9911796707
TMI Blog2019 (11) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) erred in not following the ITAT order in Appellant's own case for assessment years 2005-06 to 2008-09. 3) The CIT (A) erred in holding that Income from annuity is similar to Pension Business and loss from Pension Scheme is not adjustable against taxable business income. 4) The CIT (A) erred in holding that Rule 5 is applicable to income from Health Schemes, Group Schemes and others treated as non-life insurance schemes. 5) The CIT (A) erred in holding that the appellant also carries on investment activity and activities other than life insurance, the income from which is assessable under respective heads other than sec. 44. 6) The CIT (A) erred in holding that the actuarial surplus determined for the purpose of the Insurance Act must be the same as the surplus for the purpose of Rule 2 of the First Schedule 7) (a) The CIT (A) erred in not accepting the principle laid down by the Hon'ble Tribunal the case of the Appellants that any transfers between Shareholder Funds and Policyholders funds inter-se should be regarded tax neutral for the Company as a whole. (b) The CIT (A) erred in holding that funds transferred from Shareholders account to Policyholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this common order. 8. At the outset, Ld. AR appearing on behalf of the assessee submitted before us that these ground are squarely covered by the consolidate order of Coordinate Bench of Hon'ble ITAT for AY 2005-06 to 2008-09, 2009-10, 2010-11 & 2011-12 in assessee's own case on merits. 9. On the other hand, Ld. DR fairly conceded that these grounds are covered by the order of ITAT. 10. We have heard counsels for both the parties at length and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that the identical ground raised in the present appeal has already been decided by the Coordinate Bench of ITAT for AY 2005-06 to 2008-09, 2009-10, 2010-11 & 2011-12 in assessee's own case on merits. The operative portion of the order of ITAT for AY 2005-06 to 2008-09 is contained in para no. 36 to 38 at page no. 39 to 43 and the same is reproduced below:- Reconciliation of amounts: 36. As seen from the orders of the authorities, the 'Total surplus' prepared under Regulation 8 was taken as basis ignoring the FormI of Regulation 4. While accepting the Ld.CIT DR argument that for the purposes of Life insurance business the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal Rs 4,09,53,600 1,79,85,829 Likewise it also given Form-G consolidating Revenue Account as under: Form-G Consolidated Revenue Account Revenue Account of ICICI Prudential Live Insurance Company Limited as at March 31, 20O6 (Amount in Rupees'000) Particulars Mar-05 Mar-04 Particulars Mar-05 Mar-04 Claims under policies, less re-insurance: Balance of fund at the beginning year 95,97,898 26,58,698 By Death 1,11,348 59,627 Premiums: By Maturity 2,539 - 1st year premiums 1,45,43,024 62,91,180 Annuities, less reinsurance ~ ~ Renewal premiums 77,94,747 23,84,328 Surrenders (incl. sur bonus) less re-insurance 9,286 4,076 Single premiums Less: Reinsurance 13,00,401 (38,177) 12,17,250 (19,075) Bonuses in cash, less reinsurance Consideration for Annuities granted, less reinsurance Bonuses in reduction of premiums 56,434 17,904 Interest, Dividends and Rents 6,92,979 6,27,033 Other benefit Fees and Charges 23,629 2,348 Expenses of Management: Linked Income 4,92,380 3,61,463 Commission 17,79,564 8,65,104 Other income 1,055 1,098 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 236) Surplus for participating annuities (Pension Business) 21,33,71,824 Deficit for linked business (1,66,59,51,826) Deficit for linked pension business (63,09,19,492) Deficit for linked group business (3,29,75,274) Deficit in policyholder's account (2,01,59,99,808) Add: surplus in shareholder's' account 10,93,77,555 Income as per Rule 2 of Schedule 1 of the Act (1,90,66,22,253) Exemption under section 10(23AAB) Less: Surplus for participating pension business (21,33,71,824) Add: Deficit for linked pension business 63,09,19,492 41,75,47,668 Exemption under section 10(34) Dividend Income 2,21,29,204 Less: In pension scheme (65,19,982) Less: Disallowance under section 14A 1,44,377) (1,54,64,845) Total Surplus /(Deficit) from Life Insurance Business (1,50,45,39,430) 38. The above statement furnished is in accordance with the Insurance Act, 1938, therefore, it cannot be stated that assessee returned income is not in accordance with the Insurance Act, 1938. There is no basis for AO to take Form-I 'total surplus&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with life cover and other benefits are extended benefits allowed to the policy holders alongwith life cover, therefore presumption drawn by Ld. CIT(A) is not proper and accordingly direction given by the Ld. CIT(A) to enhance assessment is accordingly dismissed. Accordingly, ground raised by the assessee is allowed. Ground No. 4 15. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in holding that Rule 5 is applicable to income from Health Schemes, Group schemes and others treated as non-life insurance schemes. 