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TMI Blog2019 (6) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ined 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. - Decided against the Revenue. - ITA No.3839/Del./2016 - - - Dated:- 27-5-2019 - Vice President, Shri G.D. Agrawal And Shri Kuldip Singh, Judicial Member For the ASSESSEE : Shri Tarandeep Singh, CA For the REVENUE : Smt. Paramita M. Biswas, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, DCIT, Circle 1, LTU, New Delhi (hereinafter referred to as the Revenue ) by filing the present appeal sought to set aside the impugned order dated 22.04.2016 passed by the Commissioner of Income-tax (Appeals)-22, New Delhi qua the assessment year 2008-09 on the grounds inter alia that :- 1. On the facts and in the circumstances of the case and in law, ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 case for AYs 2002-03 and 2004-05, available at pages 41-49 of the paper book, goes to prove that this issue has already been decided in favour of the assessee by returning following findings :- 9. We have heard both the parties and gone through the material available on record. ITAT in order dated 27TH February, 2009 deleted the addition on the ground that income of insurance company is to be computed in accordance with the provisions of section 44 of the Act. The Bench while deleting the addition held as under :- 17. We have heard rival submissions of the parties and have gone through the material available on record. Identical issue arose in assessee's own case for AY 1985-86. The Tribunal accepted the plea of the assessee and in fact the issue went up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. 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 overriding effect over other provisions contained in the Act. It mandates the assessing authorities to compute the taxable income for business of insurance in accordance with the provisions of the First Schedule. A plain reading of rule 5(a) of the First Schedule makes it clear that in order to attract the applicability of the said provision the amount should firstly be an expenditure or allowance. Secondly, it should be one not admissible under the provisions of sections 30 to 43A. If the amount is not an expenditure or allowance, the question of testing its eligibility for adjustment by reference to rule 5(a) of the First Schedule would not arise at all. (p.144) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-06 decided this issue in favour of the assessee by relying upon the decision in AYs 2000-01 2001-02 by returning following findings :- 18. The next common dispute relates to the order of the CIT(A) in sustaining the action of AO in making (sic) allowing 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 provision 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 incurred in connection 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. I of the IT Act. Sec. 44 is a non obstante 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to 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 travel beyond these provisions. 24. Sec. 14A contemplates an exception for deductions as allowable under the Act are those contained under ss. 28 to 43B of the Act. Sec. 44 creates special application of these provisions in the cases of insurance companies. We therefore, agree with the assessee and delete the disallowance made by the AO which is based on the appli ..... 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