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TMI Blog2015 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... dent : Shri Kishan Vyas (DR) ORDER Per Vivek Varma, JM: Cross appeals have been filed by the assessee and the department against the order of the CIT(A)-14, Mumbai, dated 27.11.2012, wherein both the appeals are arising out of the same order, we, therefore, for the sake of convenience and brevity are disposing off the appeals through this common and consolidated order. ITA No.1616/Mum/2013 : Assessee appeal : The following grounds have been taken: 1. The CIT(A) has erred in not adjudicating ground no.1 raised before him relating to the computation adopted for filing return of income by the appellant holding that this ground of appeal is general in nature. 2. The CIT(A) has erred in holding that the provisions of section 14A re applicable to the appellant. 3. Without prejudice to the above, the CIT(Appeals) erred in confirming the disallowance of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 7. Grounds of appeal no.4 regarding the expenditure under section 14A. 8. We have heard the rival contentions and perused the relevant record. We note that this issue has been considered and decided by the Pune Bench of this Tribunal in the case of Bajaj Allianz General Insurance Company limited V/s Add. CIT in ITA No.1447/PN/2007 for the assessment year 2003-04 order dated 31.08.2009. This Tribunal in the case of JCITV/s M/s Reliance General Insurance co. in ITA No.3085/Mum/2008 for the assessment year 2005-06 vide order dated 26.2.2010 has considered this issue and decided in favour of the assessee. This order was followed by this Tribunal while deciding the issue in ITA No.781/Mum/2007 vide order dated 30.4.2010. Thus, this issue has been consistently decided in favour of the assessee and against the revenue by this Tribunal. The Pune Bench of this Tribunal in the case of Bajaj Allianz General 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business in accordance with the provisions of the First Schedule to the Act. In the light of these, their Lordships of Delhi High Court have held that no quest ion of law, much less a substantial quest ion of law survives for their consideration. In other words, order of the Tribunal has been affirmed. Following the same reasoning, addition made by the AO is deleted. 22. We have considered the rival contentions and gone through the records. The provisions of s. 44 read as under: 44. Insurance business.--Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head ' Interest on securities' . 'Income from house property' , 'Capital gains' or ' Income from other sources' , or in s. 199 or in ss. 28 to 43B, the profits and gains of any business ITA Nos.6854 to 6856 6509 7765 to 7767 and 7213 ICICI 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestments 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. 19. 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 case of the 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.6855,6856 6059/M/2010 (where one of us was a party), and we find that the issue is identical and is fully covered. 9. We, therefore, following the order in the above ITAs for assessment year 2006-07, 2007-08 and 2008-09, do not find any reason to deviate from our own order, which we shall follow. Consequently the order of the revenue authority is reversed. We, therefore, direct the AO to delete the disallowance made at ₹ 62.53 crores on account of section 14A. 10. Ground No. 2 3 are therefore, allowed. 11. In the result, appeal filed by the assessee is treated as allowed. ITA No.1563/M/2013: Department Appeal : 12. The following grounds have been raised: 1. 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 the provisions of section 44 of the I.T. Act read with Rule 2 of the First 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy Holder s Account and shown as part of surplus in the actuarial valuation was only transfer of capital asset 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.260 of the Income Tax Act,1961 has been filed. 6. 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 assessee by holding that surplus available in Share Holders Account is not to be taxed separately as income from other sources and at the normal corporate rate and holding that surplus from Share Holders Account was only part of income from insurance business arrived at after combining surplus available in Share Holder s Account with the surplus available in Policy Holders Account and then and taxing this net surplus 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thereby is has an impact of reducing the surplus or increase in the deficit and therefore, the assets so written off are also accordingly required to be considered as part of the surplus and taxable under section 44 of the I.T. Act 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. 11. 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 the dividend income of assessee as exempt u/s.10(34) of the I.T.Act, 1961, ignoring the fact that dividend income is considered as part of the income of Life Insurance Business and is included as an accepted by the Department and appeal u/s.260A of the Income Tax Act 1961 has been filed. 12. The appellant prays that the order of the ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restores. 13. the appellant craves leave to amend to alter any ground or add a new ground which may be necessary . 13. At the time of hearing, the AR submitted a chart, wherein it was su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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