16. The brief facts relating to this ground are, the Ld. CIT(A) directed the AO to assess the income from insurance companies other than life insurance separately and income from the health schemes, group schemes, etc is assessable under Rule 5 in the first schedule and similarly he directed the AO to determine the assessable income from the non-life insurance schemes in all the earlier years also with the observation that health schemes, group schemes, etc are not life insurance schemes, therefore income from these schemes is assessable under Rule 5. Aggrieved with the above direction and enhancement of the assessment order, assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or unit, by whatever name called, which provides a component of investment and a component of insurance issued by an insurer referred to in clause (9) of this section;] Significantly, the definition of life insurance business' in sec. 2(11) of the Insurance Act is not confined to contracts of insurance where payment is made only on death of the Life Assured. The definition is an inclusive one. It includes contracts of insurance under which payment of money is assured on 'the happening of any contingency dependent on human life' such as a terminal illness. 3. Type of products offered by the Appellant during the relevant year: The products offered by the Appellant at the relevant time and approved by the Insurance Regulatory and Development Authority ('IRDA') can be classified into 2 broad categories : (i) Policies where the benefit is payable on death of the Life Assured or on the Life Assured surviving the specified date i.e. the maturity date, (ii) Policies similar to (i) above with an add on benefit related to the health of the policyholder. (iii) Policies where the benefit is payable on the diagnosis of a specified disease. Some of the products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not principally or wholly included in clauses (6A), (11) and (13A). The relevant definitions are reproduced below for ready reference: Section 2(6A): "fire insurance business" means the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies; Section 2(13A): "marine insurance business" means the business of effecting contracts of insurance upon vessels of any description, including cargoes, freights and other interests which may be legally insured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water, or both and whether or not including warehouse risks or similar risks in addition, or as incidental to such transit, and includes any other risks customarily included among the risks insured against in marine insurance policies; Section 13(B): "miscellaneous insurance business" means the business of effecting contracts of insurance which is not principally or wholly of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed under Rule 5 of the First Schedule be reversed. 18. On the other hand, Ld. DR relied on the orders passed by Ld. CIT(A) and submitted that scheme offered by the assessee are not fall under life cover. 19. Considering the rival submission and material placed on record and after considering the schemes offered by the assessee to the policy holders, we notice that all the basic policy are offered by the assessee in term basis insurance plan or life based insurance plan and these plans are offered alongwith additional benefits of saving, health, etc. Most of these plans are approved by IRDA and are term basis alongwith tax benefits includes deduction u/s 80C not u/s 80D. The schemes referred by Ld. CIT(A) are all those schemes which are not term based and it does not have life cover whereas these schemes are purely on health based and covering a short tenure of one year or two year alongwith having a tax benefit u/s 80D. These are the distinguishing features for the insurance plans which one can distinguish from the type of schemes offered by the insurance companies. After careful reading of the schemes submitted before us, in our considered view, the plans offered by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of actuarial valuation report periodically and accordingly assessee was transferring funds from the shareholder's account to policyholder's account. Since the insurance business will not yield the required profits in the initial 7 to 10 years, lot of capital has to be infused so as to balance the deficit in the policyholder's account. During the year as already stated assessee has issued fresh capital to the extent of Rs. 250 crores and transferred funds to the extent of Rs..233 crores from the shareholder's account to policyholder's account. Since assessee is having only one business of life insurance, the entire transactions both under the policyholder's and shareholder's account do pertain to the life insurance business only as it was not permitted to do any other business. Once assessee is in the life insurance business, the computation has to be made in accordance with the Rule-2 as per provisions of section 44. Therefore, there is a valid argument raised by assessee that both the policyholder's & shareholder's 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Coordinate Bench of Hon'ble ITAT for AY 2005-06 to 200809, 2009-10, 2010-11 & 2011-12 in assessee's own case on merits. The operative portion of the order of Hon'ble ITAT for AY 2005-06 to 2008-09 is contained in para no. 39 to 42 at page no. 43 to 45 of its order and the same is reproduced below:- 39. It is also on record that assessee followed the IRDA recommendations and accordingly prepared the actuarial valuation report including the surplus or deficit. However, Rule-2 prescribes only actuarial valuation in accordance with the Insurance Act, 1938. Therefore, AO is duty bound to insist on actuarial valuation in accordance with the Insurance Act, 1938, so as to bring to tax the surplus or deficit. What we notice is that AO, ignoring Rule-2, has relied on the