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TMI Blog2016 (9) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... elines of IRDA (Investment regulations), the minimum capital requirement for carrying on the life insurance business as per the Insurance Act 1938 which has been brought to my knowledge during the course of Appellate proceedings by the appellant through it's authorized representative. Further, the A.R has highlighted in its written submission the unity of business (single indivisible business by stating that in the case of PNB Met Life the entire activity including the reporting in the share holder's account and policy holder's account IS controlled and supervised by a common Board of Directors and the same team which invests funds in policy holder's account also invests the funds in the share holder's account and both are subject to the same regulatory norms. The above arguments of the assessee even though factually correct but will not come to its rescue in escaping the share holder's profits to be taxed at the normal rates. Because, in the statute the provisions relating to the rates of taxes to the respective incomes under various sources are clearly defined so as the provisions relating to the concessional rates of the taxes. Therefore, the tax authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess against the profits of the shareholder stating that the computation of profit or loss from the business of life insurance is governed by special provisions of section 44 of the Act 1961 at concessional rate of taxes is distinct from income earned from the shareholders account which is to be taxed at normal rates of taxes and the loss relating to life insurance business cannot be set off against the income from the shareholders account is upheld. However, the Assessing Officer is directed to examine the brought forward losses whether any losses pertaining to/arising out of share holders business." 5. Aggrieved, the assessee preferred an appeal before ITAT and raised the following grounds:- 1. The impugned order of the ld CIT(A) u/s 250 of the Act is based on incorrect interpretation of law and facts and therefore bad in law; Manner of computation of income under Section 44 of the Act 2. The learned CIT(A) has erred in law and in facts in disregarding the computation of taxable income of the Appellant as provided under Section 44 of the Act; 3. The learned CIT(A) has erred, in law, and in facts, in upholding the order of the Assessing Officer of not aggregating income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable even remotely to the facts and circumstances of the instant case; 11. The learned CIT(A) has failed to appreciate the fact that there is no express or implied prohibition under the provisions of the Act denying benefit of set-off of loss from life insurance business and income from other business inter se under Section 70 of the Act; 12. The learned CIT(A) has erred in law and on facts, in denying the benefit of set-off of assessed brought forward business losses against alleged business income determined by the learned AO inasmuch as the provisions of Section 72 of the Act explicitly provides for set-off of brought forward losses while determining taxable income; 13. The learned CIT(A) has failed to appreciate that the unabsorbed brought forward business loss of earlier years amounting to Rs. 1745,61,22,586 is already assessed and vested in the hands of the Appellant and therefore the learned CIT(A) has erred in directing the AO to allow part of the loss which is a digression from the law laid down under the Act and amounts to arbitrary interpretation of law. The appellant submits that each of the above grounds is independent and without prejudice to one another. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per provisions of section 44. Therefore, there is a valid argument raised by assessee that both the policyholder's & shareholder 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 shareholder's account to the policyholder's account at the gross level while ignoring such transfer in shareholder's account, while bringing to tax only the incomes declared in the shareholder s 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 ClT(A) surprisingly in subsequent assessment years appeals accepted AO's contention that surplus in shareholder's 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 or even interest on securities does not come into play and only first schedule has to be invoked to arrive at the profit. Therefore, in our ..... 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