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TMI Blog2020 (5) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... AO erred in holding that the total profit disclosed by the Appellant in the Shareholder's Profit and Loss Account (Form A-PL) amounting to Rs. 221,77,96,000 (which includes profit on sale of investments amounting to Rs. 31,07,15,000) was not the profit of the life insurance business of the Appellant and, consequently, erred in holding that the provisions of Section 44 of the Act read with the First Schedule thereto do not apply to the said profit. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) / AO erred in not appreciating the Appellant's contention that its income was to be computed taking into account the surplus of the actuarial valuation done in accordance with the Insurance Act, 1938 as represented in Form I ('Old Form I'). 4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition of Rs. 310,94,94,000 to the taxable income of the Appellant made by the Ld. AO by considering the amount appropriated as Funds for Future Appropriation ("FFA") as part of the actuarial surplus being liable to tax under Section 44 read with Rule 2 of the First Schedule of the Act. 5. That on the facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as under:- S. No Particulars Amount (in Rs.) 1. Bonus allocated to policyholders account was treated as^ part of taxable actuarial surplus u/s 44 read with Rule 2 of the First Schedule of the Act 389,73,39,000 - 2. Amount set aside as Funds for Future Appropriations (FFA) was also treated as part of the taxable actuarial surplus u/s 44 r.w. Rule 2 of the First Schedule of the Act 310,94,94,000 3. Provision for bad debts was disallowed 57,76.000 4. Donation paid (taxed as business income at 30%) was disallowed 3,00,00,000 5. Income from shareholder's account taxed at normal rates (i.e. @30%) (this amount also includes the adjustment made on account of profit on sale of investment amounting to Rs. 31.07.15.000/-) on the ground that profit on sale of investments in the shareholder's account don't form part of the life insurance business 221,77,96,000 5. The assessee challenged the assessment before the ld CIT (A) who passed an order dated 15.11.2017 deleted the disallowance of provision of doubtful debts and dismissed all other grounds. The assessee also raised the additional grounds before him with respect to allowability of exemption u/s 10(34) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.' The First schedule to the Income tax Act contains three parts, viz., A,B & C. Part A which pertains to life insurance business is extracted here under for ready reference as is in existence during the impugned assessment year: "The First Schedule Insurance Business A.- Life insurance business Profits of life insurance business to be computed separately. 1. In the case of a person who carries on or at any time in the previous year carried on life insurance business, the profits and gains of such person from that business shall be computed separately from his profits and gains from any other business. Computation of profits of life insurance business. 2. The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter-valuation period ending before the commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe insurance business in the security fund, the amount of income-tax payable by the assessee under the said clause (i) shall be reduced by an amount equal to two and one-half per cent of such profits and gains and, accordingly, the deposit of thirty-three and one third per cent required to be made under this sub-section shall be calculated on the income-tax as so reduced." 66. Section 115B was inserted by the Finance Act, 1976 but with effect from 1 June, 1976. It is, therefore, applicable for assessment year 1977-78 and thereafter. At the time of insertion, the section contained only the provisions that were later renumbered as sub-section (1). The scope and effect of the insertion was explained by the Board in a circular as under: "Rate of tax on profits and gains of life insurance business - New section 115B. - 37.1 As explained in paragraph 40 of this circular, the Finance Act has substantially modified the basis for determining profits and gains of life insurance business. The rate of income-tax to be charged on the profits and gains of the life insurance business determined on the modified basis has been laid down in new section 115B of the Income-tax Act. Under the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount calculated at such percentage thereof as is permissible under sub-section (2) of section 40B of the Insurance Act, 1938 (IV of 1938), as reduced by any expenditure or allowance which is not deductible under sections 30 to 43 in computing income chargeable under the head "Profits and gains of business or profession". (ii) Rule 3 was in the following terms: (a) four-fifths of the amounts paid to or reserved for or expended on behalf of policy-holders shall be allowed as a deduction: Provided that if any amount so reserved for policy-holders ceases to be so reserved, and is not paid to or expended on behalf of policy- holders, that proportion of such amount (one-half or four-fifths, as the case may be) if it has been previous allowed as a deduction under this Act or under the Indian Income-tax Act, 1922 (XI of 1922), shall be treated as part of the surplus for the period in which the said amount ceased to be so reserved; (b) any amount either written off or reserved in the accounts or through the actuarial valuation balance sheet to meet depreciation of or loss on the realisation of investments shall be allowed as a deduction, any sums taken credit for in the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be charged on the profits and gains of the life insurance business determined on the modified basis has been laid down in new section 115B of the Income-tax Act. Under the new provision, in the case of a taxpayer having income from life insurance business, the income-tax payable on the profits and gains of the life insurance business will be calculated at the rate of 12 ½ percent. of such profits and gains and the remaining income, if any, will be charged to tax at the rates specified in the annual Finance Act. 37.2 This amendment has come into force with effect from the 1st June, 1976, and will apply in relation to the assessment year 1977-78 and subsequent years. [Section 20 (part) of the Financial Act]. Revised basis for computation of profits of life insurance business - First Schedule. 