actuarial valuation report prescribed under the IRDA recommendations under Regulation 8 that too at 'Total surplus', which is at variance with the Insurance Act, 1938. Since no amendment was brought to Rule-2 to incorporate IRDA recommendations, we are of the opinion that the action of AO in relying on the IRDA Regulations is not according to the law. Assessee had submitted its accounts as stated above, which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 31.74 -222.40 Page 8 Revenue account (Surplus /Deficit) Page - 9 Profit & Loss A/c (Profit/ Loss before Tax) 190.66 Net Deficit as per the return on income (before claiming exemptions under section 10) Deficit in PHA SHA Income Details as per return before claiming exemptions -201.59 10.93 Page 8 - Revenue account (surplus /deficit) Page 9 Profit & Loss A/c (Profit/ Loss) before tax. -190.66 Conclusion: Both scenarios give the same result and reflect the actual deficit as disclosed in the return of income filed (before claiming exemptions under section 10). NOTE Due to excess funding done, the surplus as disclosed by the actuarial valuation is more than the surplus disclosed in the financials: The surplus as per financials Add Excess funding done Surplus as per actuarial valuation 31.74 4.12 Page 8 Revenue account (surplus/ deficit) Page 70 Part of Actuarial Report excess funding disclosed by way of a note (Amount not mentioned) Page 14 - Actuarial Valuation in Form-I 35.86 42. In view of the above, looking at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking the total surplus from Form-I, reduced the negative reserve amounting to Rs. 27.27 crores. Assessee submitted before the CIT(A) as under: - "Method of Determination of Mathematical Reserves - (1) Mathematical Reserves shall be determined separately for each contract by a prospective method of valuation in accordance with sub-paras (2) to (4). (2) The valuation method shall take into account all prospective contingencies under which any premiums (by the policyholder) or benefits (to the policyholder/beneficiary) may be payable under the policy, as determined by the policy conditions. The level of benefits shall take into account the reasonable expectations of policyholders (with regard to bonuses, including terminal bonuses, if any) and any established practices of an insurer for payment of benefits. (3) The valuation method shall take into account the cost of any options that may be available to the policyholder under the terms of the contract. (4) The determination of the amount of liability under each policy shall be based on prudent assumptions of all relevant parameters. The value of each such parameter shall be based on the insurer's expected experience and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve, accordingly not to include in distributable surplus as per Section 49 of the Insurance Act, 1938. Clause (ii) to sub-Rule 5 mandates appointed actuary to include negative reserve in mathematics reserve only at the time of Amalgamation and transfer of insurance business and otherwise. Taxable surplus Since taxation of Life Insurance Business is on surplus disclosed as per Section 49 which is covered by Rule 2(5)(iii), where in appointed actuary is mandated to arrive at surplus after excluding negative reserve. In view of the above we humbly submit before your goodself to kindly not treat negative reserve as taxable. Sub-Rule 4 mandates Appointed Actuary to have prudent assumption of all relevant parameters and to include an appropriate margin for adverse deviations that may result in an increase in the amount of mathematical reserves." 58. The CIT(A), in his brief order vide para 17, considered the detailed explanation above and accepted that the negative reserve disclosed in Form-I does not give rise to distributable surplus. Accordingly he disallowed the same. 59. After considering the rival submissions and examining the method of accounting and the mandate given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY 2005-06 to 2008-09 is contained in para no. 43 to 46 at page no. 45 to 49 of its order and the same is reproduced below:- 43. Ground No.4 pertains to disallowance under section 14A offered in revised return on reasonable basis. Assessee offered an amount of Rs..1,44,377/- as against the dividend income mostly claimed at Rs. 1,56,09,222/- arrived at in participating life insurance business. Assessee gave methodology in contributing the expenses. However, AO did not accept and took the estimation 0.5% of the average investment thereby making the addition. The CIT (A) following the judgment of the Hon'ble Bombay High Court in the case of Godrej Boyce vs. DCIT dated on 12/08/2010 directed AO to workout on a reasonable basis. Assessee has raised the additional ground of appeal as under: Ground: "AO and the CIT (A) erred in invoking the provisions of section 14A of the Income Tax Act 1961 and disallowing expenses attributable to earning exempted income, without appreciating the fact that the provisions of section 14A are not applicable to Insurance Companies". 