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TMI Blog2019 (11) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed elaborately by the ld. CIT(A) in his order. We, therefore, do not find any error or infirmity in the order of the ld. CIT(A). Accordingly, Ground No. 1 of the Revenue is dismissed. Disallowance made u/s 14A - HELD THAT:- Section 14A contemplates an exception for deductions as allowable under the Act are those contained u/s 28 to 43B of the Act. Section 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 application of sec. 14A of the act as according to us, it is not permissible to the AO to travel beyond section 44 and First Schedule of the Income-tax Act. Respectfully following the decision of the ITAT in the case of Oriental Insurance Co. Ltd. [ 2009 (2) TMI 240 - ITAT DELHI-B] , the additional ground raised by assessee is allowed. - ITA No. 1279/DEL/2016 - - - Dated:- 6-11-2019 - Shri N.K. Billaiya, Accountant Member, And Ms. Suchitra Kamble, Judicial Member For the Assessee : Shri Aakash Singhal, CA For the Department : Shri Surendra Pal, Sr. DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proportionate income generated on the amount of corpus fund allocated in the ratio of corpus fund lying with the company to total investible funds, as the beginning of the year. It was strongly contended that the corpus fund held by the assessee is on behalf of the Government and the same is directly credited to the Corpus Fund at the end of the year. 7. The claim of the assessee did not find any favour with the Assessing Officer who proceeded by making an addition of ₹ 8,62,47,181/-. Proceeding further, the Assessing Officer noticed that in the preceding Assessment Year, the assessee has suo moto disallowed a sum of ₹ 43,88,951/- and u/s 14A of the Act r.w.r 8D of the Rules, further disallowed a sum of ₹ 2,50,038/-. However, the Assessing Officer found that during the year under consideration, no such disallowance was made. The Assessing Officer, accordingly, proceeded by computing the disallowance u/s 14A r.w.r 8D of the Act at ₹ 75,29,079/-. 8. The assessee carried the matter before the ld. CIT(A) and in respect of addition of ₹ 8.62 crores, the assessee reiterated its contentions before the ld. CIT(A) and plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fund and corpus fund in the ratio of balances at the beginning of the year, the bifurcation of the interest income earned by the appellant company has been given by the appellant as per Annexure C to the submission. The appellant further argued that the observation of the AO that corpus fund belonged to the company is factually incorrect as the appellant company is factually incorrect as the appellant company is merely acting as an implementing agency. The AR also argued that this fund has been set up to meet the catastrophic losses to the agriculture sector and it has been credited with the contributions received from Government of India and States on the fifty-fifty basis. The income of this fund cannot be used by the appellant company at its option and it is absolutely outside the purview of the company. The income credited to the corpus fund is a statutory obligation and to be used as per the directions of the Government of India. Whenever a charge is created or an overriding title is created, the appellant company becomes only a collector of another s income. In other words, the income of the appellant ceases to be his income, because the charge holder has the principle righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee submitted the letter from Government of India, Ministry of Agriculture, Department Agriculture and Co-operation, which reads as under: I am directed to say that the funds under the Corpus Fund are provided by the Central and State Governments on 50:50 basis. As the Corpus Fund belongs to the Central and State Government, the interest accrued thereon also belong to the Government. Therefore, interest accrued on the Corpus Fund is required to be added in the Corpus Fund. 13. We have given thoughtful consideration to the orders of the authorities below and have carefully considered the letter of the Government of India referred to hereinabove. The facts of the case, read with the aforesaid letter of the Government, clearly demonstrates that this is a case of diversion of income by overriding titles. Considering the fats of the case in the light of the letter of Government of India, we find that the reliance by the ld. CIT(A) on the ratio laid down by the Hon'ble Supreme Court in the case of Associated Power [supra] is well taken. The ratio laid down by the Hon'ble Supreme Court has been followed in various judgments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r while computing the income u/s 44 of the Act in the case of a 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 Rule 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. Section 14A contemplates an exception for deductions as allowable under the Act are those contained u/s 28 to 43B of the Act. Section 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 application of sec. 14A of the act as according to us, it is not permissible to the AO to travel beyond section 44 and First Schedule of the Income-tax Act. Respectfully following the decision of the ITAT in the case of Oriental Insurance Co. Ltd. (supra), the additional ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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