last inter-valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period. Respectfully following the above ground no. 6 is decided in favour of the assessee. 2. 5. 6. Last ground of appeal, related with life insurance business(Ground no. 7) is about taxability of income in Share-holder's account. While deciding the Ground no. 3 we have held that amount disclosed in Share-holder's account (Rs. 29. 62 Crores) is not to be taxed under the head 'income from other sources', but same has to be assessed under the head income from business and profession. We are of the opinion that business carried out by the assessee is governed by the provisions of section 44 of the Act. Therefore, ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Accounting Standard AS-15, that vide Circular 55/IRDA/F A/ Feb-07dtd. 21. 02. 2007 IRDA had provided that AS-15 was applicable to insuran -ce companies from the FY. 2007-08. He relied upon the judgment of the Hon'ble Supreme Court delivered in the case of Life Insurance Corporation of India (51 ITR 773). 2. 5. 7. b. We have heard the rival submissions and perused the material on record. While deciding ground no. 1 to7, we have held that income of the assessee doing the business of life insurance has to be assessed u/s. 44 of the Act r. w. Schedule I of the Act. As the effective ground of computation of income of life insurance has been decided in favour of the assessee. So, issue before us is held to be academic in nature. We are of the opinion that AOs are not allowed to disturb the actuarial valuation, as held by the Hon'ble Apex Court in the case of Life Insurance Corporation of India (supra). Therefore, ground no. 11 is allowed in favour of the assessee for statistical purposes. 2. 5. 8. Ground no. 13 also pertains to the business of Life Insurance. It is about rate of tax applicable in the case of assessee. During the assessment proceedings, as stated earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other sources. Being non-obstante clause, sec. 44 mandates that the profits and gains of insurance business shall be computed in accordance with the rules contained in First Schedule. Therefore, the incomes in Share-holders' account are to be taxed as part of life insurance business only, as they are part of same business and investments are made as part of solvency ratio of same business. The grounds are allowed. AO is directed to treat them as part of Life Insurance Business and tax them u/s 115B. Respectfully, following the order of the Tribunal, ground no. 13 is decided in favour of the assessee-company. As a result, all the grounds related with life insurance business of the asseessee-Grounds no. 1-7, 11, 13(total 9 grounds)are decided in its favour. 3. Second effective ground of appeal(Grounds no. 8-10)is about disallowance to be made u/s. 14A of the Act. During the year under consideration, AO found that assessee had received exempt dividend income of ₹ 30. 16 Crores, that the assessee had not made any disallowance as per the provisions of section 14A of the Act. He called for an explanation from the assessee in this regard. After considering the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We would like to reproduce the ground raised before the tribunal : AO and the CIT (A) erred in invoking the provisions of section 14A of the Income Tax Act 1961 and disallowing expenses attributable to earning exempted income, without appreciating the fact that the provisions of section 14A are not applicable to Insurance Companies . Deciding the issue in favour of the assessee Tribunal held as under : This issue is already decided by the Coordinate Benches in various cases. For the sake of record, the order in the case of General Insurance Corporation of India (supra) vide Para 9 is as under: 9. Issue No. 6 Non applicability of provisions of section 14A. (Modified Ground of Appeal No. 3. 1 to 3. 4Original Ground of Appeal No. 3. 1 to 3. 5). The issue is with reference to the applicability of section 14A and disallowance of expenditure in respect of sale of investment which are not taxed. We have heard the rival contentions. We also note that this issue is also considered by the Coordinate Bench in assessee's own case for 2006-07 vide Para 7 to 9: 7. Grounds of appeal no. 4 regarding the expenditure under section 14A. 8. We have heard the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal Insurance Co. Ltd. [2003life insurance business 179 CTR (Delhi) 85 : [2002life insurance business 125 Taxman 1094 (Delhi), decided the issue in favour of the assessee by holding that s. 44 of the Act is a special provision dealing with the computation of profits and gains of business of insurance. It being a non obstinate provision, has to prevail over other provisions in the Act. It clearly provides that income from insurance business has to be computed in accordance with the rule contained in the First Schedule. It is not the case of the Revenue that the assessee has not computed the profits and gains of its insurance business in accordance with the said rules. Reliance was placed on the scope of s. 14A, as held in the case of General Insurance Corporation of India v. CIT [1999life insurance business 156 CTR(SC) 425 :[1999life insurance business240 ITR 139 (SC), where -in their Lordships of the apex Court have categorically held that the provisions of s. 44 being a special provision govern computation of taxable income earned from business of insurance. It mandates the tax authorities to compute the taxable income in respect of insurance