44. The learned Counsel submitted that in view of the provisions of section 44, the provisions of section 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: "17. Finally the quest ion to be answered is about the applicability of s. 14A in respect of sale of investment which is not taxed under the special circumstances of deletion of a sub-rule from the statute. It is not questioned that the impugned profit was non-taxable per se rather the accepted legal position is that the impugned profit was very much taxable in the past.Now it has been informed that this controversy in respect of insurance company set at rest by a decision of Tribunal, Delhi Bench verdict in the case of Oriental Insurance Co. Ltd. (ITA Nos. 5462 & 5463/Del /2003) asst. yRs. 2000-01 and 2001-02 order dt. 27th Feb. 2009 [reported as Oriental Insurance Co. Ltd. v. Asst t. CIT [2010] 130 TTJ (Delhi)388 : [2010] 38 DTR (Delhi ) 225-Ed. ]. Therefore considering the vehement reliance of learned Authorized Representative it is worth to mention at the outset itself that the issue now stood resolved by this latest decision of Delhi, Tribunal in the case of Oriental Insurance Co. Ltd. (supra), the relevant portion reproduced below: "17. We have heard rival submissions of the parties and have gone through the material available on record. Identical issue arose in asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 in 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 t ravel 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 act as according to us, it is not permissible to the AO to travel beyond s. 44 and First Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at follow on a combined reading of ss. 14, 14A, 44 and r. 5 of the First Schedule are: (a)That no head-wise bifurcation is cal led 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 there under. The adjustments do not refer to disallowance under s. 14A of the Act. (b) Profits and gains of business as refer red to in (a) above have only to be computed in accordance with r. 5 of the First Schedule. 22. Sec. 44 creates a specific except ion to the applicability of ss. 28 to 43B. Therefore, the purpose, object and purview of s. 14A has no applicability to the profits and gains of an insurance business. 21. The learned Departmental Representative strongly justified the act ion of the AO and that of the CIT(A) in the light of the clear provisions of s. 14A of the Act. Since the view has al ready been expressed by respected Coordinate Bench therefore, we have no reason to take any other view except to follow the same. With the result we hereby acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in para no. 55 at page no. 55 of its order and the same is reproduced below:- 55. We have heard the rival contentions. As briefly discussed while deciding the issue of taxing surplus, assessee is in life Insurance business and it is not permitted to do any other business. All activities carried out by assessee are for furtherance of Life Insurance business. Maintaining adequate capital is necessary to comply with IRDA( Assets, Liabilities and Solvency margin of insurers)Regulations,2000. Income earned on capital infused in business is integral part of Life Insurance business. The LD. CIT(A) gives a finding that assessee is exclusively in Life Insurance business. However, since he gave primacy to Form I proforma he concluded that other incomes are not of Life Insurance business. We have already considered and decided that assessee was mandated to maintain separate accounts by IRDA Regulations. Just because separate accounts are maintained the incomes in Shareholder's account does not become separate from Life insurance business. As per Insurance Act 1938 all incomes are part of one business only and these incomes are considered as part of same business. Therefore, the incomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f to the assessee, following the decision of Hon'ble /TAT in assessee own case for the earlier years, wherein Hon'ble tribunal held that on account of "legislation by incorporation", 'only' the "un-amended" Insurance Act 1938 and the Regulations there under became part of Section 44 r.w Rule 2 of the First Schedule of the I.T. Rules,; when an appeal against this order of /TAT has been filed & is pending with High Court, Bombay? 4. ] Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in giving relief to the assessee, following the decision of Hon'ble IT AT in assessee own case for the earlier years, wherein Hon'ble Tribunal held that the Legislature consciously omitted incorporation of the provision of Insurance Regulatory and Development Authority Act 1999 and Regulations made thereunder in section 44 of the I.T. Act r.w. Rule 2 of the First Schedule which 'refers' only to un-amended Insurance Act 1938 and Regulations made there under; when an appeal against this order of /TAT has been filed & is pending with High Court, Bombay? 5. Whether on the facts and in the circumstances of the case and in law, the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of income of Life Insurance Business and is included as an 'income' by the actuary? 10. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing relief to the assessee by holding that surplus available in Share Holders Account is not to be taxed separately as "income from other sources" and at the normal corporate rate and holding that surplus from Share Holders Account was only part of income from insurance business arrived at after "combining" surplus available in Share Holders Account with the surplus available in Policy Holders Account and then taxing this 'net surplus' arrived at, at the rates specified u/s. 115B of the Act ? 11. The appellant prays that the order of the Ld CIT(A) on the above grounds be set aside to the file of the AO or confirm the order of the AO. 12. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. Ground No. 1 to 12 47. All the grounds raised by the revenue are inter connected and inter related and relates to challenging the order of Ld. CIT(A), therefore we thought it fit to dispose of the same by this common order. 48. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order of ITAT has been filed & is pending with High Court, Bombay? 4. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in giving relief to the assessee, following the decision of Hon 'ble ITAT in assessee own case for the earlier years, wherein Hon 'ble Tribunal held that the Legislature consciously omitted incorporation of the provision of Insurance Regulatory and Development Authority Act 1999 and Regulations made thereunder in section 44 of the IT.Act r.w.Rule 2 of the First Schedule which 'refers' only to un-amended Insurance Act 1938 and Regulations made there-under; when an appeal against this order of ITAT has been filed & is pending with High Court, Bombay? 5. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in giving relief to the assessee, following the decision of Hon 'ble ITAT in assessee own case for the earlier years, wherein Hon' ble Tribunal failed to take note that Section 28 of Insurance Regulatory and Development Authority Act 1999 clarifies that provisions of IRDA Act are in addition and not in derogation of Insurance Act 1938, which means IRDA Act and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act? 11. "The appellant prays that the order of Ld. CIT(A) on the above grounds be set aside to file of AO or confirm the order of the AO. 12. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 5. Ground No.1 to 6 regarding interpretation of the provision of section 44 of the Income tax Act r.w. Rule 2 of the 1st Schedule of the Income tax Act, 1938. 5.1 We have heard the ld. DR as well as the ld. AR and considered the relevant material on record. The issue involved in ground No.1 to 6 of the revenue's appeal have been considered by this Tribunal in assessee's own case for the assessment year 2005- 06 to 2008-09 in 140 ITD 41 in para nos. 23, 27, 32, 38, 40 and 42 which are 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 bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licyholder's account. Since the insurance business will not yield the required profits in the initial 7 to 10 years, lot of capital has to be infused so as to balance the deficit in the policyholder's account. During the year as already stated assessee has issued fresh capital to the extent of Rs. 250 crores and transferred funds to the extent of Rs. 233 crores from the shareholder's account to policyholder's account. Since assessee is having only one business of life insurance, the entire transactions both under the policyholder's and shareholder's account do pertain to the life insurance business only as it was not permitted to do any other business. Once assessee is in the life insurance business, the computation has to be made in accordance with the Rule-2 as per provisions of section 44. Therefore, there is a valid argument raised by assessee that both the policyholder's & shareholder's 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years i.e. the correct method as per Rule 2 and Sec 44 of IT ACT. In view of the discussion above and after analyzing the Forms, Regulations and Provisions we have no hesitation to hold that the assessee working of actuarial surplus/ deficit is in accordance with Rule 2 of First Schedule. Therefore, assessee grounds on this issue are allowed and AO is directed to modify the order accordingly. Ground Nos.1 to 3 are considered allowed. 5.2 Following the earlier order of this Tribunal we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Accordingly ground Nos. 1 to 6 are dismissed. 6. Ground No.7 is regarding the taxability of surplus of both policy and share holders account. 6.1 We have heard the ld. DR as well as the ld. AR and considered the relevant material on record. We find that this issue was decided by this Tribunal in assessee's own case for the assessment year 2005-06 and assessment year 2008-09 in para no.55 as under :- " 55. We have heard the rival contentions. As briefly discussed while deciding the issue of taxing surplus, assessee is in life Insurance business and it is not permitted to do any other business. All ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was the contention of the Revenue that the CIT(A) ignored the actuarial surplus determined on the basis of the total assets if the company and therefore not capitalized in the above assets. The assets of assessee to that extent are not stated, therefore, it has an impact of reducing the total surplus. 61. Before the CIT(A) it was submitted that the assessee prepared its accounts as per the format prescribed by the IRDA in tune with the Insurance Act 1938. The assets were originally capitalized in the books and being eligible for 100% depreciation they are written off. The CIT(A), after considering the submissions, accepted the contention as under: - "19. The appellant has to prepare its accounts as per the formats prescribed by the IRDA under the Insurance Act, 1938. These accounts have accordingly been prepared by the appellant and have been subject to statutory audit. Further, the accounting policy of claiming 100% depreciation in its financial statements has been consistently followed by the appellant and has also been duly accepted by the IRDA. The appellant has stated that the assets on which depreciation has been claimed have been initially capitalized in the books and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
