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TMI Blog2021 (2) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... AO." Addition on account of Investments written off : 3. On the issue of investments written off, the ld. CIT (A) has dealt this issue comprehensively which is as under: "6. Section 44 of the Income Tax Act provides that the profits and gains of any business of insurance shall be computed in accordance with rules contained in the First Schedule. The rule 5 of the First Schedule provides that the profits and gains of any business of insurance, other than Life Insurance, shall be the profit before tax and appropriation as disclosed in the profit and loss account prepared in accordance with the provisions if Insurance Act, 1938 (4 of 1938) or the rules made thereunder or the provisions of the IRDA Act, 1999 (4 of 1999) or the regulations made thereunder. Further, the sub-clause 'a' 'b' & 'c' provide for certain adjustments, which can be made to such profit before tax and appropriation. Clause 'a' provides that any expenditure or allowance which is not admissible under the provisions section 30 to section 43 B in computing the profits and gains of business shall be added back. This means that any expenditure or allowance which is not allowable for computation of profit and gains a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponding clause did not exist from 01.04.1989 to 01.04.2011. Prior to 01.04.1989, the old clause 5b(i), provided for deduction of any amount written off or provided to meet diminution in or loss on realisation of investments in accordance with regulations made by IRDA old clause 5b(ii) It also provided for an addition on account of appreciation or gains on realisation of investments in accordance with the regulations made by IRDA. Therefore, prior to 01.04.1989, the rule 5b(i) and 5b(ii) of First Schedule specifically provided for deduction of provision to meet diminution in the value of investments and taxing the appreciation of such investments. The said section was removed from 01.04.1989 to 01.04.2011. Therefore, it cannot be said that in the intervening period deduction of diminution in the value of investment was allowed. Ground no. 4 pertains to claim of investments written off. The Decision of Hon'ble ITAT dt. 29.09.2004, reported in 92 TTJ Del(300) is stated to be in favour of appellant on this issue. The said decision examined whether write off/write down of investments is an expenditure or allowance. The said decision is for AY 1990-91 i.e. after the amendment w.e.f. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 139 (SC). 51. The contention of the Revenue is that contradictory pleas have been taken by the Assessee before the ITAT in the appeal for the AY 1990-91 where, on the issue of write off of investments, it was contended that since Rule 5(b) had been omitted, no exemption has been provided in respect of the profits earned and that since they were chargeable to tax, the losses, if any, were required to be allowed as a deduction. 52. In the written note of submissions filed on behalf of the Assessee, it is stated that: "When the petitioner is availing the non-taxation of its profits from sale of investments it is also not claiming the loss suffered on these investments. The AO has not only taxed the profits on sale of investment but has also disallowed the losses." (emphasis supplied) Therefore, even the Assessee acknowledges that if it succeeds, as it has, in its plea that the profit from sale/redemption of investments must be exempt from tax, then it cannot seek deduction as a result of losses on the write off of such investments. 53. Consequently the question framed in the Revenue's ITA No. 448/2015 is answered in the negative, i.e. in favour of the Revenue and against ..... 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. Reliance was placed on the scope of section 44, as held in the case of General Insurance Corpn. of India Vs. CIT (1999) 240 ITR 139 (SC), wherein Their Lordships of the Apex Court have categorically held that the provision of section 44 being a special provision, govern computation of taxable income earned from business of insurance. It mandates the tax authorities to compute the taxable income in respect of insurance business in accordance with the provisions of the First Schedule to the Act. In the light of these, their Lordships of Delhi High Court have held that no question of law, much less a substantial question of law survives for their consideration. In other words, order of the Tribunal has been affirmed. Following the same reasoning, addition made by the Assessing Officer is deleted." 5. Since the facts of the case before us are identical to the facts of the case for the earlier assessment years, we respectfully following the decision of the ITAT in assessee' s own case for earlier assessment years, this issue is bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered view that the assessee company had rightly not recognised an amount of Rs. 92,00,59,000/- as income for the years as per its accounting policy and as per policy issued by the Insurance Regulatory Development Authority (IRDA). So, finding no illegality or perversity in the findings returned by the ld. CIT (A), ground no.1 is determined against the Revenue." 9. During the year, the amount involved was Rs. 15,55,75,000/-. The ld. CIT DR vehemently argued based on the orders of the Assessing Officer and argued that interest accrued on loans cannot be given a different treatment for the purpose of taxation when the amount is received was a part of business income for the assessee company. 10. We have gone through the record before us and find that the matter has also been adjudicated by the ITAT for several prior years and by the Hon'ble Jurisdictional High Court also. Since, we find no material change in the facts of the case and the interpretation of the law laid down, we decline to interfere with the order of the ld. CIT (A). Addition on account Guest House: 11. The ld. CIT (A) deleted 50 % of the disallowance of Rs. 9,90,688 /- made by the AO on account of expenses incur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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