business in accordance with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the act ion of AO in al lowing only 50 per cent of the management expenses by invoking the provisions of s. 14A of the Act. The addition is made by the AO on the plea that the provisions of s. 14A was inserted by Finance Act, 2001 w. e. f. 1st April, 1962. It is stated that the investments made by the assessee are both taxable as well as tax free. An estimated disallowance of 50 per cent out of the management expenses incurred and as claimed in the P L a/c is treated as expenses incur red in connect ion with the looking after tax-free investment. The learned counsel for the assessee vehemently argued that the income of the assessee is to be computed under s. 44 r/w r. 5 of Sch. 1 of the IT Act. Sec. 44 is a non obstinate clause and applies notwithstanding anything to the contrary contained within the provisions of the IT Act relating to computation of income chargeable under different heads, other than the income to be computed under the head 'Profit and gains of business or profession'. For computation of profits and gains of business or profession the mandate to the AO is to compute the said income in accordance with the provisions of ss. 28 to 43B of the Act. In the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been decided in faovur of the assessee, so the grounds no. 9 and 10 become academic. Both the grounds are decided in favour of the assessee for statistical puoposes. 4. Next effective Ground of appeal(Ground no. 12) relates to not allowing the benefit of set off of brought losses and unabsorbed depreciation. During the assessment proceedings AO found that the assessee had made a claim u/s. 72 of the Act to carry forward its business losses, other than speculation business losses, for a period up to eight Assessment years for set off against subsequen -t year's business profits. AO rejected the claim made by the assessee. In appellate proceedings FAA held that the AO had not deliberated the issue in assessment order. He directed the AO to determine the brought forward losses of earlier year as per his record and then allow the same, if admissible in accordance to the respective provisions of law. He allowed ground of appeal for statistical purposes. 4. 1. Before us, AR submitted that FAA should have directed the AO to set off brought forward losses and unabsorbed depreciation of earlier years while computing the total income of the assessee. DR submitted that FAA had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 208 of the Act an assessee would be liable to pay advance tax only if the amount of advance tax payable by it under Chapter XVII of the Act were to exceed ₹ 5, 000, that during the year under consideration assessee had estimated, to the best of its judgment, the total income for the purpose of ascertaining advance tax payable, if any, that as per the estimate no income, as computed under section 209(1)(a) of the Act, arose and hence, no advance tax was payable, that section 234B of the Act had no application in the case of the assessee, that once an assessee estimateed bona fide that his income was nil it followed that he was not liable under section 208 and was therefore not liable to pay interest under section 234B of the Act, that the fact that the Appellant acted bona fide in not paying any advance tax was borne out by the return of income filed over the years by the assessee and also by the fact that the initial assessments of the assesseedid not result in any assessed tax as defined in section 234B of the Act. He placed reliance on the decision of Mumbai Tribunal in the case of Indian Airlines Ltd. (59ITD 353). He also referred to the judgment of Prime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... results. He did not agree with the submission of the assessee that policies were not to be treated as assets because it would mean according to AO to treat that negative results had to be eliminated. As per the AO, it was unrealistic pacifistic to eliminate all negative results, that all life insurance policies would not lapse, that if a sophisticated investment/ valuation was made, there was no need to eliminate negative results, that elimination of such negative results gave unrealistic picture and understated the surplus. AO further held that provisions of Sec. 44 r. w. schedule I of the Act provided that surplus worked out by actuarial valuation was to be adopted for computing income from life insurance business, that it did not mean the figure taken by the appointed actuary automa -tically became assessed total income, that schedule I of the Act prescribed that profits and gains of life insurance business would be on the basis of actuarial valuation made in accordance with Insurance Act, 1938, that in the case under consideration the actuarial valuation in respect of sum of policies was resulting in mathematical reserve to be negative, that as a conservative method of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... until they emerged Negative Reserves under column 6 in the Form I, that it was the mandatory requirement of the IRDA regula -tions. Following his predecessor's order he decided the ground in favour of the assessee. 6. 2. Before us, DR submitted that matter might be decided on merits. AR submitted that AO had disturbed the actuarial surplus by making addition under the head INR, that he was not authorised to do so in light of the judgment of the Hon'ble Apex Court delivered in the case of LIC. (supra). He referred to the case of IPLCI(supra). 