40.1 The Finance Act has amended the First Schedule to the Income- tax Act with a view to simplifying the determination of profits from life insurance business. Broadly, the profits and gains of a life insurance business are computed at the higher of the two following figures - (a) the gross external incomings of the nature of rent, interest, etc., of the previous year (but exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of life insurance business has to be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938, in respect of the last inter valuation period ending before the commencement of the assessment year, so as to exclude any surplus or deficit included therein, which was made in any earlier inter valuation period. According this rule as is applicable from A.Y.1977-78, the surplus or deficit between two inter valuation periods disclosed by the actuarial valuation made in accordance with Insurance Act,1938, can only be taken as income or loss of the period. The old Rule 2 which was in existence prior to amendment made by Finance Act, 1976 contains two methods of determining profits and gains of the insurance business and greater of these two method was regarded to be the profit and gains of life insurance business. The first method prescribes calculation of net income = Gross external incomings of the previous year from that business less the management expenses of that year. Clause (2) of old rule 2 restricts the deduction of management expenses under old Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms:- "... ... It is now well known that so far as the life insurance business is concerned, the computation of the profits has to be made not in the matter in which it is normally done in the case of an ordinary assessee but according to the special and artificial mode prescribed in the First Schedule, having regard to the provisions of s.44 of the I. T. Act, 1961. The effect of s. 44 of the I. T. Act, 1961, is that the provisions relating to interest on securities, income from house property, capital gains and income from other sources are not made applicable in the case of an insurance company and the profits are to be computed in accordance with rr. 2, 3 and 4 in the First Schedule so far as life insurance business is concerned. Thus, so far as the proceedings regarding assessment to tax under the I. T. Act are concerned, they will be controlled solely by the provisions of s. 44 and the First Schedule which, as already pointed out, is an artificial mode of computation of income. The basic figure which is required to be taken for the purposes of computation of income from insurance business is the annual average of the surplus. Rule 2(b), which is the only material rule so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Regulations laid down in Part I of the Fourth Schedule and in conformity with the requirements of Part II of that Schedule. The fifth proviso to section 13 stipulates that on or after the commencement of the IRDA Act, 1999 every insurer shall cause an abstract of the report of the actuary to be made in the manner specified by the Regulations made by the Authority. In exercise of the powers conferred by section 114A of the Insurance Act, 1938, the IRDA notified the Insurance Regulatory and Development Authority (Actuarial Report and Abstract) Regulations, 2000. Regulations 3 and 4 stipulate the procedure for preparation of actuarial reports and abstracts and the requirements applicable. Under Regulation 3(4)(v), each abstract and statement is to be accompanied by a certificate signed by the appointed actuary, inter alia, stating that in his opinion, the mathematical reserves are adequate to meet the insurer's future commitments under contracts and the reasonable expectation of policyholder's. Each insurer is required to prepare statements which are to be annexed to the abstract and a list of those statements is set out in Regulation 4(2). Regulation 8 provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of ICICI Prudential Insurance Co. Ltd. (supra) as relied by learned Senior Advocate discussed these provisions as under:- '27. Respectfully following the above principles and examining the provisions of IT Act, we are of the opinion that the actuarial valuation made in accordance with the Insurance Act, 1938 do mean that the actuarial valuation done in accordance with the Insurance Act, 1938. In arriving at the above decision we have also taken into consideration that Rule-5 in Part-B of the First Schedule with reference to other insurance business did incorporate the IRDA and its Regulations as amended by the Finance Act 2009 w.e.f. 1.4.2011 which is as under: B-Other Insurance Business: Computation of profits and gains of other insurance business. 5. The profits and gains of any business of insurance other than life insurance shall be taken to be the profit before tax and appropriations as disclosed in the Profit & Loss A/c prepared in accordance with the provisions of the Insurance Act, 1938 (4 of 1938) or the rules made thereunder or the provisions of the Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) or the Regulations mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance business shall, in respect of the life insurance business transacted by him in India, and also in the case of an insurer specified in sub-clause (a)(ii) or sub-clause (b) of clause (9) of section 2 in respect of all life instance business transacted by him, (every year) cause an investigation to be made by an actuary in to the financial condition of the life insurance business carried on by him, including a valuation of his liabilities in respect thereto and shall cause an abstract of the report of