9911796707
TMI Blog2015 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... 62.52 crores under section 14A of the Income Tax Act, 1961. 2. Ground no.1 pertain to non adjudication of the specific ground raised before the CIT(A), pertaining to computation of income. The AR submitted that the issue of computation, has not been adjudicated by the CIT(A), and, therefore, needs to be restored back to the file of the CIT(A) with the direction to give finding on the correctness of basis of computation. The DR also accepted that there is no finding as such by the CIT(A), in the impugned order. 3. After hearing both the parties, we are of the considered opinion that the issue must be restored to the file of the CIT(A), for adjudication on the basis of computation of income and adoption thereof, for forming part of the ROI. 4. Ground No.1 is therefore, allowed for statistical purposes. 5. Grounds no. 2 & 3 pertains to applicability of provision of section 14A on insurance companies. 6. At the time of hearing, the AR submitted that the issue has been dealt with in assessee's own case in ITA Nos.6855, 6856 & 6059/Mum/2010, by ITAT, Mumbai, wherein it has been observed as under: "44. The learned Counsel submitted that in view of the provisions of section 44, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insurance Company limited V/s Add. CIT (supra) has decided this issue in paragraphs 17 to 20 as under: "17. Finally the quest ion to be answered is about the applicability of s. 14A in respect of sale of investment which is not taxed under the special circumstances of deletion of a sub-rule from the statute. It is not questioned that the impugned profit was nontaxable per se rather the accepted legal position is that the impugned profit was very much taxable in the past .Now it has been informed that this controversy in respect of insurance company set at rest by a decision of Tribunal , Delhi Bench verdict in the case of Oriental Insurance Co. Ltd. (ITA Nos. 5462 & 5463/Del /2003) asst. yrs. 2000-01 and 2001-02 order dt. 27th Feb. 2009 [reported as Oriental Insurance Co. Ltd. v. Asst t . CIT [2010] 130 TTJ (Delhi)388 : [2010] 38 DTR (Delhi ) 225--Ed. ] . Therefore considering the vehement reliance of learned Authorized Representative it is worth to mention at the outset itself that the issue now stood resolved by this latest decision of Delhi, Tribunal in the case of Oriental Insurance Co. Ltd. (supra), the relevant portion reproduced below: "17. We have heard rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I PRULIFE Mumbai F Bench of insurance, including any such business carried on by a mutual insurance company or by a co operative society, shall be computed in accordance with the rules contained in the First Schedule"'. 23. The above provision makes it very clear that s. 44 applies notwithstanding anything to the contrary contained within the provisions of the IT Act relating to computation of income chargeable under different heads. We agree with the learned counsel that there is no requirement of head-wise bifurcation called for while computing the income under s. 44 of the Act in the case of an insurance company. The income of the business of insurance is essentially to be at the amount of the balance of profits disclosed by the annual accounts as furnished in the Controller of Insurance. The actual computation of profits and gains of insurance business will have to be computed in accordance with r. 5 of the First Schedule. In the light of these special provisions coupled with non obstante clause the AO is not permitted to t ravel beyond these provisions. 24. Sec. 14A contemplates an exception for deductions as allowable under the Act are those contained under ss. 28 to 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of profits and gains of any business of insurance, the same shall be done in accordance with the rules prescribed in First Schedule of the Act, meaning thereby ss. 28 to 43B shall not apply. No other provision pertaining to computation of income will become relevant. According to the learned counsel, two presumptions that follow on a combined reading of ss. 14, 14A, 44 and r. 5 of the First Schedule are: (a) That no head-wise bifurcation is called for. The income, inter alia, of the business of insurance is essentially to be at the amount of the balance of profits disclosed by the annual accounts as furnished to the ITA Nos.6854 to 6856 6509 7765 to 7767 and 7213 ICICI PRULIFE Mumbai F Bench Controller of Insurance under the Insurance Act, 1938. The said balance of profits is subject only to adjustments there under. The adjustments do not refer to disallowance under s. 14A of the Act. (b) Profits and gains of business as refer red to in (a) above have only to be computed in accordance with r. 5 of the First Schedule. 22. Sec. 44 creates a specific except ion to the applicability of ss. 28 to 43B. Therefore, the purpose, object and purview of s. 14A has no applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule along with provisions of Insurance Act 1938, Insurance Regulatory and Development Authority Act 1999 and regulations there under and accordingly allowing adjustment from the "actuarial valuation"[ and as shown by the assessee in Form-I] in violation of the ration of the Apex Court in the case of LIC vs. CIT 51 ITR 778, without appreciating the fact that this decision of the ITAT was not accepted by the Department and appeal u/s.260A of the Income Tax Act,1961 has been filed. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying on the order of the ITAT in assessee's own case for A.Y.2005-06 to A.Y.2008-09, in concluding that transfer between Share Holders Account and Policy Holder's Account is tax neutral and not taxable u/s.44 of the Act r.w. Rule 2 of the First Schedule, without appreciating the fact that this decision of the ITAT was not accepted by the Department and appeal u/s.260A of the Income Tax Act,1961 has been filed. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying on the order of the ITAT in assessee's own case for A.Y.2005-06 to A.Y.2008-09, in interpreting Section 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at, at the rates specified u/s.115B Department and appeal u/s.260A of the Income Tax Act,1961 has been filed. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying on the order of the ITAT in assessee's own case for A.Y.2005-06 to A.Y.2008-09, in stating that insurance company can do only insurance business thus there cannot be other income other than insurance business income ignoring that fact that even the assessee insurance company uses the nomenclature expenses "other than those directly related to insurance business" while computing the surplus in the Share Holders Account and treating it as part of Insurance Business, without appreciating the fact that this decision of the ITAT was not accepted by the Department and appeal u/s.260 of the Income Tax Act, 1961 has been filed. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying on the order of the ITAT in assessee's own case for A.Y.2005-06 to A.Y.2008-09, in allowing relief to the assesse by holding that income in shareholders account is liable to be assessed as income from Life Insurance Business u/s.115B of the Act when through ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
