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TMI Blog2019 (4) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... st the Revenue. Addition u/s 14A - assessment of insurance company - HELD THAT:- Hon ble Supreme Court in Maxopp Investment Ltd . . [ 2018 (3) TMI 805 - SUPREME COURT OF INDIA] are not sustainable because of the fact that in case of insurance company, the assessee in this case, the income is to be computed as per provisions contained u/s 44 read with Rule 5 of First Schedule, coupled with non-obstante clause and in these circumstances, the AO is not empowered to travel beyond these provisions. Section 14A contemplates an exception for deduction as allowable under the Act are those contained under sections 228 to 438 of the Act and section 44 creates special application of these provisions in case of the insurance companies. AR for the assessee stated at Bar that the decision rendered by coordinate Bench of the Tribunal right from AYs 2000-01 to 2005-06 have not been challenged in the Hon ble High Court. No illegality or perversity in the findings deletion made by the ld. CIT (A), ground no.3 is determined against the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... t it has not incurred any expenditure to earn the exempt income. AO thereby assessed the total income/loss of the assessee u/s 143 (3) of the Act at (-) ₹ 1,12,37,16,049/- and (-) ₹ 2,18,28,09,334/-. 4. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the additions made by the AO by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 6. At the very outset, it is brought to our notice by the ld. AR for the assessee that this ground has already been decided in favour of the assessee in AYs 2002-03 & 2004-05 in ITA No.3908 & 3909/Del/2007 order dated 29.05.2009, AY 2003-04 in ITA No.2242/Del/2007, AY 2005-06 in ITA Nos.4786 & 4493/Del/2012 dated 21.11.2014, which have been confirmed by the Hon'ble Delhi High Court. 7. Perusal of the order dated 29.05.2009 passed by the coordinate Bench of the Tribunal in assessee's own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ITAT in assessee's own case for assessment years 2000-1 and 2001-02, this issue is decided in favour of the assessee." 8. Hon'ble Delhi High Court has also decided the issue in question in assessee's own for AYs 1986-87 & 1988-89 by returning following findings :- "8. We find substance in the contention of learned counsel for the assessee. 9. Section 44 of the Act is a special provision dealing with the computation of profits and gains of business of insurance. It being a non obstante 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 rules 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. The scope of section 44 of the Act came up for consideration before the Supreme Court in General Insurance Corpn.'s case (supra), and their Lordships observed thus "Section 44 of the Income-tax Act is a special provision governing computation of taxable income earned from business of insurance. It opens with a non obstante clause and thus has an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s contentions, A copy of the said order of the Tribunal is placed at pp, 78 to 82 of the paper book. 11. The learned Departmental Representative, on the other hand, strongly justified the order of the CIT(A), in the light of his discussion in the impugned order. 12. We have carefully considered; the rival contentions and gone through the records, The Tribunal in assessment year 1999- 2000 has held that expenditure incurred for maintenance of the company's own guest houses is covered under section 30(a)(ii) of the Act. Therein the Tribunal accepted the plea of the assessee that in respect of the guest houses owned by the assessee, repair expenses will have to be allowed as deduction under section 30(O)(ii) of the Act. Once the expenditure is allowable under section 30(O)(ii), if the expenditure of incurred on repair and maintenance of guest house taken on lease should also be allowed. In the light of the aforesaid order of the Tribunal, we decide the matter, for the AYs in question, in favour of the assessee." 11. So, following the decision rendered by the coordinate Bench of the Tribunal, we are of the considered view that when the expenditure incurred by the assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 gain 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 and 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 Controller of Insurance under the Insurance Act, 1938. The said balance of profits is subject only to adjustments thereunder. The adjustments do not refer to disallowance under s. 14A of the Act. (b) Profits and gains of business as referred to in (a) above have only to be computed in accordance with r. 5 of the First Schedule. 20. Sec. 44 creates a specific exception to the applicability of ss. 28 to 43B. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument addressed by the ld. DR for the Revenue by relying upon the decision rendered by Hon'ble Supreme Court in Maxopp Investment Ltd. (supra) are not sustainable because of the fact that in case of insurance company, the assessee in this case, the income is to be computed as per provisions contained u/s 44 read with Rule 5 of First Schedule, coupled with non-obstante clause and in these circumstances, the AO is not empowered to travel beyond these provisions. Even otherwise, section 14A contemplates an exception for deduction as allowable under the Act are those contained under sections 228 to 438 of the Act and section 44 creates special application of these provisions in case of the insurance companies. The ld. AR for the assessee stated at Bar that the decision rendered by coordinate Bench of the Tribunal right from AYs 2000-01 to 2005-06 have not been challenged in the Hon'ble High Court. So, finding no illegality or perversity in the findings deletion made by the ld. CIT (A), ground no.3 is determined against the Revenue.
15. Resultantly, the appeal filed by the Revenue is dismissed.
Order pronounced in open court on this 25th day of February, 2019. X X X X Extracts X X X X X X X X Extracts X X X X
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