6. 3. We have heard rival submissions and perused the material before us. We are of the opinion that treatment given to negative reserves by actuary cannot be disturbed by the AO. Here, it would be useful to understand meaning of negative reserve in simple terms. While making actuarial valuation, requirement of reserve to service insurance policies issued is ascertained. Such reserve (called mathematical reserve or value of liability)is equal to present value of future benefits payable and future expenses to be incurred less present value of future premium receivable. When the present value of future premium is more than the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismiss the Revenue's ground. Respectfully, following the above we decide effective ground of appeal against the AO. As a result appeal filed by the assessee is allowed in part and appeal of the AO stands dismissed. ITA No. 2203/Mum/2012 ITA No. 3000/Mum/2012(AY. 2002-03) 7. Grounds of appeal no. 1-7 for the year are identical to the Ground of appeal filed for the AY. 2008-09. Following the orders for the said AY. , we decide ground no. 1-7 in favour of the assessee . Ground no. 8 is about apportionment of depreciation allowance. Before us, AR submitted that if ground no. 2 was decided in favour of the assessee , ground no. 8 will be academic in nature. As we have already decided ground no. 2 in favour of the assessee , therefore, ground no. 8 is allowed for statistical purposes. Ground no. 9 is about set off of brought forward business losses. While deciding the Ground no. 12 of for the AY. 2008-09 we have adjudicated the said ground against the assessee . Following the same Ground no. 9 stands dismissed. Next Ground pertaining to charging of interest u/s. 234 B of the Act has been decided in favour of the assessee for the AY. 2008-09. Following the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Only issue, raised by the AO, is about INR and following our order for 2008-09 we decided the issue against him. Appeal filed by the AO is dismissed. ITA No. 2206/Mum/2012 ITA No. 3003/Mum/2012(AY. 2005-06) 10. Out of the 14 grounds of appeal first ground of appeal is about reopening and same was not pressed before us, during the course of hearing. We dismiss Ground no. 1 as not pressed. Grounds no. 2-11 and 13-14 are identical to Grounds of appeal no. 1-10 and 13-14 respectively filed by the assessee for the AY 2008-09. Following the order of that year, we decided above 12(10+2) Grounds in favour of the assessee . Ground no. 12 is about carry forward of losses. Following the orders of the earlier years GOA. 12 is decided against the assessee. 10. 1. Following our order for the AY 2008-09, we dismiss the only ground filed by the AO with regard to INR. Appeal filed by the assessee is allowed in part. AO's appeal stands dismissed. ITA No. 4959/Mum/2011 ITA No. 5494/Mum/2011(AY. 2006-07) 11. For the year under consideration, except one ground rest of the grounds are covered in favour of the assessee by our order for the year 2008-09. Following our main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(23AAB) of the Income-tax Act, 1961. The argument of the Revenue is that with the insertion of section 10(23AAB) by the Finance (No. 2) Act, 1996, with effect from April 1, 1997, the profits as well as loss arising from the Jeevan Suraksha Fund would not be includible in the total income of the assessee and, therefore, while determining the distributable profits of the assessee, the loss from the Jeevan Suraksha Fund ought not to be allowed to be adjusted against the taxable income. It is not in dispute that the Jeevan Suraksha Fund is a pension fund approved by the Controller of Insurance appointed by the Central to perform the duties of the Controller of Insurance under the Insurance Act, 1938. The loss incurred in the Jeevan Suraksha Fund has been considered by the actuary as a business loss, as per the valuation report as on the last day of the financial year, allowable under section 44 read with the First Schedule to the Income-tax Act, 1961. The fact that the income from such fund has been exempted under section 10(23AAB) with effect from April 1, 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee carrying of insurance business. As the assessee is engaged in the business of Life Insurance so provisions of section 14A r. w. r 8D of Rules (supra) cannot be applied in its case. We have already decided, while adjudicating the appeal for the AY 2008-09 that proportionate expenses cannot be disallowed u/s. 14A in case of company doing the business of life insurance. Following the same ground no. 2 is decided against the AO. Like earlier year, appeal of the assessee is allowed in part and the appeal of the AO is dismissed. ITA No. 4960 /Mum/2011 ITA No. 5493/Mum/2011(AY. 2007-08) 14. Grounds No. 1 to 9, for the year under consideration, are same as grounds no. 2 -10 for the AY. 2008-09. Following our order for that year, grounds no. 1 to 9 are allowed in favour of the assessee. Ground no. 10 and 11 filed by the assessee are identical to the grounds of appeal no. 12 and 14 for the AY 2008-09. Following our order for the year 2008-09, ground no. 11 is decided in favour of the assessee. Ground no. 10(ground no. 12 for the AY 2008-09), related brought forward of losses, is decided against the assessee. 15. Grounds of appeal no. 1and 2 filed by the AO are similar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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