such actuary to be made in accordance with the Regulations contained in Part I of the Fourth Schedule and in conformity with the requirements of Part II of that Schedule: Provided that the Authority may, having regard to the circumstances of any particular insurer, allow him to have the investigation made as at a date not later than two years from the date as at which the previous investigation was made: Provided: Provided: Provided: Provided also that every insurer on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall cause an abstract of the report of the actuary to be made in the manner specified by the Regulations made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ultimate out-come of insurable events. In the business of insurance the product cost is an abstraction, depending on the timing issues, variability issues and risk parameters. One big function actuaries provide is making reserves to insure that insurance companies keep enough money on their balance sheets to make good of all the claims they will have to pay. This involves arriving at actuarial surplus or deficit depending on various factors. In order to ensure a fair play in the business, the IRDA prescribed regulations according to which various norms were prescribed in order to ensure that Life Insurance of business (even other insurance business) are done according to healthy business practices. As per the above regulations, Regulation 4 prescribes number of abstracts and statements in respect of (a) linked business; (b) non-linked business and (c) health insurance business. As part of this Regulation 4(2)(d) item No. iv, Form -'I' was prescribed for the purpose of valuation results and to indicate the surplus or deficit in the life insurance business of a company. Apart from the above regulations, IRDA also prescribed Insurance Regulatory and Development Authority (Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholder'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 only and incomes are to be treated as income from life insurance business, the CIT(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 I T Act are invoked to arrive at the profit. Therefore, in our opinion both the policyholder's and shareholder's account has to be consolidated for the purpose of arriving at the deficit or surplus.' 71. We noted that the Revenue challenged the order passed by the Tribunal in appeal under section 260A of the Act before the Bombay High Court raising amongst several questions, the following question of law: "(8) Whether on the facts and in the circumstances of the case and in law, the Tribunal is correct in allowing relief to the assessee by holding that surplus available in Share Holders Account is not to be taxed separately as "income from othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as confirmed by Mumbai High Court has been referred to before us. Although Supreme court admitted SLP, that will not loose the value of binding precedent until the decision is reversed or operation of the order is stayed. But, we noted in respect of the issue whether the income in shareholder account has to be taxed as part of the income of the insurance business, the learned DR in this regard contended that if shareholder income is also taxed as part of life insurance business, the provisions of section 115(1)(ii) will become redundant and we cannot interpret the law in this manner to make part of the section to be redundant. In this regard, he vehemently relied on the decision of the Supreme Court in the case of Surat Art silk cloth Mfgr. Association (supra) in which it was held "The construction contended for the revenue would have the effect of rendering section 11(4) totally redundant after the enactment of section 13(1)(bb). A construction which renders a provision of the Act superfluous and reduces it to silence cannot be accepted". He also referred to the decision of Ahmadabad Bench of this tribunal in the case of Mayurbhai Mangaldas Patel (supra) particularly the observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be a case that in future government may amend the Act and permit life insurer to carry on other business or there may be a case where insurer, although allowed license for life insurance business but in violation of license, may have carried out any other business but IRDA have not exercise the power of cancelling registration ,under these circumstances income so derived has to be assessed at the rate prescribed u/s 115B(1)(ii). There may be a case that the assessee may have interest income on refund of income tax, the income so received be taxed u/s 115(1)(ii). Therefore, we do not agree with the plea of learned DR that the provisions of section 115(1)(ii) will become redundant in case the income in shareholders account is taken to be the income derived from life insurance business. We may also mention that we cannot take a different view what has been taken by the coordinate Bench approved by High Court. The learned DR was fair enough to state that there is no other decision either of the Tribunal or superior court on this issue taking a contrary view as has been taken in the case of ICICI Prudential Life Insurance Co. Ltd. (supra). 73. The observations of the Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d traversable by the Defendant, has not been traversed. In that case also a Defendant is bound by the judgement, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken." At pg 329 of the judgement, Their Lordships observed as under: "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating though the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 19. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter and if there was not change it was in support of the assesses - we do not think the question should have been reopened and contrary to what had been decided by the Commission of Income-Tax in the earlier proceedings, a different and contradictory stand should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon the decision of the ld CIT(A) in assessee's own case for Assessment Year 2010-11. The ld CIT(A) also confirmed the action of the ld AO relying upon the order of his predecessor for that year. The order of the ld CIT(A) for Assessment Year 2010-11 travelled up to the coordinate bench and the issue has been decided as per para No. 69, 70 of that order in favour of the assessee. Further in para no 86 it is held that:- "86. We do not find any ambiguity in Rule 2 of the First Schedule. Rule 2 of the First Schedule does not refer to any deduction but merely refers to actuarial surplus or deficit determined in accordance with Insurance Act, 1938. Prior to amendment of law in 1976 there was limitation in the erstwhile Rule 3, which limited the allowability of the deduction pertaining to the amount set aside for the benefit of policy holders to 80%. Post amendment no such limitation exists. We do not find any provision under the Income tax which states that while arriving at actuarial surplus liability ascertained by the actuary as bonus payable in future or amount set aside for further appropriation for the benefit of the policy holders would not be deductible. Actuarial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cremental FFA has been allowed as deduction by the Revenue. Our aforesaid view is supported by the following decisions." 16. The other years decision of ITAT merely follows this decision. Therefore, as there is no distinction in the facts and circumstances of the case we do not find any reason not to follow the order of the coordinate bench. Accordingly, ground No. 3 of the appeal of the assessee is allowed. 17. Ground No. 4 and 5 of the appeal of the assessee is with respect to the addition of Rs. 3109494000/- on account of funds for further appropriation and Rs. 3897339000/- on account of bonus allocated to the policyholders to the taxable income of the appellant and treating the same as part of the actuarial surplus liable to be taxed u/s 44 of the Act read with Rule 2 of the 1st Schedule. 18. The ld AR submitted that this issue has also been decided in favour of the assessee by the coordinate bench for Assessment Year 2010-11 vide para No. 77 to 91 of that order. Therefore, it was submitted that the issue is squarely covered in favour of the assessee. 19. The ld DR vehemently supported the orders of the lower authorities. 20. We have carefully considered the rival contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, survival benefits, cash or reversionary bonuses and other payouts/benefits linked to the happening of future uncertain events. The premiums earned by the assessee, therefore, in our opinion, have embedded obligation to make available such benefits in future. The premiums earned have to be set off by estimated liability to make available future benefit as actuary declared such provision in form of the FFA. In our view this present the provision of future bonus which it is bound to pay even though this liability has not been allocated but it is a ascertained liability and, therefore, while working out the actuarial surplus this has to be taken into account. While disposing of ground no.5 in the preceding para, we held that in the absence of any definition being given for actuarial surplus, we have to give a meaning to it, what actuarial surplus mean in common parlance. Actuarial surplus in our view represent the surplus i.e. the amount available for the shareholders after providing for all the expenses and ascertained liabilities of life insurance business. policyholders are not the shareholders but are the customers. The insurance policies are written by the company on the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on account of the accumulated earned/vacation leave. In the assessment year 1978- 1979 an amount of Rs. 62,25,483/- was set apart in a separate account as provision for encashment of accrued leave. It was claimed as a deduction. In the opinion of the Tribunal the assessee was entitled to such deduction. The High Court has formed a different opinion and held that the provision for accrued leave salary was a contingent liability and therefore was not a permissible deduction. The reasoning applied by the High Court is that the liability will arise only if an employee may not go on leave and instead apply for encashment. If the employee avails the leave as per his entitlement, then he would be paid salary for the period of leave and liability for encashment would not arise. The other event on the occurrence of which the employee may stake his claim is termination or retirement which again is an uncertainty. Accordingly the High Court has answered the question in the negative, that is, in favour of the Revenue and against the assessee....... " Ultimately, the Hon'ble Supreme Court laid down the following proposition of law: "The law is settled if a business liability has defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the contract receipts taken as income includes the unbilled revenue for which bills to be raised in succeeding year. Therefore, the provision for forseeable losses towards completion of contract was allowed as deduction. It is not a case where all future premiums to be received in the case of present assessee are treated as part of the income. We have also gone through the decision of Rotor Controls (P.) Ltd. (supra),This decision relate to the claim of the deduction u/s 37 for provision of warranty. This decision may assist only for ascertaining whether while calculating acturial surplus, there exists any liability which has to be reduced while calculating acturial surplus. In this decision, Hon'ble SC laid down following four aspects to be satisfied so that the provision made is not to be regarded as a contingent liability :- (i) The provision relates to present obligation; (ii) It arises out of obligating events; (iii) It involves outflow of resources; and (iv) It involves reliable estimation of obligation. If these principles are applied to the FFA, in our view the FFA since being earmarked for participating policyholders and represents provision for expectatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,1976 as well as the decisions as discussed by us while disposing off ground no. 5. We have already taken a view while disposing off ground no. 5 that the golden rule of interpretation is that external aid to the interpretation is not required when there is no ambiguity in the relevant provision and the language of the relevant provision is plain and clear. The language of Rule 2 is plain and clear and there is no ambiguity. Therefore, as held by us earlier, explanatory note given in the circular 202 will not help the Revenue while interpretating Rule 2 of Schedule A We noted that Hon'ble SC in the case of Marwanji P Desai (supra), has observed as under:- "True intent at the legislature shall have to be gathered and deciphered in its proper spirit having due guard the language used therein. Statements of objects and reasons is undoubtedly an aid to construction but that by itself cannot be term to be and by itself cannot be interpreted. It is an useful guide but the interpretations and the intent shall have to be gathered from the entirety of the statute and when the language of the sections providing an appeal to a forum is clear and categorical no external aid is permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly free ". The judge cannot innovate at pleasure. It may be said that the Legislature having designedly used the expression " belonging to " and not the expression " owned by " had perhaps expected judicial statesmanship in the interpretation of this expression as leading to an interpretation that in a situation like this, it should not be treated as belonging to the assessee but, as said before, times are not yet ripe and in spite of some hesitation, I have persuaded myself to come to the conclusion that for all legal purposes, the property must be treated as belonging to the assessee and perhaps the Legislature would remedy the hardship of the assessee in such cases if it wants. Even though the assessee had a mere husk of title and as against the vendee no reality of title, as against the world he was still the legal owner and the real owner. 91. We therefore, are of the view that in case the Revenue is of the opinion that due to the language of Rule 2, the companies carrying on life insurance business will be paying unjustifiably tax at a lower rate, the Revenue can approach the Parliament for making the necessary amendment in the Income Tax Act. 92. We even noted upto Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit and gains of business of insurance. The learned DR even though vehemently contended that since the donations paid are covered under section 80G, therefore, they have to be disallowed. The provision of section 80G falls under Chapter VI-A and the deduction u/s 80G has to be allowed out of the gross total income of the assessee. The gross total income arise at after computing income under each head of income and after giving effect to the inclusion of the other persons income as stipulated under Chapter V, under section 60 to 65, whichever is applicable, and after aggregating the income under various heads of income giving effect to the set off or carried forward of the losses. This means applicability of the provisions of Chapter VI-A have not been denied under section 44 while computing the income in accordance with Rule 2 contained in the First Schedule. We find force in this regard and agree with the contention of the learned DR as it is not a case that the deduction of the donations while computing the income from insurance business has to be allowed as per the provision of section 28 to 43B. The learned Senior Advocate did not advance any argument that the claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 020. Assessee therefore, submitted the assessee should be allowed for the claim of the above donation. 28. The ld DR submitted that the claim of the assessee has been set aside by the coordinate bench to the file of the ld AO for verification of satisfaction of certain conditions. 29. We have carefully considered the rival contentions and perused the orders of the lower authorities as well as orders of the coordinate bench in assessee's own case for Assessment Year 2006-07, 2012-13. For all these years the coordinate bench has set aside the whole issue back to the file of the ld AO with a direction to verify the claim of the assessee u/s 80G of the Act. Accordingly, giving the same reason, we also set aside the additional ground of appeal back to the file of the ld AO to decide the issue afresh in accordance with the law. Accordingly, additional ground of appeal is allowed for statistical purposes. 30. Ground No. 7 of the appeal is with respect to the exemption of claim by the assessee u/s 10(34) of the Act and with respect to dividend income earned by the appellant. This issue was raised by the assessee as an additional ground before the ld CIT(A). The ld CIT(A) rejected the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came before it, it took the view that S. 92 applied to an assessee carrying on insurance business. In case of computation of determination of ALP of International transaction, we are concerned with S. 92 in the case of an assesse carrying on life insurance business, there has to be two staged computation of income. First income has to be computed as per S. 44 read with First Schedule & while computing income all the other provisions relating to the computation of income chargeable under the head 'Interest on Securities', 'income from house property', 'income from capital gains' or 'income from other sources' or in S. 199 or in S. 28-43B has to be disregarded. Second stage comes after computation of income u/s 44, computation as per provision of S. 92 by making addition on a/c of transfer pricing adjustment. 98. This decision in our view will not apply w.r.t. the applicability of S. 14A as the applicability or inapplicability of S 14A has to be considered at the stage of making computation of income u/s 44. We also do not agree with submissionof learned DR since the only activity in shareholders a/c is of investment, it cannot be said that no expen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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